(MAkor) VIV update


Update on Vivendi post Q3 results (CIX updated : .H-VIV%)

 

Since the UMG spin-off, Vivendi:

 

  • Announced on Sep 23rd that they had Increased their stake in Multichoice to 15.4% (On October 1st, Public Investment Corporation SOC a state owned entity announced that they had acquired a 15.2% stake)
  • Increased their stake in Lagardere to 27.6% (as per agreement with Amber)
  • Repurchased 39.0 million shares, i.e., 3.52 % of the share capital, for a total amount of €464 million.
    • As of October 20, 2021, Vivendi directly held 59.7 million of its own shares, i.e., 5.38% of the share capital
    • Vivendi can still buy up to 7.6m shares under current SBB program agreed by the board
    • Vivendi’s board can still increase this 7.6m number up to a maximum of 51.2m (max 10% of capital agreed at last AGM)
    • If Vivendi were to keep on buying stock at the same rythm (11% of average traded volume since Sep 24), they would be done by Nov 25
    • However, Vivendi has paid a max price of €11 (average price paid since UMG spin-off of €10.87) while the max price that can be paid is €29

 

Updated SOP

 

We assume the 59.7m treasury shares have been cancelled hence reducing the number of shares outstanding to 1,049m

 

 

Opinion

 

Vivendi has performed well since the UMG spin-off

Q3 results are quite positive on all fronts (no change in our SOP to the valuation of Canal +, Havas or Editis)

Canal + revenues were announced 3.2% of consensus which is probably the reason for the positive market reaction today

Vivendi currently trades at a 29.9% discount to NAV

 

We would still keep the position as we believe the risk reward is attractive:

  • Business fundamentals are ok
  • You are protected on the downside with the buy- back program as Vivendi is buying up to €11

 

We believe Vivendi will exhaust its Buy-back capacity and could then launch an OPRA at a small premium for the remaining 40% they are allowed to buy (50% - 10% SBB)

If Vivendi were to launch an OPRA at a 10/15% premium (€12.7/13.3) to current price for the remaining shares they can buy and then cancel the shares acquired (OPRA + SBB), this would allow Bollore to increase its stake to approx. 60%

 

We realise people are uncomfortable being “minority shareholders in a Bollore controlled company” but:

  • The price offered in the OPRA needs to be at a premium in order to convince some shareholders to tender. Would you not tender if you are offered a price of €12.7/13.3? We believe some would
  • If the OPRA price offered is too low, Bollore will not achieve its goal to increase its stake and potentially reach 50%
  • Bollore would increase its stake and take full control at a average 20/24% discount to NAV which makes sense financially (he is using the SBB program to average down the price paid)
  • In addition, an unlevered Vivendi is inefficient and the OPRA might sort this out
  • An OPRA for the remaining 44.6% at €13 would cost Vivendi €6.4bn but the 10% UMG stake represents 70% of that amount so it could be financed

 

Available if you have any questions

 

David

 

>>> US Gapping down

Gapping down
In reaction to earnings/guidance:

  • SNAP -20.2%, CMBM -16.3% (lowers Q3 rev guidance due to supply constraints), INTC -10% (also CFO to retire), BOOM -10%, VFC -7.7%, USX -4.4%, SAM -3.7%, WHR -3.3%, VICR -2.9%, HCA -1.7%, ROP -0.9%

Other news:

  • MTCR -49.3% (reports interim results from Phase 2a trial of MET642; also announces strategic re-prioritization of clinical development programs)
  • ISEE -4.5% (prices offering of 9 mln shares of common stock at $16.75 per share)
  • MGNI -4.4% (online ad stocks lower on SNAP guidance)
  • TTD -4.4% (online ad stocks lower on SNAP guidance)
  • TWTR -3.9% (online ad stocks lower on SNAP guidance)
  • PUBM -3.8% (online ad stocks lower on SNAP guidance)
  • FB -3.6% (online ad stocks lower on SNAP guidance)
  • PINS -2.6% (online ad stocks lower on SNAP guidance)
  • ROKU -1.9% (online ad stocks lower on SNAP guidance)
  • GOOG -1.6% (online ad stocks lower on SNAP guidance)

Analyst comments:

  • FCX -0.7% (downgraded to Hold from Buy at Deutsche Bank)
  • ALLY -0.6% (downgraded to Neutral from Overweight at Piper Sandler)
  • LUV -0.6% (downgraded to In-line from Outperform at Evercore ISI)

>>> US Gapping up

Gapping up
In reaction to earnings/guidance:

  • MAT +6%, ALV +4.6%, ARAY +3.4% (issues upside SepQ and FY22 rev guidance), CLF +3.4%, WSFS +2.8%, GBCI +2.7%, SMPL +2.6%, OLN +2.3%, AXP +1.6%, CMG +1%, CE +0.8%

Other news:

  • ATHA +9.1% (CEO resigns; names new CEO and COO)
  • VLD +2.9% (stock offering)
  • ENDP +2.4% (Presents new XIAFLEX data)
  • AMD +2% (in sympathy with weak Intel results)
  • KTB +1.9% (increases dividend)
  • OLO +1.3% (to acquire Wisely)
  • ZIM +1.1% (acquires seven secondhand vessels)
  • FANG +1% (RTLR to acquire water midstream assets from parent FANG for $160 mln)

Analyst comments:

  • GLOP +4.4% (upgraded to Buy from Hold at Jefferies)
  • ZM +2.8% (upgraded to Overweight from Neutral at JP Morgan)
  • URBN +2.7% (upgraded to Buy from Neutral at Citigroup)
  • IVZ +1.2% (upgraded to In-line from Underperform at Evercore ISI)
  • LNN +1% (upgraded to Buy from Hold at Stifel)

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up:
    • ATHA +7.6%, MAT +6.3%, ARAY +3.4%, WSFS +2.8%, GBCI +2.7%, KTB +1.9%, AMD +1.9%, TMCI +1.4%, OLO +1.3%, REGN +1.2%, OLN +1.2%, PSN +0.6%, ZIM +0.6%, WAL +0.6%, WDC +0.5%, WRB +0.5%, ASB +0.5%
  • Gapping down:
    • MTCR -51.4%, SNAP -20.7%, CMBM -16.1%, BOOM -10%, INTC -9.8%, CRTO -8.4%, TTD -5.3%, MGNI -5.1%, TWTR -4.5%, USX -4.4%, FB -4.1%, SAM -4.1%, BJRI -3.9%, VICR -2.9%, PUBM -2.7%, MRNA -2.7%, PINS -2.6%, ROKU -2.6%, DVAX -2.1%, GREE -2%, GOOG -1.8%, WHR -1.1%, RAD -1%, IDA -0.9%, RHI -0.5%, PSMT -0.5%

>>> Europe : Brokers Upgrades & Downgrades - 22nd of October 2021

>>> Up
* BC Vaudoise Raised to Hold at Bank Vontobel; PT 73 Swiss francs
* Duni Raised to Buy at Handelsbanken; PT 140 kronor
* Elisa Raised to Neutral at JPMorgan; PT 57 euros
* Euronav Raised to Buy at ING; PT 11.15 euros
* Hays Raised to Buy at HSBC; PT 195 pence
* Iren Raised to Buy at Stifel; PT 3.20 euros
* OMV Raised to Buy at Raiffeisen Bank; PT 65 euros
* Orange Belgium Raised to Buy at HSBC; PT 23 euros
* RWE Raised to Buy at HSBC; PT 42 euros
* Voyageurs du Monde Raised to Outperform at Oddo BHF

>>> Down
* CareTech Cut to Hold at HSBC; PT 715 pence
* Epiroc Cut to Hold at Pareto Securities; PT 220 kronor
* Hannover Re Cut to Hold at SocGen; PT 165 euros
* HSBC Cut to Hold at Investec; PT 450 pence
* Mediobanca Cut to Equal-Weight at Barclays; PT 11.50 euros
* Orlen Cut to Hold at Raiffeisen Bank; PT 95 zloty
* Pearson Cut to Neutral at BofA; PT 700 pence

>>> Initiation
* ABB Rated New Hold at Vertical Research; PT 35 Swiss francs
* CureVac Rated New Hold at Deutsche Bank; PT $35
* Moderna Rated New Sell at Deutsche Bank; PT $250

>>> Call
* ‘Aggressive’ Dip Buying Leads to ~$25b Equity Inflow, BofA Says
* Encavis Raised to Buy, 2022 Seen More Exciting, Berenberg Says
* Essity’s 3Q Ebita in Line But Earnings Beat by 10%: Jefferies
* Howden Joinery Up to Buy at Peel Hunt on Expected Outperformance
* L’Oreal 3Q Sales ‘Gorgeous,’ Expect Shares to Rebound: Bernstein
* L’Oreal’s ‘Hugely Successful’ Rebalancing in Focus as 3Q Praised
* Sika 3Q Results Show Growth Momentum Continuing, Bergos Says
* French Caterer Sodexo Has Little Downside Risk From Report: Citi

>>> What to look at today - 22nd of October 2021

Asian stocks were steady Friday and the dollar slipped as a report that developer China Evergrande Group pulled back from the brink of default aided sentiment.
Rallies in China’s technology equities and property shares were among the more notable moves. Local media said Evergrande paid a dollar-bond coupon before a weekend deadline, easing concerns about possible contagion from any default by the firm. Chinese junk bonds and the Australian dollar climbed.
The S&P 500 edged up to a record overnight but the mood soured after the cash session when Snap Inc. -- owner of the Snapchat app -- tumbled on a tempered earnings outlook, hurting other technology shares in late trading. Nasdaq 100 futures retreated, S&P 500 contracts were little changed and European ones advanced.
The 10-year U.S. Treasury yield fell below 1.70% but remains higher for the week. The Federal Reserve is nearing a reduction in bond purchases and traders are ramping up bets on rate hikes to quell price pressures. Market-implied expectations for inflation have hit multiyear highs.
US After Hours INTC -8.6% falls on earnings; SNAP -21.9% also falls on earnings, spooking entire online ad space; WHR -2.3%, CMG -0.9% down modestly on earnings



Macro :
- Bitcoin ETF Is Already in Danger of Breaching a Limit on Futures
- Europe To Decide For Strict Basel III Rules: HB
- VIX Index Closes at Lowest Level Since Beginning of Pandemic

Keep an eye on :
- ADP FP : ADP 9M Revenue EU1.87B Vs. EU1.67B Y/y
- AI FP : Air Liquide 3Q Revenue Beats Estimates
- ATC NA : Altice Portugal Is Said to Draw Interest from Blackstone, CVC
- BILL SS : BillerudKorsnas 3Q Adjusted Ebitda Beats Estimates
- BOL SS : Boliden 3Q Adjusted Operating Profit Misses Estimates
- BOL FP : Bollore 3Q Organic Revenue +22%
- BC IM : Brunello Cucinelli 3Q Revenue Beats Estimates
- CABK SM : CaixaBank Signals Exit From $1.92 Billion Erste Stake
- CARM FP : Carmila 9M Gross Rental Income EU263.8M
- CERV IM : Cerved Holders Maven, Berry Request Special Div, Meeting Delay
- COV FP : Covivio Sees FY EPRA EPS Above EU4.20, Saw EU4.10 to EU4.20
- DANSKE DC : Danske Bank Cuts Deposit Rate for Private Clients to -0.7%
- DTE GY :T-Mobile Falls as Analyst Says Peers’ Results Signal Tough Setup
- DBAN GY ; Deutsche Beteiligungs AG Boosts FY Net Income Forecast
- DOM SS :
- EDF FP : French PM to Announce Steps to Ease Impact of Rising Fuel Costs
- ENGI FP : French PM to Announce Steps to Ease Impact of Rising Fuel Costs
- ENI IM : Italy’s Be Power to Be Listed With Eni Gas&Power: Messaggero
- EVS BB : EVS Broadcast Sees FY Rev. EU120m to EU130m, Saw EU115m-EU125m
- FGP LN : Firstgroup’s Lumo Electric Rail Services Are Already Selling Out
- FNAC FP : Fnac Darty 3Q Like-for-like Sales -0.5%
- HYPRO NO : HydrogenPro Told by H2V Normandy Project Cooperation to Cease
- IFX GY : Intel in Longest Winning Streak Since December Before Earnings
- IHG LN : InterContinental Hotels 3Q Comparable Hotel RevPAR Misses Est.
- IPS FP : Ipsos 3Q Organic Revenue +11.4%
- JD/ LN : JD Sports Fashion Buys 80% of Cosmos Sport
- BAER SW : Julius Baer CFO Enkelmann May Soon Be Leaving, IP Reports
- LI FP : Klepierre Boosts FY Group Net Current Cash Flow Per Share View
- TKWY NA : Just Eat Touts Turnaround Plan to Boost U.S., Widen Margins
- LSEG LN : LSE 3Q Data & Analytics Revenue GBP1.16B Vs. GBP1.16B Y/y
- OR FP :L'Oreal's Beauty Units Confirm Wide, Luxury-Led Recovery: React
- RCO FP : Remy Cointreau 2Q Revenue Beats Estimates
- RNO FP : Renault Sees 2021 Production Loss of Close to 500,000 Vehicles
- RIEN SW : Rieter Sees FY Sales About CHF900M
- SAN FP : Regeneron, Sanofi Dupixent Pivotal Phase 3 Met Primary Goals (1)
- SOBI SS : Sobi 3Q Ebita SEK1.17B Vs. SEK933M Y/y
- SCST SS : Swedish Company at Center of Chicken Crisis Appoints New CEO
- THULE SS : Thule 3Q Adjusted Ebit Misses Estimates
- UMG NA : K-Pop Group BTS Exits Columbia Records Deal For UMG: Billboard
- VIV FP : Vivendi’s Ad Unit Havas Propels Sales Higher After Music Spinoff
- VIV FP : Vivendi 3Q Shows Strong Momentum, Highlighted by Havas: Analysts
- WALLB SS : Wallenstam 3Q Rental Income Meets Estimates
- WHA NA : Wereldhave Sees FY EPS EU1.80 to EU1.85, Saw EU1.75 to EU1.85
- WIHL SS : Wihlborgs 3Q Rental Income Beats Estimates
- WISE LN : Wise Co-Founder Taavet Hinrikus Offers 11m Shares

>>> After Hours Summary: INTC -8.6% falls on earnings; SNAP -21.9% also falls on

After Hours Summary: INTC -8.6% falls on earnings; SNAP -21.9% also falls on earnings, spooking entire online ad space; WHR -2.3%, CMG -0.9% down modestly on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: MAT +5.2%, CE +2.8%, WSFS +2.7%, GBCI +2.6%, OLN +1.6%, ARAY +1% (issues upside SepQ and FY22 rev guidance), WAL +0.6%, WRB +0.5%

Companies trading higher in after hours in reaction to news: ATHA +4.9% (CEO resigns; names new CEO and COO), AMD +1.7% (in sympathy with weak Intel results), PSN +1.5% (announces award of a potential $1.1 bln contract by US Army), GREE +1.5% (announces new details regarding expansion plans), TMCI +1.5% (patent issued by USPTO), OLO +1.3% (to acquire Wisely), VLD +0.4% (stock offering), GCO +0.1% (names new CFO), KTB +0.1% (increases dividend)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: SNAP -21.9%, CMBM -11.2% (lowers Q3 rev guidance due to supply constraints), INTC -8.6% (also CFO to retire), USX -8.6%, BOOM -8.2%, OZK -5.7%, BJRI -3.2%, SAM -3.2%, VICR -2.9%, WHR -2.3%, CMG -0.9%, CSL -0.6%, SIVB -0.2%, RHI -0.1%

Companies trading lower in after hours in reaction to news: MTCR -49.1% (reports interim results from Phase 2a trial of MET642; also announces strategic re-prioritization of clinical development programs), MGNI -5.4% (online ad stocks lower on SNAP guidance), TTD -5.3% (online ad stocks lower on SNAP guidance), ISEE -4.8% (stock offering), FB -4.4% (online ad stocks lower on SNAP guidance), PUBM -4.2% (online ad stocks lower on SNAP guidance), TWTR -4% (online ad stocks lower on SNAP guidance), PINS -3.1% (online ad stocks lower on SNAP guidance), ROKU -3% (online ad stocks lower on SNAP guidance), GOOG -2.2% (online ad stocks lower on SNAP guidance), IDA -1% (increases dividend), FANG -0.5% (RTLR to acquire water midstream assets from parent FANG for $160 mln), ALTM -0.4% (will acquire BCP Raptor, parent of EagleClaw Midstream), JNJ -0.4% (CDC panel votes to endorse boosters for vaccines from Moderna and JNJ), RAD -0.4% (files mixed securities shelf offering), DVAX -0.3% (names new board chairman), SO -0.3% (announces revised schedule for Vogtle 3 & 4 nuclear expansion project), MRNA -0.2% (CDC panel votes to endorse boosters for vaccines from Moderna and JNJ), KFY -0.1% (to acquire Lucas Group)

>>> US Close Dow-0.02% S&P +0.30% Nasdaq +0.62% Russell +0.28%

Closing Stock Market Summary

There was no quit in the stock market on Thursday, as the S&P 500 (+0.3%) eked out intraday and closing record highs and extended its win streak to seven straight sessions. The Nasdaq Composite gained 0.6%, and the Russell 2000 gained 0.3%. The Dow Jones Industrial Average (-0.02%), however, closed flat. 

The mega-caps were the difference makers today, featuring an earnings-driven gain in Tesla (TSLA 894.00, +28.20, +3.3%), even as interest rates moved higher. The Vanguard Mega Cap Growth ETF (MGK 249.02, +1.76) rose 0.7%, and for comparison, the Invesco S&P 500 Equal Weight ETF (RSP 158.06, +0.19) increased just 0.1%. 

Tesla overcame an initial negative reaction and led the S&P 500 consumer discretionary sector (+1.4%) to a first-place finish. Every other sector, except energy (-1.8%), finished closer to their flat lines. Energy stocks followed oil prices ($82.49/bbl, -1.76, -2.1%) lower. 

Shares of IBM (IBM 128.33, -13.57, -9.6%) dropped nearly 10.0% after missing revenue estimates on flat year-over-year growth. IBM dragged on the Dow, and to a lesser extent, so did Dow Inc. (DOW 59.26, -0.63, -1.1%) following its earnings report. Earnings reactions were generally mixed. 

It's worth noting that the broad market firmed up into the close, as investors looked past those mixed earnings reactions, calls that the market was overextended on a short-term basis, and reports highlighting continued disagreement on infrastructure. Presumably, there were fears of missing out on a break-out rally in the S&P 500. 

Demand for shorter-term and longer-term Treasuries waned, as investors digested the implications from weekly initial and continuing claims declining to their lowest levels since the start of the pandemic. Initial jobless claims were 290,000 (consensus 303,000), coming in below 300,000 for the second straight week. 

The 2-yr yield rose five basis points to 0.43% amid increased expectations for the Fed to hike rates sooner than forecasted. The 10-yr yield rose four basis points to 1.68% amid expectations for improved economic growth. The U.S. Dollar Index increased 0.2% to 93.78. 

Reviewing Thursday's economic data:

  • Initial claims for the week ending October 16 decreased by 6,000 to 290,000 (consensus 303,000). That is the second straight week they have been below 300,000 and it is the lowest level of initial claims since March 14, 2020. Continuing claims for the week ending October 9 decreased by 122,000 to 2.481 million, and that, too, was the lowest level for continuing claims since March 14, 2020.
    • The key takeaway from the report is that it is apt to spur elevated expectations for October nonfarm payrolls since the data for initial claims coincides with the week in which the household survey is completed for the Employment Situation Report.
  • Existing home sales increased 7.0% m/m in September to a seasonally adjusted annual rate of 6.29 million ( consensus 6.05 million). Total sales in September were down 2.3% from a year ago.
    • The key takeaway from the report is that the median price increase was the lowest since December 2020, but even so, it continues to exceed income growth. The bottom line is that prices remain high, inventory remains tight, and first-time buyers continue to get squeezed by that dynamic.
  • The Conference Board's Leading Economic Index (LEI) increased 0.2% in September ( consensus +0.5%) after increasing a downwardly revised 0.8% (from 0.9%) in August.
  • The Philadelphia Fed Index for October decreased to 23.8 ( consensus 24.5) from 30.7 in September.

Looking ahead, investors will receive the preliminary IHS Markit Manufacturing and Services PMIs for October on Friday. 

  • S&P 500 +21.1% YTD
  • Nasdaq Composite +18.1% YTD
  • Dow Jones Industrial Average +16.3% YTD
  • Russell 2000 +16.3% YTD