After Hours Summary: AEO -14.2% falls on EPS miss, will pause dividend; others down on earnings/guidance: CURV -11%, AVAV -5.2%, DSGX -4%, MKC -3.5%; ASAN +17.7%, GME +11.3% higher on earnings; W -7.5% falls on convertible offeringAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: ASAN +17.7%, GME +11.3% (also partners with FTX making GME FTX's preferred retail partner in US), YEXT +5.3%, INTA +2%, BASE +0.1%, CPRT +0.1%
Companies trading higher in after hours in reaction to news: ARQT +5% (to acquire Ducentis BioTherapeutics), OLO +1.7% (authorizes new $100 mln share repurchase program), STKS +1.6% (authorizes new $10 mln share repurchase program), XXII +1.5% (COO to step down, co plans to eliminate COO position)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: AEO -14.2% (also will pause dividend; plans to cut expenses and cap-ex), SKIL -11.8% (also authorizes new $30 mln share repurchase program), CURV -11%, AVAV -5.2%, DSGX -4%, MKC -3.5%, VRNT -3.1% (also CFO to step down, names new CFO), PLAY -2.1%, CASY -0.6%
Companies trading lower in after hours in reaction to news: GDYN -9.3% (files for $100 mln common stock offering), W -7.5% (to offer $600 mln in convertible notes), VIEW -3.7% (stock offering), ERAS -2.9% (preliminary Phase 1/1b monotherapy data for ERAS-007 ERK and ERAS-601 SHP2 inhibitors), HPK -2.4% (files for 7,455,493 share offering by selling shareholders), DNA -1.7% (files for 3,178,887 share offering by selling shareholders), VCYT -1.7% (new data suggest co's Envisia Genomic Classifier can help predict disease progression), CDNA -1.2% (names new CFO), JBLU -0.5% (Air Emirates to end partnership on Oct 30), TOL -0.4% (TOL and EQR to to develop 3 new luxury rental communities in Dallas area), CG -0.4% (MANT shareholders approve previously proposed merger with CG), AGNC -0.3% (prices offering)
>>> Up
* Close Brothers Raised to Buy at Investec; PT 1,170 pence (+)
* Fodelia Raised to Accumulate at Inderes; PT 5.50 euros
* Great Portland Raised to Overweight at Morgan Stanley
* Kion Raised to Overweight at JPMorgan; PT 58 euros
* Legrand Raised to Overweight at JPMorgan; PT 95 euros
* Signify Raised to Overweight at JPMorgan; PT 43 euros
* SocGen Raised to Buy at BofA; PT 35 euros
* Unite Group Raised to Overweight at Morgan Stanley
>>> Down
* Andritz Cut to Neutral at JPMorgan; PT 60 euros
* British Land Cut to Hold at Panmure Gordon; PT 449 pence (yest.)
* CFE Cut to Hold at Berenberg
* Electrolux Cut to Underweight at JPMorgan; PT 135 kronor
* Froey Cut to Hold at Arctic Securities; PT 50 kroner (+)
* GEA Group Cut to Underweight at JPMorgan; PT 31 euros
* Hapag-Lloyd Cut to Reduce at HSBC; PT 193 euros
* Hermes Cut to Hold at HSBC; PT 1,500 euros
* Land Sec. Cut to Hold at Panmure Gordon; PT 645 pence (yest.)
* LVMH Cut to Hold at HSBC; PT 725 euros
* Norway Royal Salmon Cut to Hold at Nordea (+)
* Orpea Cut to Hold at Berenberg; PT 41.50 euros
* Richemont Cut to Hold at HSBC; PT 127 Swiss francs
* Swatch Cut to Hold at HSBC; PT 270 Swiss francs
* Vestas Cut to Sell From Hold at ABG Sundal Collier (+)
>>> Initiation
* Note Rated New Buy at SEB Equities; PT 235 kronor
* Norwegian Air Rated New Sell at Nordea; PT 7 kroner (+)
* Sino Rated New Buy at Baader Helvea; PT 49.30 euros
>>> Call
* Berenberg Tweaks Midcap Top Picks, Downgrades CFE and Orpea
* Pernod Ricard’s Positive Outlook Likely to Be in Focus, RBC Says (+)
* Societe Generale Upgraded to Buy at BofA; Stock Re-Rating Ahead
* UK, Logistics and Health Care are Morgan Stanley Property Picks
Stocks fell with US equity futures Thursday and the dollar jumped as a lockdown in a Chinese metropolis and a hawkish drumbeat from central banks further frayed investor nerves. A global equity index hit a six-week low, dragged down by a slide in Asian shares amid a retreat in tech firms. S&P 500 and Nasdaq 100 contracts slid partly on a tumble in chipmaker Nvidia Corp. over a sales warning. China moved to lock down Chengdu, a city of 21 million residents, from Thursday night to tackle Covid. It’s the biggest Chinese city to face such curbs since Shanghai’s bruising two-month crisis earlier this year. The market jitters come after the worst month since June for US shares, reflecting fears of an economic downturn alongside restrictive monetary policy to choke inflation. A global bond selloff saw the two-year Treasury yield touch 3.50% for the first time since 2007. Commodity-linked and Group-of-10 currencies weakened, while the yen fell to a fresh 24-year low -- heading closer to the 140 per-dollar level. Stocks are entering a month that is often poor for returns after an August of losses across asset classes. An equity bounce from June lows is fizzling as the Federal Reserve pushes back against bets on tempered rate hikes. Global bonds, meanwhile, are near their first bear market in a generation. oil was on the back foot, sliding to about $89 a barrel. Aggressive Fed tightening and China’s slowdown are dimming the demand outlook. Bitcoin weakened, hovering around the closely watched $20,000 level. The latest economic data underlined a parlous outlook for China. A private survey suggested factory activity contracted in August, sapped by power shortages and Covid-linked curbs. US After Hours NTNX +22.3%, PSTG +6.5%, FIVE +5% higher on earnings; AI -15.9%, MDB -13.3%, OKTA -11.6%, VEEV -11.1%, SMTC -6.9% lower on earnings; NVDA -3.9% as US govt imposes new license
Nikkei -1.59% Hang Seng -1.38% CSI -0.11% Shanghai +0.13% Shenzen -0.06%
Eur$ 1.0019 CNH 6.9097 CNY 6.9018 JPY 139.36 GBP 1.1588 CHF 0.9798 RUB 60.25 TRY 18.2101 WTI$ 88.95 -0.67% Gold 1,707.35 -0.22% BTC 20,105.60 -0.45% ETH 1,558.90 -0.82%
S&P -0.67% Nasdaq -1.14% EuroStoxx -0.94% FTSE -0.55% Dax -0.74% SMI -0.63%
Macro :
- Morgan Stanley’s Wilson Says Indexes Face Fresh Low This Year
- Millennium Hires Morgan Stanley Rates Trading Co-Head Flowerdew
Keep an eye on :
- ABDN LN : Abrdn Exits FTSE 100 in Fresh Blow to British Money Manager
- AF FP : Italy’s Right-Wing Leader Opposes Plan to Sell State Carrier ITA
- BCART BB : Biocartis 2Q Cash and Cash Equivalents EU19.7M Vs. EU37.3M Q/Q
- BZU IM : Buzzi to Be Added to FTSE MIB Index, Replacing Exor
- CTEC LN : ConvaTec Group, F&C Investment Trust to Join FTSE 100 Index
- DIS US : Disney Explores Amazon Prime-Like Program to Offer Perks: DJ
- FGR FP : Eiffage 1H Revenue Beats Estimates
- GREEN BB : Greenyard Co-CEO Hein Deprez to Switch to Board After April 2024
- INPST NA : InPost 2Q Sales 1.70B Zloty Vs. 857.6M Zloty Y/y
- ENI IM : Eni Evaluates Consequences of Cyber Attack on Its Network
- EQT SS : EQT Sets Target Fund Size for EQT Infrastructure VI at EU20b
- EAPI FP : EuroAPI 1H Ebitda EU70.3M Vs. EU58.5M Y/y
- EXO IM : Buzzi to Be Added to FTSE MIB Index, Replacing Exor
- LHA GY : Pilots at Lufthansa Unit Eurowings Vote to Strike on Jobs, Hours
- LHA GY : Lufthansa Pilot Union Calls for One-Day Strike on Friday
- MC FP : Watch Luxury Stocks After China Locks Down Megacity Chengdu
- EGL PL : Mota-Engil 1H Net Income EU12M Vs. EU9M Y/y
- NOVOB DC : Novo Nordisk to Pay $6.3m to Resolve Allegations, US DOJ Says
- RI FP : Pernod Ricard FY Recurring Operating Income Beats Estimates
- PRU LN : Prudential Names Don Guo as Group Chief Investment Officer
- RNO FP : French Aug. New Car Registrations Rise 3.8%: PFA
- CFR SW : Some Richemont Investors Set to Vote Against Bluebell Plan: FT
- RIO LN : Rio Tinto to Buy Remaining Turquoise Hill Stake for $3.3 Billion
- ROSE SW : Zur Rose Launches ~CHF100M Convertible, ~CHF50M Share Offering
- P4F GY : Seadrill 2Q Adjusted Ebitda $75M Vs. $78M Q/Q
- SHEL LN : Shell Restarts Prelude LNG Plant in Australia After Outage
- STM FP : Nvidia Declines on Warning That China Restriction May Hurt Sales
- TSLA US : SpaceX Gets $1.44b NASA Order for More Space Station Missions
- TPRO IM : Technoprobe Appoints Beretta as New CFO Starting From October 1
Five scientific breakthroughs to cheer you up
This year, scientists have worked out how to edit bacteria, predict proteins and see further into deep space
1. An alternative to animal testing
2. A new era of astronomy
3. Harnessing the power of bacteria
4. Predicting proteins with AI
5. Nuclear fusion record
>>> Up
* Fodelia Raised to Accumulate at Inderes; PT 5.50 euros
* Great Portland Raised to Overweight at Morgan Stanley
* Kion Raised to Overweight at JPMorgan; PT 58 euros
* Legrand Raised to Overweight at JPMorgan; PT 95 euros
* Signify Raised to Overweight at JPMorgan; PT 43 euros
* SocGen Raised to Buy at BofA; PT 35 euros
* Unite Group Raised to Overweight at Morgan Stanley
>>> Down
* Andritz Cut to Neutral at JPMorgan; PT 60 euros
* British Land Cut to Hold at Panmure Gordon; PT 449 pence (yest.)
* CFE Cut to Hold at Berenberg
* Electrolux Cut to Underweight at JPMorgan; PT 135 kronor
* GEA Group Cut to Underweight at JPMorgan; PT 31 euros
* Hapag-Lloyd Cut to Reduce at HSBC; PT 193 euros
* Hermes Cut to Hold at HSBC; PT 1,500 euros
* Land Sec. Cut to Hold at Panmure Gordon; PT 645 pence (yest.)
* LVMH Cut to Hold at HSBC; PT 725 euros
* Orpea Cut to Hold at Berenberg; PT 41.50 euros
* Richemont Cut to Hold at HSBC; PT 127 Swiss francs
* Swatch Cut to Hold at HSBC; PT 270 Swiss francs
>>> Initiation
* Berenberg Tweaks Midcap Top Picks, Downgrades CFE and Orpea
* Note Rated New Buy at SEB Equities; PT 235 kronor
* Sino Rated New Buy at Baader Helvea; PT 49.30 euros
* UK, Logistics and Health Care are Morgan Stanley Property Picks
>>> Call
Top Richemont investors set to vote against activist’s plan to shake up board
Shareholders of Swiss luxury group line up against hedge fund Bluebell’s challenge to chair Johann Rupert
Several top investors in Richemont are planning to vote against proposals by an activist investor to shake up the Swiss luxury group’s board and challenge its controlling shareholder and chair Johann Rupert.
London-based hedge fund Bluebell Capital Partners, which owns a small stake in Richemont, has proposed three resolutions to be voted on at a shareholder meeting next Wednesday, including one that would nominate former Bluebell partner and luxury industry veteran Francesco Trapani to the board.
They contend that Richemont, whose biggest brands are Cartier and Van Cleef & Arpels, has underperformed peers such as LVMH and Hermès and has been hurt by poor governance and strategic choices, such as sticking with money-losing ventures in fashion and ecommerce.
Bluebell, which has been part of successful campaigns at Danone and Hugo Boss, has also called out Rupert for behaving like a “padre-padrone” or godfather-like figure, who makes most decisions at Richemont even though he owns only a minority stake.
But Stephen Paice, head of European equities at Baillie Gifford, which is a top 15 investor in Richemont, said the fund was planning to vote against Bluebell’s resolutions.
“You can see that the composition of the board has changed over the past five years and Richemont has tried to address some of the gaps in the skillset,” said Paice. “I think the direction of travel is positive.”
A second top 15 investor said that changes by Richemont to its board — notably the appointment last year of Patrick Thomas, the former chief executive of luxury rival Hermès — showed that “the company is going in the right direction”.
This person added: “I wouldn’t be overly aggressive in pushing them for change because I think they have made some noticeable progress.”
Rupert, 72, who built Richemont into a powerhouse in jewellery and watches with a market value of about SFr63bn ($65bn), has said shaking up the board is not necessary and has opposed Trapani because of his links to major competitor LVMH, who he worked for until 2016.
Although he owns only a 9.1 per cent stake in Richemont, Rupert has almost total power to set strategy and choose directors because he owns B shares that carry 50 per cent of the voting rights.
Proxy advisory firms Institutional Shareholder Services and Glass Lewis have opposed Trapani joining the board.
Bluebell has proposed Trapani’s nomination as a board member to specifically represent the A shareholders as provided for in the company’s bylaws but never applied by Richemont.
The company has agreed to appoint a representative of the A shareholders but wants to name a current board member Wendy Luhabe to the post.
It also has come out against Bluebell’s other proposals to increase the minimum size of the board and mandate that A and B holders each had equal representation.
Bluebell partner Guiseppe Bivona said he was confident about the vote after having canvassed other shareholders. “We think we have the support of some of the largest shareholders,” he added.
A third top 15 Richemont shareholder said it was voting against all three of Bluebell’s proposals and agreed that Trapani’s appointment to the board was “not advisable”.
It said that Bluebell had not given sufficient detail as to how it intended to improve Richemont’s governance and said that it could not be ruled out that the activist hedge fund was pursuing its own interests, “which are not long term and in the interests of all shareholders”.
Bluebell’s campaign at Richemont became public in July and since then executives at the Swiss group, including Rupert, have been holding calls with top shareholders. This marks a change in approach for a company that usually restricts its investor communication to its twice-yearly earnings.
Baillie Gifford’s Paice said that the Rupert family’s long-term investment horizon and its patriarch’s influence on strategy had been a big benefit for Richemont.
He pointed to the Chinese government’s crackdown on gift giving to fight corruption, which began about a decade ago and hurt Swiss watch exports to Hong Kong and mainland China.
During this period Richemont bought back inventory from its distributors, which came at a financial cost but protected the brands over the long term.
Paice said: “I think that’s some of the parts of governance which are sometimes overlooked — everyone thinks about the composition of the board . . . many people forget just how long term and how beneficial having a family involved with Richemont has been over the years.”
Richemont declined to comment.
Tencent turns from buyer to seller in investment pivot
Chinese internet giant plans $15bn of disposals this year as pressure mounts from investors and regulators
Chinese internet titan Tencent is pivoting from years of aggressive stakebuilding to a focus on divestments as it comes under pressure from investors and Beijing’s recent antipathy towards Big Tech.
As part of an important shift in strategy, the company has outlined a soft target of divesting about Rmb100bn ($14.5bn) of its $88bn listed equity portfolio this year, according to two people familiar with the matter. This would take place depending on market conditions and internal profit targets.
Partial divestments in large Chinese companies such as food delivery service Meituan were in the pipeline, the people said. Meituan was not a top priority for share sales owing to its strong performance, but cutting its stake could help reduce pressure on Tencent from the anti-monopoly regulator, the people said.
A crackdown that began in 2020 has led to nearly 100 deals involving Alibaba and Tencent coming under antitrust scrutiny from Chinese regulators, reversing Beijing’s once laissez-faire approach towards the country’s vast internet sector.
Investors have also pressured the company to divest underperforming assets, a third person with direct knowledge of the matter said, as China’s zero-Covid policies and property crisis batter the economy.
Tencent reported its first decline in quarterly revenues in August, driven by weak advertising and games sales, marking a departure from the days of double-digit growth in its internet businesses that had fuelled the company’s aggressive investment strategy.
Its new approach was not driven by any urgent need for cash, and sale proceeds could be distributed in a variety of ways, including special dividends for shareholders, share buybacks and bonuses for employees, the people said. Two employees who did not wish to be named said they had started receiving stock dividends this year in the form of JD.com shares.
Proceeds in 2022 would contribute to two batches of funds planned by Tencent that will be based on themes espoused by Beijing, including sustainable social values and common prosperity, two of the people said. Tencent promised last year to raise Rmb100bn to support rural revitalisation and help increase earnings for low-income groups in a move that was in step with Beijing’s call for greater corporate social responsibility.
Tencent responded: “We have repeatedly made clear publicly that our Rmb100bn commitment towards our sustainable development initiative is a multiyear initiative that is separate from our investment decisions. There is no timeline for contributions to this fund, which will be made over time, and are not determinative of our investment decisions.”
While Tencent has already begun its divestment drive, one person said the investment team was still deliberating which stakes could be reduced in non-core businesses and at what target price. The Shenzhen-based group owns more than 10 per cent of six large tech companies listed in China and is the biggest investor in Meituan, short-video sharing app Kuaishou and popular question-and-answer site Zhihu.
In January, it offloaded more than $3bn worth of shares in Singaporean internet conglomerate Sea. Last year, Tencent gave out $16.4bn worth of stakes in ecommerce player JD.com to shareholders as a dividend in a surprise move that some saw as the start of the strategy pivot.
Tencent added: “We don’t have any target amounts for divestments. We have always invested with the goal of generating strong returns for our company and shareholders, not according to any arbitrary timeline or target. Nor have we received any external pressure regarding our investment portfolio. In fact, our most recent divestments, JD.com and Sea, were overperforming and generated many multiples on our initial investment. We will continue to make decisions independently and in the best interest of our shareholders over the long term.”
Despite the switch in strategy, Tencent was expected to continue to invest overseas and in strategic growth areas, including enterprise software, video services and the games industry, though more selectively than before, said Fitch Ratings analysts Kelvin Ho and Jia Wen in a report in May.