Gapping up
In reaction to earnings/guidance:
- TH +13.2% (raises outlook), LEVI +3.6% (also increases dividend by 20%), MRC +3.2% (raises revenue guidance for Q2 and FY22)
Other news:
- SRG +53.9% (filed preliminary proxy materials; appointed Adam Metz as Chairman)
- ANNX +5.8% (announces $130 mln private placement financing)
- HOLI +5.2% (Buyer Consortium announces engagement of financial advisor and reaffirms non-binding indicative offer of $25 per share to acquire Hollysys)
- AHT +5.1% (provides Q2 operating data)
- RDUS +4.5% (Publishes Investor Presentation Outlining Company's Progress and Board Process Resulting in Agreement to be Acquired at Significant Premium)
- HNRG +4.5% (signs new coal contracts; raises FY23 outlook)
- MCRB +4.5% (Flagship Pioneering increased active stake to 18.9% (prior ~15.6%))
- BHR +4.4% (provides Q2 operating data)
- PRVB +3.9% (announces $60 mln private placement)
- FSTX +3.7% (invoX Pharma commences tender offer for F-star Therapeutics Inc. at $7.12/share)
- ADCT +2.3% (announces exclusive license agreement with Sobi to develop and commercialize ZYNLONTA in Europe)
- SAVE +2.1% (Spirit Airlines Announces Intention to Adjourn Special Meeting of Stockholders)
- JBSS +1.8% (declares special dividend of $1.50/sh)
- ULCC +1.8% (Spirit Airlines Announces Intention to Adjourn Special Meeting of Stockholders)
- OXY +1.5% (Berkshire Hathaway raises stake)
- NRIX +1.3% (announces $55 mln registered direct offering; also reports earnings)
- JBLU +1.1% (Spirit Airlines Announces Intention to Adjourn Special Meeting of Stockholders)
Analyst comments:
- XPO +4.2% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
- COCO +3.1% (upgraded to Buy from Neutral at BofA Securities)
- IPG +1.5% (upgraded to Overweight from Equal Weight at Wells Fargo)
- HWM +1.4% (upgraded to Buy from Hold at The Benchmark Company)
- OMC +1.1% (upgraded to Overweight from Equal Weight at Wells Fargo)
Luxury Watches Are Still in Short Supply, Top Rolex Dealer Says
Forget demand worries stirred up by inflation and a slowing economy, a shortage of top-brand timepieces is still the biggest problem for the UK’s largest seller of Rolex watches.
Demand for most Rolex, Audemars Piguet and Patek Philippe watches has long outstripped supply, but now the problem is spreading to other high-end brands, including Zenith, Omega and IWC, said Brian Duffy, chief executive officer of Watches of Switzerland Group Plc.
“A lot of what we are selling we can’t get enough of in the first place,” Duffy said in an interview. “The whole industry is characterised by more demand than supply.”
Three-quarters of the retailer’s sales, by value, are done through customers getting on waitlists because the timepieces they want aren’t in stock. Watches of Switzerland is still adding more people to waitlists than it’s taking off — leaving the retailer well insulated from an economic slowdown, said Duffy.
“Even if there is an impact in demand it will be a long time coming before we feel it,” he said.
Watches of Switzerland is the top retailer of Rolex in the UK and among the biggest in the US, with an estimated 9 percent market share. Duffy said his stores are struggling to keep Zenith chronographs, IWC pilot watches and Omega’s James Bond Seamaster and Speedmaster models in stock.
“Omega, we can’t get enough of. All the new products,” Duffy said.
The CEO said he expects the retailer’s supply of Tudor watches will increase as they are currently under-supplied.
Watches of Switzerland’s strategy is to grow its retail presence to give it more clout to commandeer supply from Swiss watchmakers. It grew in-store and online sales by 48 percent in the US to £428 million ($512 million) in its 2022 fiscal year.
“We could have grown even more if we had more supply,” Duffy said.
Watch prices have already increased by an average of 4 percent to 5 percent this year, and Duffy said he doesn’t expect brands to implement another significant increase in 2022.
Sales of luxury watches surged during the pandemic as homebound consumers, flush with cash, snapped up Rolexes and other timepieces, sending prices for many secondhand models soaring. Now, secondary market prices for the most sought after Rolex, Audemars Piguet and Patek Philippe watches have started to decline as equities and cryptocurrency valuations tumbled.
Profit Doubles
The company on Thursday reported pretax profit of £126 million for the 12 months ending May 1, almost double its earnings the previous year.
The record performance was helped by the UK, it’s home market, where revenue soared 36 percent. Any disruption from the pandemic is now “largely behind us,” the company said.
The retailer reiterated its revenue forecast of £1.45 billion to £1.50 billion for this fiscal year, as well as its outlook for profitability.
China Car Sales Jump as Covid Curbs Relaxed
Tesla sales more than doubled in June as local auto makers saw a bump in market share following new incentives for the secondhand market
HONG KONG—China’s car sales rose almost 23% in June from a year earlier as production recovered in lockdown-hit Shanghai to meet pent-up demand and government cash incentives stimulated purchases in the world’s biggest auto market.
Sales for passenger cars also rose sharply to 1.94 million in June from 1.35 million vehicles in May, the China Passenger Car Association said Friday, a sign of buyers making up for lost time after falls in recent months caused by pessimism over the economy and social restrictions to fight the pandemic.
Production also grew 46% from a year ago to 2.2 million vehicles, signaling that the industry has mostly recovered its capacity following a slump as China imposed tough lockdowns amid a Covid-19 outbreak that affected its automotive manufacturing center near Shanghai.
The passenger-car market saw “explosive growth” in June, said Cui Dongshu, the association’s secretary-general.
The production recovery was due to lessening shortages in imported car parts, which allowed manufacturers in the Yangtze Delta area to resume supply. A multiplier effect from the supply chain’s recovery, export resilience and government stimulus also ensured the market’s growth, he said.
Tesla Inc. TSLA 5.53% was among car makers seeing the strongest rebound following a three-month slump that ended in May. Last month it sold over 78,000 units, more than doubling that of May and up from just 1,512 vehicles in April, when its plant was unable to operate under Shanghai’s strict Covid-19 lockdown. Most of the June deliveries were sold domestically, with only 968 cars exported.
Sales at Volkswagen AG’s joint venture with Chinese state-owned partner SAIC Motor Corp. increased 51% in June from a year ago, but sales for General Motors Co. were down 21%.
The Warren Buffett-backed BYD Co. 1211 -1.29% Ltd, meanwhile, recorded a 177% increase in sales on-year. Sales by the Chinese manufacturer—which included fully electric and hybrid vehicles—surpassed Tesla’s global output during the first half of this year.
To give another boost to the car market after cutting vehicle purchase tax at a cost of almost $9 billion in May, the Chinese central government on Thursday rolled out a policy package to encourage new vehicle sales by allowing secondhand vehicles to be sold across the country.
Shares of Chinese electric car makers including BYD and startups including NIO Inc., Li Auto Inc. and XPeng Inc. rose Thursday after a memo said the government would consider extending its tax exemption for new-energy vehicles purchases. The exemption was set to expire by the end of 2022. Local governments are also being asked to remove all local protectionist measures, and to work on adding parking spaces and charging stations for EVs in their urban renewal plans, the memo read.
The return of an Arctic survivor
A rugged new tool watch marks 70 years since the explorers of the British North Greenland Expedition set off for the icy wastes
BHP will face £5bn High Court lawsuit over Brazilian dam disaster
Some 202,600 claimants are suing over country’s biggest environmental disaster
A £5bn lawsuit brought against BHP by 202,600 Brazilian claimants who are suing over the South American country’s biggest environmental disaster can proceed in the English courts, three judges ruled on Friday.
The Court of Appeal ruled that the lawsuit, which will be one of the biggest cases by value in the English courts, can go ahead to trial. The judges overturned an earlier decision that the courts should not hear the case, which was filed in 2018.
The lawsuit centres around Brazil’s worst ever environmental disaster in 2015, when the Fundão Dam collapsed, releasing around 40mn cubic metres of tailings, a form of solid waste, from iron ore mining.
In the lawsuit, the Brazilian claimants allege their homes and livelihoods have been damaged by the disaster and are claiming compensation of at least £5bn.
The collapse and flood killed 19 people, destroyed entire villages, and created damage to the River Doce system over its entire course to the sea some 400 miles away. The dam was owned and operated by Samarco, a Brazilian company jointly owned by Vale and BHP Billiton Brasil, part of BHP group.
It was followed less than four years later by another dam disaster at an iron ore mine owned solely by Vale. The Brumadinho accident in 2019 killed 270 people and resulted in big investors putting pressure on miners to adhere to new safety standards.
The Court of Appeal said the overlap with the Brazilian legal proceedings was “relatively limited.” “The vast majority of claimants who have recovered damages have only received very modest sums in respect of moral damages for interruption to their water supply,” the judges said.
Tom Goodhead, managing partner of PGMBM, the law firm representing the claimants said: “This is a monumental judgment that means the victims of the worst environmental disaster ever seen in Brazil are a step closer to justice. ”
BHP said Friday’s judgment was a decision about jurisdiction and not related to the merits of the claim. The Australian based miner said it would review the ruling carefully and consider its next steps, which include an appeal to the Supreme Court.
“We will continue to defend the action, which we believe remains unnecessary as it duplicates matters already covered by the existing and ongoing work of the Renova Foundation under the supervision of the Brazilian Courts and legal proceedings in Brazil,” the company said. “By the end of this year, around £4.5bn will have been spent in Brazil on reparation and compensation programs for those impacted by the dam collapse.”
BHP and Vale set up the Renova Foundation in 2016 with Vale to carry out repair and compensation work. BHP believes the quickest and fairest way to settle claims is through the programmes managed by the foundation.
Vale declined to comment.
Tyler Broda, analyst at RBC Capital Markets, said Friday’s ruling was a “modest negative”.
“The process is still likely to take some time, especially if BHP pursues an appeal to the UK Supreme court,” he said. “In addition, there is considerable potential that these claims are covered by Renova.”
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