Nikkei : BMW's Chinese partner reveals unauthorized loan guarantees for parent

BMW's Chinese partner reveals unauthorized loan guarantees for parent - https://s.nikkei.com/2Qsb1hi
Substantial bank deposits also missing from Brilliance Auto subsidiary

HONG KONG -- BMW's Chinese joint venture partner Brilliance China Automotive said Wednesday that a subsidiary has provided unauthorized guarantees for bank loans made to their bankrupt parent, Huachen Automotive Group Holdings.

In a disclosure after market hours, Hong Kong-listed Brilliance Auto revealed that its wholly owned unit Shenyang JinBei Automotive Industry Holdings (SJAI) has guaranteed a total of 5.89 billion yuan ($900 million) for Huachen's borrowing from four mainland banks.

Huachen, owned by the Liaoning provincial government, entered bankruptcy proceedings last November after defaulting on onshore bonds. Its bankruptcy proceedings, along with other prominent defaults in China last year, sent shock waves through the bond market by destroying the notion that Chinese state-owned enterprises could not fail.

The actual amount of loans owed by Huachen to the four banks is 3.75 billion yuan. Brilliance Auto did not provide further details of these loans, including the interest rates and other terms or when the guarantees were made.

Banks have initiated legal proceedings against SJAI. The case opened by Harbin Bank is scheduled to have its first hearing on April 26, while those for Export-Import Bank of China and China Everbright Bank have yet to be scheduled. Huaxia Bank's position on legal action is not known.

Brilliance Auto also disclosed that a substantial amount of SJAI's bank deposits were missing. According to a letter received by the company's auditors from Shengjing Bank on Tuesday, total bank deposits were 1.73 billion yuan less than the amount listed in SJAI's books. A 650 million yuan structured deposit was also missing, although it was unclear whether this was part of the total missing amount.

In addition, SJAI has provided 650 million yuan of loan guarantees to two unspecified companies.

According to Brilliance Auto's annual report last April, SJAI has run the joint venture with BMW since March 2003. The venture -- called BMW Brilliance Automotive -- operates two vehicle assembly plants, a research and development center and an engine factory in Shenyang, the capital city of Liaoning Province.

Brilliance Auto said in the statement attributed to Chairman Wu Xiaoan that the board was "not aware" of these unauthorized guarantees until it was notified by the auditors recently. Similarly, the board said it "only came to notice" these missing deposits and additional guarantees on Tuesday when it received a letter from its auditors.

The board on Tuesday formed an independent committee comprised of its two outside non-executive directors to investigate the case with an independent firm. The board seeks to learn "whether there are any additional unauthorized guarantees apart from those identified so far" as well as the reasons for and consequences of these deals.

Brilliance Auto said on March 31 that it was unable to publish its annual results by that day. The company said the delay was caused mainly by "certain unauthorized guarantees and resulting legal proceedings involving a subsidiary," but did provide further details.

Failing to meet the deadline for publishing annual results constitutes a breach of the Hong Kong stock exchange's listing rules, and trading in Brilliance Auto shares has been suspended. The company has said it would be unable to release the results before the end of April. Shares last traded at 7.30 Hong Kong dollars on March 30.

Huachen has been in bankruptcy proceedings since last fall under the Shenyang Intermediate People's Court. The court ruled in March in favor of merging Huachen with 11 other group companies in a joint rehabilitation. The first creditors conference is scheduled for April 20, according to the court.

Huachen's former chairman, Qi Yumin, was put under investigation in early December by the Central Commission for Discipline Inspection, China's most powerful graft buster, over a suspected violation of discipline. In a brief statement at the time, CCDI alleged Qi was "involved in serious violation of discipline and law" -- a phrase that typically implies the investigation is related to some form of corruption. No further details have been provided.

WSJ : Luxury Brands Are Helped By a Lack of Other Spending Options

Luxury Brands Are Helped By a Lack of Other Spending Options
Louis Vuitton’s owner LVMH grew sales by an impressive 30% in the first quarter of this year. But designer brands’ share of consumer spending is abnormally high.

For an industry traditionally dependent on tourism and consumer optimism, many luxury brands have done surprisingly well during the pandemic. A caveat is that shoppers will soon have more choice about where to spend their cash.

The world’s biggest luxury company, LVMH Moët Hennessy Louis Vuitton, LVMUY 4.87% said late Tuesday that sales increased by a remarkable 30% in the three months through March compared with the same period of 2020, stripping out the impact of exchange-rate and portfolio changes. That isn’t just the effect of the pandemic sweeping across the world early last year: LVMH also said its first-quarter sales were up 8% on the same apples-for-apples basis versus the same period of pandemic-free 2019.


The numbers, which easily beat analysts’ forecasts, lifted the Paris-listed stock 3% Wednesday morning. The relatively modest reaction follows steep gains in recent months that have made the owner of Louis Vuitton and Christian Dior Europe’s most valuable listed company, a position long occupied by Swiss food giant Nestlé.

LVMH has been well managed during the crisis. It took advantage of strong demand for its goods in Asia, where sales increased by 86% in the first quarter. The business renegotiated rents in its stricken travel-retail unit and spent on marketing when rivals trimmed back.


But it also got a boost from consumers’ lack of options. The closure of hotels, expensive restaurants and a slump in international travel meant wealthy shoppers have been forced to consume goods rather than services. Management said parts of the business also benefited from fiscal stimulus: Americans spent lavishly on its cognac and champagne brands, contributing to 23% overall growth in the U.S. during the first quarter.

There is still plenty of pent-up cash. The U.S. savings rate was 13.6% in February, compared with 8.3% in the same month of last year, according to the Bureau of Economic Analysis. Lockdowns have also pushed up Europe’s savings rates. The risk for fancy handbags is that shoppers will have more choice about how to part with that cash as economies reopen.

Europe’s top luxury companies, LVMH, Kering, Hermès and Compagnie Financière Richemont, have defied dire predictions a year ago that the industry would take a long time to recover. The issue for new investors is that the stocks are at records at a time when other industries may start revving up. Luxury brands are currently enjoying more than their fair share of consumers’ wallets.

>>> US Gapping down

Gapping down
In reaction to earnings/guidance:

  • BBBY -8.7%, SCR -5.8%, FRC -1.6%, JPM -0.6%

Other news:

  • DISCK -6.6% (Credit Suisse reportedly selling 19 mln share block of DISCA, and 22 mln share block of DISCK, according to CNBC's David Faber)
  • DISCA -4.4% (Credit Suisse reportedly selling 19 mln share block of DISCA, and 22 mln share block of DISCK, according to CNBC's David Faber)
  • STSA -3.3% (stock offering)
  • SFIX -3% (Founder and CEO to transition to Exec Chairperson; Elizabeth Spaulding will become CEO)
  • AL -1.1% (announces delivery of one new Airbus A321-200neo LR)
  • NGD -1.1% (Q1 operations)
  • AVNW -1% (files for $200 mln mixed securities shelf offering)

Analyst comments:

  • SYF -1.4% (downgraded to Perform from Outperform at Oppenheimer)
  • SLG -1.1% (downgraded to Underperform from Neutral at BofA Securities)

>>> US Gapping up

Gapping up
In reaction to earnings/guidance:

  • CTRN +8.3%, LOVE +8%, FLXN +5.3% (guides to Q1 ZILRETTA sales of $24.6 mln), TEAM +3.8% (guides MarQ revs well above consensus, but co believes it's short-term event-driven), SAP +3.4% (raises FY21 outlook reflecting the strong new cloud business performance), BRKR +1.5% (issues upside Q1 revenue guidance), GS +1.5%, PKI +0.9% (issues upside Q1 revenue guidance), WAFD +0.6%

Other news:

  • GALT +30.3% (Phase 1 clinical research for Belapectin published in Journal for ImmunoTherapy of Cancer)
  • GLSI +15% (announces update of GP2 phase III clinical trial design at the 2021 AACR Annual Meeting)
  • MBRX +12.4% (announced that the FDA has granted Rare Pediatric Disease Designation to its p-STAT3 inhibitor, WP1066, for the treatment of ependymoma)
  • PRQR +4.7% (announces publication in Nature Medicine)
  • NKLA +4.6% (Nikola Corporation IVECO and OGE announce intent to accelerate the deployment of hydrogen infrastructure and fueling solutions)
  • TECH +3.7% (inked a license agreement for use of a proprietary Bio-Techne antibody by Xencor (XNCR))
  • PFMT +3.4% (CMS awarded Performant an 8.5 year contract)
  • MRNA +3.2% (provides clinical and supply updates on COVID-19 vaccines)
  • MN +2.9% (reports March AUM of $21.1 bln)
  • DNN +2.8% (announces discovery of high-grade uranium mineralization at mcclean lake south)
  • GME +2.5% (announces voluntary early redemption of senior notes)
  • AZN +1.7% (Tagrisso receives approval in China)
  • DKNG +1.5% (DraftKings and PGA TOUR expand on existing commercial partnership)
  • SQ +1.3% (extends Square Loans to Australia)
  • VCTR +1% (reports March total AUM of $154.3 bln)

Analyst comments:

  • FOLD +5.3% (upgraded to Overweight from Neutral at Cantor Fitzgerald)
  • GLPG +4.3% (upgraded to Overweight from Equal Weight at Barclays)
  • JBLU +3.1% (upgraded to Overweight from Underweight at JP Morgan)
  • OXY +2.8% (upgraded to Buy from Neutral at MKM Partners)
  • SAVE +2.3% (upgraded to Overweight from Underweight at JP Morgan)
  • SNAP +2.2% (upgraded to Outperform from Neutral at Wedbush)
  • FROG +0.9% (upgraded to Hold from Sell at Summit Insights)
  • LOW +0.8% (upgraded to Overweight from Neutral at Atlantic Equities)

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up:
    • GALT +26.1%, PFMT +6%, FLXN +5.7%, GME +5.2%, NKLA +5%, SAP +3.8%, MN +2.9%, ENDP +2.8%, PRQR +2.2%, BRKR +2.1%, TEAM +2%, AZN +1.6%, MRNA +1.5%, VCTR +1%, WAFD +0.6%, PKI +0.5%
  • Gapping down:
    • SCR -8.1%, DISCK -6.1%, DISCA -4%, STSA -3.3%, GLSI -2.5%, SFIX -2%, NGD -1.7%, AL -1.1%, NVAX -0.7%

FT : O2-Virgin Media £31bn merger cleared by UK competition watchdog

O2-Virgin Media £31bn merger cleared by UK competition watchdog
Telecoms deal agreed last year judged unlikely to lead to higher prices

The UK competition watchdog has provisionally cleared Virgin Media’s £31bn tie-up with mobile operator O2 after finding it was unlikely to lead to reduced competition or higher prices for wholesale mobile services.

Liberty Global and Spanish group Telefónica, the respective owners of Virgin Media and O2, struck a deal to combine their UK operations in May 2020, which will unite the country’s second-largest broadband network with its largest mobile operator. 

“The deal is unlikely to lead to higher prices or a reduced quality of mobile services — meaning customers should continue to benefit from strong competition,” said Martin Coleman, Competition and Markets Authority panel inquiry chair.

Initial clearance by the CMA was widely expected within the telecoms industry after regulators allowed BT to acquire EE, a similar broadband-mobile deal, for £12.5bn in 2016.

Virgin Media’s combination with O2, structured as a 50-50 joint venture, will create a stronger competitor to BT in the UK market and signals a fresh wave of consolidation within the European telecoms industry. 

The CMA fast-tracked the landmark deal to an in-depth investigation in December at the companies’ request. Its probe looked at whether the tie-up would affect the market for “virtual” operators that use mobile networks such as O2’s to offer services to customers. HMD Global, the Finnish phonemaker, agreed a deal last week to launch in the UK using the EE network.

The CMA said on Wednesday that there would still be a choice of companies providing mobile networks for virtual operators to use, meaning O2 would be forced to maintain a competitive service.

The regulator also said Virgin Media was unlikely to be able to raise costs for the supply of leased lines — known as backhaul — to mobile operators in a way that would result in higher charges for customers. It concluded there were also other players in the market offering the same service, such as BT’s Openreach.

Leased lines connect mobile masts to the telecoms grid and are set to become increasingly important in the 5G era due to the large volumes of data being transported over the network. 

Liberty Global and Telefónica said in a joint statement that they “continue to work constructively with the CMA to achieve a positive outcome and continue to expect closing around the middle of this year”. The two companies have already started preparing to integrate after naming Lutz Schüler, the head of Virgin Media, as chief executive of the combined company last week. 

The competition investigation was one of several which Brussels and the UK tussled for control over in the run-up to Brexit, when the CMA became an antitrust regulator in its own right.

9to5 : Kuo on iPhone 14... Iphone 13 not realeased yet and still obsolete....


Kuo: iPhone 14 Pro to feature significant camera upgrades, including 48-megapixel sensor and 8K video recording

In addition to claiming that the iPhone mini screen size is no more, Kuo detailed some impressive camera specs for the 2022 iPhones.

He reports that the standard rear cameras on the iPhone 14 Pro and iPhone 14 Pro Max will be upgraded to 48-megapixels, an increase from the 12-megapixel sensor in iPhone 12.

As a reminder, Kuo expects four models of iPhone 14 in 2022: two 6.1-inch phones and two 6.7-inch phones. Like today, Apple would designate a 6.1-inch and 6.7-inch model as a high-end ‘Pro’ option.

Kuo seems confident that the 48-megapixel spec is only destined for the more expensive Pro models. It’s not clear if the lower-end non-Pro 6.1-inch and 6.7-inch models would also see a jump in megapixels (less than 48MP) or if the camera quality would improve in other ways. Kuo does not also discuss details of the 2x zoom or ultra–wide lenses, suggesting the 48 megapixel upgrade is exclusive to the main wide camera.

Although the sensor is 48 megapixels, it is possible that output images from the iPhone will still be 12-megapixels in resolution. Apple may opt to use a smart scaling algorithm that takes the raw 48-megapixel data and creates a 12-megapixel output image, with more detail and less noise. This is called ‘four cell merge output mode’ and used today by some high-end Android phones.

Moreover, the raw size of each pixel will increase to about 2.5um, significantly larger than the 1.7um pixels in iPhone 12. Bigger pixels means the phone can take in more light, reducing noise. (The iPhone 13 later this year is expected to maintain 12 megapixel resolution but increase pixel size to 2um.)

Kuo believes the video camera system will also be upgraded for the iPhone 14, supporting 8K recording for the first time. 8K would be available on all four models of iPhone 14.

>>> Europe : Brokers Upgrades & Downgrades - 14th of April 2021

>>> Up
* Daily Mail Raised to Neutral at Citi
* Faurecia SE Raised to Buy at HSBC; PT 57 euros
* Galapagos Raised to Overweight at Barclays; PT 80 euros
* Glencore Raised to Buy at Goldman; PT 350 pence
* Restaurant Group Cut to Neutral at JPMorgan; PT 120 pence
* Sandvik Raised to Sector Perform at RBC; PT 210 kronor
* Total Raised to Overweight at JPMorgan; PT 51 euros
* Tryg Raised to Market Perform at KBW; PT 160 kroner
* Tullow Raised to Hold at HSBC; PT 43 pence

>>> Down
* Deutsche Beteiligungs AG Cut to Accumulate at SRC Research
* Merck KGaA Cut to Reduce at HSBC; PT 128 euros
* Telefonica Deutschland Cut to Underweight at Morgan Stanley

>>> Initiation
* Buzzi Unicem Rated New Buy at Berenberg; PT 28 euros
* Integrated Wind Solutions Rated New Buy at Fearnley
* Kingfish Rated New Buy at DNB Markets; PT 34 kroner
* STMicroelectronics Reinstated Buy at BofA; PT 41 euros

>>> Call
* Buzzi Unicem Initiated Buy at Berenberg on Longer-Term Value
* *EUROPE CONSUMER DISCRETIONARY RAISED TO OVERWEIGHT AT CITI
* *EUROPEAN FINANCIALS SECTOR RAISED TO OVERWEIGHT AT CITI
* LVMH ‘Smashes’ Consensus Forecasts, Good for Sector: Bernstein
* Telefonica Deutschland Cut on Wholesale Reliance: Morgan Stanley

>>> What to look at today - 14th of April 2021

Most Asian stocks climbed Wednesday following gains in U.S. equities and bonds, as investors shrugged off a higher-than-forecast rise in U.S. inflation to focus on the path of the global recovery.
Hong Kong’s benchmark rose and tech stocks lifted China, but shares dipped in Japan amid concerns a slow vaccine rollout will crimp activity. U.S. equity futures were steady following all-time highs for the S&P 500 and Nasdaq 100 indexes, as the White House said the U.S. inoculation campaign remains on track despite a pause in Johnson & Johnson doses amid health concerns.
Treasuries held a rally after a successful sale of 30-year bonds, which settled fears of poor demand sparking another bout of volatility. The U.S. dollar added to the prior session’s losses.
Asia’s credit markets steadied after coming under pressure as a sharp selloffin one of China’s largest bad-debt managers raised questions about other heavily leveraged borrowers. Tencent Holdings Ltd. is holding off marketing a planned dollar bond deal Wednesday, according to people familiar with the matter.
US After Hours SAP +3.7% jumps as it raises FY21 outlook; TEAM +3% also had strong guidance; SFIX -5.4% lower on news its founder and CEO will transition to Exec Chair, making room for new CEO; MRNA +2.2% as it provides clinical and supply updates

Nikkei -0.32% Hang Seng +1.24% CSI +0.31% Shanghai +0.15% Shenzen +0.85%

Eur$ 1.1961 CNH 6.5423 CNY 6.5396 JPY 108.93 GBP 1.3774 CHF 0.9198 RUB 75.73 TRY 8.1131 WTI$ 60.60 +0.70% Gold 1,743.80 -0.10% BTC 63,740 +600

S&P +0.05% Nasdaq +0.02% EuroStoxx +0.33% FTSE +0.06% Dax +0.26% SMI

Macro :
- Fed’s Harker Says There’s No Reason to Withdraw Support Yet
- First Bitcoin ETF in North America Hits $1 Billion in Assets
- Merkel Succession Race Turns Nasty With Mudslinging and Threats
- Vaccine Blood-Clot Side Effect Puts Spotlight on Immune Reaction
- Oil Rises on OPEC Prediction; Gold Advances: Resources Wrap

Spacs :
- Berlin VC Firm Seeks $360M in Frankfurt Blank-Check Listing

Keep an eye on :
- ARL GY : Aareal Activist Names Three Supervisory Board Canddiates
- ACS SM : ACS Could Revive Margin Growth With Construction Spinoff: React
- AAF LN : Airtel Africa Holder Offers 50m Shares via JP Morgan Cazenove
- ATE FP : Alten to Pay Div EU1/Share After 2020 Payout Halt
- AAPL US : Apple to Hold First Product Unveiling of the Year on April 20
- AZN LN : J&J, Astra Vaccine Tests in Kids Face Setback, Analyst Says
- AAG GY : Aumann FY Sales Miss Estimates
- BEKB BB : Bekaert Holder STAK Bekaert Reduces Holding to 34.19% April 7
- BOOZT SS : Boozt Boosts FY Net Sales Forecast
- BP/ LN : BP Restarts FCC at Gelsenkirchen Refinery in Germany
- CAI AV : Starwood Unit to Own 33.2% of CA Immo After Settlement of Offer
- COIN US : Coinbase Global Has 130.7m Class A Shares Outstanding
- COIN US : Nasdaq sets reference price of 250 dollars a share for Bitcoin
- COM GY : Compleo Charging Solutions Offers Up to 342,348 Shares: Terms
- 1COV GY : Covestro Boosts FY Ebitda Forecast
- CSGN SW : Credit Suisse Offers $2 Billion of Archegos-Linked Block Trades
- ROO LN : Just Eat Aims to Take Big Bite Out of Deliveroo's Market Share
- DTY LN : Dignity Shares Jump; ISS Says Vote Against Chairman Removal
- FOXT LN : Finance News: Estate agent Foxtons under fire over chief executive’s bonus https://t.co/LimWjxUmJG
- GIMB BB : *GIMV INVESTS IN APRAXON, NO TERMS
- HLE GY : Hella 9M Sales EU4.65B Vs. EU4.85B Y/y
- HSBA LN : HSBC Targets 10-fold Growth of SME Clients in Pearl River Delta
- IMPN SW : Implenia, City of Zurich Settle Claims on Letzigrund Stadium
- KATEK IPO : Katek Plans IPO in Frankfurt, Aims for EU80m in Proceeds
- MC FP : LVMH 1Q Revenue Beats Estimates
- MC FP : LVMH Sales Surpass 2019 as Luxury Seems to Defy Pandemic Gloom
- MXHN GY : Max Automation: Spvy Board Resolves on Strategic Realignment
- MRNA US : Moderna Says Covid Shot Remains 90% Effective After Six Months
- MONT BB : Montea Raises EU235m Through Green Bonds in Private Placement
- READ SS : Readly International Holder Zouk Capital Offers Up to 3m Shares
- REP SM : Repsol Could Fetch Valuation of 4.8 Billion Euros for Renewables
- SAP GY : SAP Announces Preliminary First Quarter 2021 Results, Raises Full-Year Outlook
- SAP GY : SAP Gains After Boosting Low End of Cloud Revenue Forecast
- SquareSpace : Squarespace Is Said to Opt for Direct Listing Instead of IPO
- STWK SS : Stockwik Forvaltning Offers 1.03m Shares via Pareto Securities
- TOM2 NA : TomTom FY Location Technology Revenue Forecast Misses Estimates
- UCB BB : UCB to Redeem EU350m 1.875% Fixed Rate Notes Due 2022