FT : Boris Johnson’s Mustique holiday probed by standards watchdog

Boris Johnson’s Mustique holiday probed by standards watchdog
Commissioner looking at PM’s declaration of luxury break he took with Symonds in early 2020

Boris Johnson is under investigation by the parliamentary standards watchdog over claims he may have broken rules in the way he declared a new-year holiday in the Caribbean.

Kathryn Stone, the parliamentary standards commissioner, is looking at the UK prime minister’s declaration of a luxury break on the island of Mustique in early 2020, which he took with his partner Carrie Symonds.

Downing Street has insisted that Johnson had complied with “all relevant transparency requirements” for the holiday — which he took after his election victory in December 2019 — in the register of MPs’ interests.

In the entry Johnson said he accepted “accommodation for a private holiday for my partner and me, value £15,000”, and said it had been provided by the Conservative party donor David Ross.

In February 2020 a spokesman for Ross, co-founder of Carphone Warehouse, told the Daily Mail: “Boris wanted some help to find somewhere in Mustique, David called the company who run all the villas and somebody had dropped out.

“So Boris got the use of a villa that was worth £15,000, but David Ross did not pay any monies whatsoever for this.”

A spokesman for Ross said on Monday: “Mr Ross facilitated accommodation for Mr Johnson on Mustique valued at £15,000. Therefore, this is a benefit in kind from Mr Ross to Mr Johnson, and Mr Johnson’s declaration to the House of Commons is correct.”

Johnson’s spokesman said the prime minister had “transparently declared a benefit in kind in the Commons register of interests”, adding that Ross’s spokesman had said the prime minister’s entry was correct.

But Labour’s deputy leader Angela Rayner, said the inquiry into the holiday was more evidence of “sleaze and dodgy dealings” following the dispute over who initially paid for the refurbishment of Johnson’s Downing Street flat.

“The public have a right to know who paid for Boris Johnson’s luxury Caribbean holiday and the renovation of his flat,” she said. “Most importantly, we need to know what these donors were promised or expected in return for their generosity.”

Stone confirmed on Monday she was looking into the Mustique holiday as one of a number of investigations launched into the conduct of nine MPs.

The Commons code of conduct states that MPs must be “open and frank in drawing attention to any relevant interest”. Johnson could be ordered to apologise to the Commons if he was deemed to have broken the rules; serious offences can see an MP suspended.

Stone has also been asked by Labour MP Margaret Hodge to look into Johnson’s financial arrangements regarding the refurbishment of the Downing Street flat. The prime minister says he paid for the work, but has refused to say who initially met the bill.

Ft : Société Générale to boost corporate banking after trading pain

Société Générale to boost corporate banking after trading pain
French lender shifts focus of investment arm towards finance and advice

Société Générale plans to shift the focus of its investment bank towards corporate finance and advice as the French lender tries to move away from the kind of trading risks that pushed it to a first full year loss in decades.

The company said on Monday it would push “a client-centric strategy”, allocating capital “in favour of financing, advisory and transaction banking” to cut its reliance on more volatile trading flows.

The pledge comes after its equity derivatives business, which has been core to the bank’s identity for decades, pushed SocGen to a loss last year after the pandemic forced companies to cancel dividend payments, tearing holes in some of the structured products the bank sold to clients.

As a result, SocGen slashed the level of risk being taken by its equity division. It culled top ranks and created new products in an overhaul that sacrificed up to €250m in revenue but should reduce the cost base by €450m by 2023.

This part of the business has since rebounded to its best performance since 2015, helping boost SocGen profits in the first quarter and easing pressure for deeper changes.

The lender is now going to try to “deliver predictable performance” from its markets business, division head Jean-François Grégoire told investors on Monday.

“Last year, impacts from a unique market dislocation led us to review the management of structure products that were clearly too problematic in extreme market conditions,” Grégoire said. “We quickly decided to de-risk.”

SocGen said on Monday that its overall global banking and investor solutions business (GBIS), which encompasses both trading and investor funding, will now target return on “normative equity” — the bank’s measure of adjusted returns — of more than 10 per cent from 2023, against about 7 per cent currently.

The bank is seeking to achieve average revenue growth of approximately 3 per cent between 2020 and 2023 for the financing and advisory businesses while the markets business is aiming for “stability”.

SocGen wants to “normalise” revenues in GBIS at about €5bn in 2023, while targeting a cost base of €5.5bn-€5.7bn in 2023. It stood at about €5.8bn in 2020.

“All in, incorporating SocGen’s new target fully would lead to a [roughly] 8 per cent lift to consensus 2023 earnings,” noted analysts at Morgan Stanley.

SocGen’s shares were up almost 3 per cent in early afternoon trading in Paris, bringing their gains this year to almost 50 per cent.

However, the bank’s share price, at €25.64, is still below the point at which chief executive Frédéric Oudéa took over in 2008, after the Jérôme Kerviel rogue trading scandal.

Oudéa’s current term as CEO runs until 2023 and the revamp of the investment bank is one part of a strategy shift that will be key to his legacy.

>>> US Gapping down

Gapping down
In reaction to earnings/guidance
:

  • KOD -6.5%, DMS -5.4%, COTY -4.6%, CEVA -3.7%, FF -2.9%, APD -1.9%, ASX -1.8% (April sales), QURE -1.7%, BHVN -1.7%, MAR -1.5%, KOS -1.3%, TSM -1.1% (April sales)

Other news:

  • INSM -13.3% (intends to offer and sell $250 million of its common stock and $500 mln convertible senior notes due 2028 in separate concurrent underwritten public offerings)
  • CLSD -4% (announces multiple poster presentations at the association for Research in Vision and Ophthalmology 2021 Virtual Meeting)
  • DVAX -2.7% (proposed private offering of $200 million of convertible senior notes)
  • PK -2% (to sell two assets for combined gross proceeds of $149.0 million, or approximately $360,000 per key)
  • JFIN -1.2% (files for $200 mln mixed securities shelf offering)
  • LCII -1% (announces proposed offering of $400 million aggregate principal amount of convertible senior notes)

Analyst comments:

  • FB -1.2% (downgraded to Neutral from Buy at Citigroup)
  • GOOG -0.9% (downgraded to Neutral from Buy at Citigroup)
  • ORCL -0.9% (downgraded to Equal Weight from Overweight at Barclays)
  • CAH -0.8% (downgraded to Neutral from Outperform at Robert W. Baird)
  • INTC -0.7% (downgraded to Underweight from Neutral at Atlantic Equities)

>>> US Gapping up

Gapping up
In reaction to earnings/guidance
:

  • PRTY +9.3%, BNTX +9.2% (also to establish first regional hub in Asia Pacific region in Singapore), MX +5.7%, WB +4.4%, J +3.6%, CRNC +3.4%, ENR +2.9%, GEO +2.4%, VTRS +1.8%, UNVR +1.4%, DBD +1.3%, TSN +1.2%, DUK +1.1%

Other news:

  • OFIX +8.6% (announces the expansion of its pediatric offerings with the U.S. Food and Drug Administration 510(k) clearance of the OrthoNext)
  • MBIO +6.9% (FDA has accepted the Company's Investigational New Drug application to initiate a Phase 1/2 multicenter study to assess the safety, tolerability and efficacy of MB-106)
  • LPI +4.4% (announces transaction of acquisition and divestiture) MAN +4.3% (increase semi-annual dividend to $1.26/share from $1.17/share)
  • SJ +4.3% (signed a memorandum of understanding (MOU) with Beijing Douneng Maihuo Culture Media)
  • SIC +1.9% (divests RDS segment to Interior Logic Group for $215 mln; updates outlook)
  • ALT +1.4% (announces "positive" results from a preclinical study of AdCOVID in a SARS-CoV-2 challenge model of infection)
  • COHU +1% (divests Printed Circuit Board Test business)
  • STPC +1% (Benson Hill to become publicly listed through business combination with Star Peak Corp II) 

Analyst comments:

  • IHRT +4.6% (upgraded to Overweight from Neutral at JP Morgan)
  • MGI +3.5% (upgraded to Neutral from Underweight at JP Morgan)
  • SEDG +2.1% (upgraded to Buy from Neutral at BofA Securities)
  • LYV +2% (upgraded to Buy from Hold at Jefferies)
  • CREE +1.5% (upgraded to Neutral from Underweight at JP Morgan)
  • LYFT +1.4% (upgraded to Outperform from Neutral at Daiwa Securities)
  • CCOI +1.3% (upgraded to Outperform from Sector Perform at RBC Capital Mkts)
  • SBRA +1.1% (upgraded to Buy from Hold at Stifel)
  • VCTR +1% (upgraded to Outperform from Mkt Perform at Keefe Bruyette)

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up:
    • BNTX +8.8%, LPI +4.5%, MAN +4.3%, HCIC +3.3%, WB +3.1%, UNVR +3%, LQDA +1.1%, COHU +0.8%
  • Gapping down:
    • DMS -5.4%, TLRY -3.4%, VJET -2.7%, SIC -2.2%, PK -1.9%, ASX -1.8%, IMGN -1.8%, APD -1.7%, JFIN -1.2%, TSM -1.1%, MRUS -0.5%, CDXS -0.5%, XLNX -0.5%

FT : Volvo and Daimler bet on hydrogen truck boom this decade

Volvo and Daimler bet on hydrogen truck boom this decade
Swedish and German groups expect fuel to challenge diesel in long-distance freight

Hydrogen-powered heavy trucks capable of driving long distances are likely to reach a tipping point towards the end of the decade, according to the heads of the world’s two biggest truckmakers.

Martin Daum, chair of industry leader Daimler Truck, told the Financial Times that while diesel trucks would dominate sales for the next three to four years, hydrogen would take off as fuel between 2027 and 2030 before going “steeply up”.

Martin Lundstedt, chief executive of Volvo Group, which has just bought into a hydrogen joint venture with Daimler, said that after fuel-cell production started in 2025 there would be a “much steeper ramp-up” towards the end of the decade.

The Swedish truckmaker is aiming for half its European sales in 2030 to be trucks powered by batteries or hydrogen fuel cells, while both groups want to be fully zero emissions by 2040.

The German and Swedish groups’ joint venture, Cellcentric, will start fuel cell production in 2025. Both truckmakers will use electric batteries predominantly for smaller trucks as well as heavier vehicles based in one place that can recharge overnight.

But hydrogen is viewed as essential for the long-distance, heavy trucks that criss-cross Europe, the US and other parts of the world delivering goods to multiple destinations and where refuelling stops need to be as short as possible.

Daum, who predicted the split between hydrogen and battery sales would end up being about 50-50, said that to move “40 tonnes up a hill you need an enormous amount of energy” and that after diesel, the most efficient fuel for such tasks, hydrogen was the best option.

“Fuel cells and hydrogen will play a super-important role,” Lundstedt added.

Both men urged governments not just to ensure that the necessary fuel infrastructure would be in place for hydrogen but also to provide sufficient incentives for transport companies to shift to greener trucks.

About 300 high-performance hydrogen refuelling points would be needed in Europe by 2025 and 1,000 by 2030, the companies said.

Of the need to build the infrastructure at the same time as the trucks, Lundstedt said: “It can be seen as a chicken and egg. But we have said we will go for it. We will deliver the chicken. Someone else can deliver the egg.”

Conceding that hydrogen and battery-powered trucks would remain more expensive than those powered by diesel “at least for the next 15 years”, Daum noted that customers typically spent three to four times more on fuel over a truck’s lifespan than on the vehicle itself.

He added that early adopters — who would otherwise have to “pay a penalty” with high prices — could be helped by government support through the EU’s Green Deal or other incentives. But he said that by the tipping point in 2027, a proper price for CO2 would be better as there would be too many trucks for subsidies.

Lundstedt stressed the truckmakers’ commitment was also important in terms of helping develop green hydrogen, made using renewable energy rather than natural gas as is common now, as other heavy industries such as shipping and steel consider the fuel. “This joint venture is a clear stick in the ground” from the truckmakers, he said.

>>> Europe : Brokers Upgrades & Downgrades - 10th of May 2021 V2(+)

>>> Up
* Amadeus Raised to Overweight at JPMorgan; PT 70 euros
* Berkeley Raised to Overweight at JPMorgan; PT 5,400 pence
* Centamin Raised to Outperform at RBC; PT 140 pence
* Fresnillo Raised to Sector Perform at RBC; PT 950 pence
* GNP Energy Raised to Buy at Norne Securities; PT 57 kroner
* Victrex Raised to Overweight at JPMorgan; PT 2,800 pence (+)

>>> Down
* ISS Cut to Neutral at Goldman; PT 150 kroner

>>> Initiation
* Ekopak Rated New Buy at Berenberg; PT 19.70 euros
* Embellence Group Rated New Buy at Handelsbanken; PT 52 kronor
* Semperit Rated New Buy at GSC Research; PT 55 euros

>>> Call
* Adidas Relative Valuation Discount Narrower on China Relief: RBC
* New Unicaja, Liberbank May Be Worth EU3b, Citi Says (+)
* PostNL 1Q Reveals ‘Better-Than-Expected’ Trends, Jefferies Says (+)

>>> Stoxx 600 Pre-Market Indications

  • ITV (IJ7 TH) +6.6%
    • ITV Set to Rule Out Takeover of BT Sport: The Times
  • Carnival Plc (POH1 TH) +3.5%
    • Watch Europe Travel Stocks After U.K. Announes ‘Green List’
  • Nel (D7G TH) +2.9%
    • Watch Oil and Gas Stocks After Cyberattack Hits U.S. Pipeline
  • Anglo American (NGLB TH) +2.8%
    • Watch Miners as Iron Ore Surges, Copper Hits Another Record
  • Glencore (8GC TH) +2.8%
  • Nibe (NJBC TH) +2.3%
  • Rio Tinto (RIO1 TH) +2.3%
  • Vestas (VWSB TH) +2.3%
  • CD Projekt (7CD TH) +2.1%
  • Philips (PHI1 TH) +1.9%
  • Corbion (CSUA TH) -1%
  • AstraZeneca (ZEG TH) -1.5%
  • IAG (INR TH) -2.6%