Gapping up
In reaction to earnings/guidance:
- WGO +6.1%, APOG +2.7%
M&A news:
- BEAT +17% (BioTelemetry to be acquired by Philips (PHG) for $72.00 per share), PHG +1.7%
Other news:
- MREO +38.9% (MREO and RARE announce collaboration and license agreement for setrusumab)
- DMTK +25.7% (announces positive results of TRUST Study)
- TLC +6.2% (provides study updates at investor conference; Patient enrollment of EXCELLENCE pivotal trial reaches 98%)
- ACTG +4.5% (President/CIO disclosed the purchase of 100K shares worth ~$377K (transaction dates 12/15-12/16) )
- VIR +4.4% (VIR and GSK start of trial evaluating VIR-7831 in hospitalized adults with COVID-19)
- MNKD +3.5% (announces co-promotion agreement for Thyquidity)
- DD +3% (approved the separation of DuPont's Nutrition & Biosciences business through an exchange offer)
- NVO +1.9% (files MMA with EMA for approval of once-weekly semaglutide)
- BCLI +1.7% (completed in the ongoing Phase 2 trial evaluating NurOwn as a treatment for progressive MS; Topline clinical trial results expected by the end of the first quarter 2021)
- POR +1.3% (announced the Special Committee of the Board of Directors concluded its independent review of the energy trading activity that led to the losses incurred in the third quarter)
- AR +1.2% (S&P outlook revised to stable from negative)
- EGBN +1% (announces new share repurchase program)
- TME +1% (Tencent Music consortium exercises call option to acquire additional equity interests in Universal Music Group)
Analyst comments:
- MYE +4.4% (upgraded to Overweight from Sector Weight at KeyBanc Capital Markets)
- ABNB +3.6% (initiated with a Positive at Susquehanna)
- DOW +2% (upgraded to Overweight from Neutral at JP Morgan)
- NRZ +1.6% (upgraded to Outperform from Mkt Perform at Keefe Bruyette)
- NLY +1% (upgraded to Outperform from Mkt Perform at Keefe Bruyette)
Early premarket gappers
- Gapping up:
- MREO +41.2%, DMTK +24.5%, BEAT +16.9%, TLC +6%, VIR +3.2%, MNKD +3%, DD +2.2%, NVO +1.8%, TWO +1.6%, PHG +1.3%, TME +1.2%, AR +1%, EGBN +1%, SCVL +0.9%, RTX +0.7%, REGN +0.6%
- Gapping down:
- MESO -32.2%, SCHL -12.7%, GLSI -11.7%, EGLE -8.1%, SCS -7.8%, BB -5.6%, CKPT -3.6%, X -3.3%, FDX -3%, ASUR -2.9%, PRSP -2.6%, INN -2.1%, UPS -1.7%, AIR -1.4%, CNC -1.4%, PRAH -1.1%, HON -0.9%
Gucci targets China’s post-Covid luxury surge with Alibaba tie-up
Luxury brand previously said it would not work with country’s ecommerce groups because of fakes
Gucci will launch two online stores in China alongside ecommerce group Alibaba, as the high-end brand counts on a post-coronavirus boom in luxury goods spending in the country to offset sluggish sales in the west.
The European fashion house said on Friday that it would launch the virtual outlets on Alibaba’s Tmall platform, in what marks the latest effort by western luxury houses to tap into a market that is gaining momentum as China’s economy recovers from Covid-19.
Analysts suggested the move also meant premium fashion brands were putting to one side image concerns over marketing their products en masse to Chinese consumers, as well as over the prevalence of counterfeiting in the country.
“The inclusion of luxury goods in ecommerce platforms — a destination for bargains — may lead to a drop in brand image,” said Yang Jingzhu, founder of AmeriChina Group, a Beijing-based consultancy. “But the huge popularity of Tmall among both rich or poor makes it a powerful channel for Gucci to improve sales.”
Gucci’s first Tmall store, which will sell everything from bags to shoes, will launch on December 21. A second outlet focused on beauty products will open in February and will be managed by US brand Coty.
China’s luxury market has taken off after Beijing successfully controlled the spread of Covid-19. Bain, a consultancy, forecast that sales of high-end fashion goods in the world’s most populous nation would grow by almost half this year to Rmb346bn ($52.9bn) as global travel restrictions meant shoppers bought locally instead.
Bain’s research shows that China’s online sales of luxury goods more than doubled in the first 10 months of 2020 compared with a year earlier. Ecommerce outlets are expected to account for 23 per cent of total luxury sales this year, up from 13 per cent in 2019.
“Online purchasing has become the most dynamic growth engine for Chinese luxury spending,” said Simon Tye, executive director at CSG INTAGE Group, a consultancy.
Luxury brands have traditionally been reluctant to explore partnerships with China’s online platforms, which are known for selling cheap — and sometimes fake — goods.
Marco Bizzarri, Gucci’s chief executive, said two years ago in Shanghai that the firm was not willing to work with Alibaba or JD.com, two of China’s leading online retailers, as there was “a lot of counterfeiting on most of the platforms”.
The change in attitude, said Ms Yang of AmeriChina Group, suggested Gucci was becoming “more pragmatic” about expanding its China business as sales fell elsewhere.
Gucci did not disclose its China sales figure. But Jean-Marc Duplaix, finance chief of Kering, Gucci’s parent company, said in the company’s third-quarter earnings call that mainland China was “again the bright spot” for the brand. Gucci’s sales were down 47 per cent in western Europe during the third quarter.
However, Chinese shoppers appear cool on Gucci’s online foray, which is already permitting pre-orders. Lucy Zhang, a Shanghai-based marketing executive at a law firm, pointed to the poor selection of goods and lack of discounts.
“They didn’t put the most popular items in the store,” said Ms Zhang, “I will give it a pass.”
Hurricane Energy warns shareholders could be left with ‘no value’
UK North Sea oil group says it may have to run down key asset and halt further development
Shares in Hurricane Energy plunged by nearly a third on Friday as the North Sea oil producer warned investors they faced a possible dilution or even being left with “no value” as it starts talks with bondholders over its future.
Aim-listed Hurricane was once seen as a bright hope for the ageing UK North Sea as it sought to prove that oil could be commercially recovered from a type of reservoir known as “fractured basement”.
But the company has had a tumultuous year after being forced to admit in May that it was unable to sustain intended production rates at its key asset located to the west of the Shetland Islands.
Hurricane parted with its founder and former chief executive Robert Trice in June, and has since been researching how it can maximise output from its flagship Lancaster field.
However, the company said on Friday it had appointed advisers to commence talks with “key stakeholders”, including bondholders, as it tries to secure “suitable funding arrangements” for developing Lancaster, which is located in waters that often suffer poor weather conditions.
The company had cash of $87m at the end of November and has a $230m bond that matures in July 2022.
Hurricane warned there would be “a risk of dilution to existing shareholders from a possible restructuring and/or partial equitisation” of its bonds.
If an agreement cannot be reached, the group warned it might have to abandon its planned development, continuing to produce as much oil from the Lancaster field as is economically viable before decommissioning it “with potentially limited or no value returned to shareholders”.
The company, which also had to contend with the sharp plunge in oil prices in the first half of the year, did not offer any guidance on when decommissioning might occur if it could not secure an agreement.
Shares fell more than 30 per cent in morning trading on Friday in London, adding to Hurricane’s heavy losses so far this year, which now stand at almost 90 per cent. Once worth more than 60p, they are now trading around 3p.
“While there can be no certainty as to the outcome of this engagement, we continue to believe there is significant value in Lancaster and our broader West of Shetland portfolio,” said Antony Maris, Hurricane’s new chief executive. “And we remain focused on delivering that value for the benefit of our stakeholders.”
Fractured basement reservoirs are in naturally occurring fissures in hard rock such as granite that lie below the softer sedimentary sandstone from which most North Sea oil is recovered.
>>> Up
* Cewe Stiftung Raised to Buy at FMR Frankfurt Main; PT 107 euros
* DSV Panalpina Raised to Buy at ABG; PT 1,180 kroner
* EDP Raised to Add at AlphaValue
* EVN Raised to Overweight at Barclays; PT 20 euros
* Randstad Raised to Overweight at JPMorgan; PT 60 euros
* Sika Raised to Add at Baader Helvea; PT 253 Swiss francs
* Smart Metering Raised to Buy at Liberum; PT 800 pence (+)
* Smith & Nephew ADRs Raised to Outperform at Bernstein; PT $46.50
* Smith & Nephew Raised to Outperform at Bernstein; PT 1,750 pence
* Zehnder PT Raised to 57 Swiss francs at Bank Vontobel
>>> Down
* Aegon Cut to Neutral at Credit Suisse; PT 3.30 euros
* Chr. Hansen Cut to Hold at Carnegie; PT 670 kroner
* Cyan Cut to Hold at Berenberg; PT 15 euros
* Enagas Cut to Underweight at JPMorgan; PT 17.70 euros
* Petrofac Cut to Equal-Weight at Barclays; PT 230 pence
* Shaftesbury PT Cut to 435 pence from 475 pence at Barclays (+)
>>> Initiation
* Royal Unibrew Reinstated Buy at Carnegie; PT 715 kroner
* Tamburi Investment Rated New Buy at Stifel; PT 8.10 euros
>>> Call
* Beijer Ref Buys 85% of Shares in Czech HVAC Company Sinclair (+)
* Enel’s Board Support, Timeline for Open Fiber Sale Positive: MS (+)
* Flutter’s Potential $1.5b Kentucky Liability Is Surprising: Davy (+)
* Morgan Stanley Raises European Energy Sector, Cuts Utilities
* Petrofac Cut With 2021 Looking Tougher Than Expected: Barclays (+)
* QinetiQ Shares Deserve a Higher Rating, Berenberg Says
* Sika Trading May Prove Better Than Expected, Baader Upgrades
* Generic Advair Approval Positive for Vectura, Hikma: Peel Hunt (+)
U.S. Blacklists China’s Top Chip Maker, Escalating Tech Fight
SMIC among more than 60 Chinese institutions added to the entity list restricting access to American technology
The Trump administration is adding China’s largest manufacturer of computing chips to an export blacklist, restricting the company’s access to high-end technology over its alleged links it to the Chinese military.
Semiconductor Manufacturing International Corp., or SMIC, will be added alongside more than 60 other Chinese institutions to the entity list, the Commerce Department said. The designation restricts companies from exporting U.S.-origin technology to the listed firms without a license, with a provision that effectively prohibits SMIC from acquiring technology to build chips with 10-nanometer circuits and smaller, the industry’s top class of chips.
The move raises the pressure significantly on the chip maker, a national champion that has received billions of dollars in state backing and is central to Beijing’s drive to improve the country’s self-sufficiency in critical technologies. It comes during the waning weeks of the Trump administration and follows a string of actions against Chinese tech companies.
Two days ago, the chip manufacturer said it was looking into reports that one of its two co-chief executives had suddenly decided to step down, a disclosure that sent its shares tumbling.
Commerce Department officials said they applied the restriction on SMIC because of what they said was the company’s cooperation with Chinese military-linked entities. The Trump administration has grown more concerned about Beijing’s practice of leaning on civilian companies to advance its military goals, an effort known as military-civil fusion.
A SMIC representative didn’t immediately comment. SMIC has repeatedly denied any links to China’s military and has said that it produces chips solely for commercial and civilian use.
“Entity List restrictions are a necessary measure to ensure that China, through its national champion SMIC, is not able to leverage U.S. technologies to enable indigenous advanced technology levels to support its destabilizing military activities,” Commerce Secretary Wilbur Ross said in a statement provided to The Wall Street Journal.
Infrastructure group Atlantia aims to expand in struggling airport sector
Company also intends to offload Italian toll road arm at centre of Genoa bridge collapse
Infrastructure group Atlantia is aiming to expand further into the European airport sector as it accelerates plans to sell its main asset, Italy’s toll road operator at the centre of the Genoa bridge disaster.
Chief executive Carlo Bertazzo plans to swoop for cheap airport assets with many European hubs expected to face a tough 2021 as the pandemic bites harder.
At the same time, he wants to finally offload Autostrade per l’Italia, its subsidiary responsible for the maintenance of the Genoa bridge, which collapsed two years ago and caused the deaths of 43 people.
Atlantia has come under pressure to sell Autostrade after a running dispute with the Italian government over the bridge, which represents more than 50 per cent of the toll group’s portfolio.
“Many airports in Europe will need to raise capital next year as, unlike airlines, they aren’t receiving enough government subsidies, but they continue to have very high fixed costs in terms of staff and infrastructure,” Mr Bertazzo said in an interview with the Financial Times.
“I can see Atlantia’s [airport business] playing an active role,” he added.
Atlantia already has a strong foothold in the European airport sector, owning Aeroporti di Roma that operates Rome’s two main airports, Fiumicino and Ciampino, and a 65 per cent stake in the operator of the French airports at Nice, Cannes and St Tropez.
A sale of Autostrade would help Mr Bertazzo, appointed in January after the forced resignation of Giovanni Castellucci after the Genoa bridge tragedy, turn a new chapter and refocus the group on its airport business.
“Aeroporti di Roma specialises in leisure travel, and this will be a characteristic of strength in a post-pandemic world as tourism will recover faster than business travel which might be reduced forever,” Mr Bertazzo said.
The company is not in talks with any other airport operator at this stage but “I can think of a few European airports we could create synergies with . . . geographic continuity and the tourism focus are key,” he added.
Mr Bertazzo highlighted important fundraisings in the capital markets for Atlantia, which owns a 50 per cent-plus one share stake in Abertis, the Spanish multinational that operates toll roads and car parks in the Iberian peninsula and France.
Autostrade raised €1.25bn through a bond offering in early December in an important deal given that the company had been struggling to access the markets this year after downgrades of its credit rating in January because of the Morandi bridge fallout.
Aeroporti di Roma also launched a €300m green bond in November.
“These were important milestones for us this year,” said Mr Bertazzo.
“We kicked off 2020 with a downgrade due to a change in the Italian toll road concession regulation, so we knew it was going to be a tough year for us, even before the pandemic.”
He added: “Since becoming CEO I changed 80 per cent of the group’s executives, and there’s now a clear separation between roles. You can go very far and fast only if you have the right people in terms of skills and values.
“We’re obviously suffering from a reputation issue. Solving it is a long-term project but we have a strategy and we’re on the right track now.”
Remo Ruffini shows Moncler is more than just puff with €1bn Stone Island deal
Italian owner plots new path for the luxury puffer jacket brand that he rebuilt
Remo Ruffini, chairman and chief executive of Moncler, approached rival luxury brand owner Carlo Rivetti after his son, Romeo, saw the Stone Island chief speak at a conference late last year and insisted they meet because of shared values and vision.
On their first encounter, which Mr Ruffini, 59, recalls as “fun”, the men chatted for more than two hours about their early careers. Other meetings followed with their respective families before they agreed the €1bn acquisition of Stone Island, announced this month.
The deal for Stone Island, a label popular with celebrities such as rapper Drake and former Oasis lead singer Liam Gallagher, surprised analysts and fashion industry insiders.
Luxury puffer jacket brand Moncler has often been identified as a target, rather than a buyer. It was rumoured to be in buyout talks with French group Kering last year. Mr Ruffini has not denied the talks but after the Stone Island announcement, he reiterated that this was the first tie-up that he could fully commit to. But few in the industry expect the deal to be the last for Moncler.
Mr Ruffini’s closest associates say he tends to spot trends before rivals and often goes against the tide.
“While few people like to contradict him, he is usually proven right over time,” said one Moncler executive. “Remo is an excellent entrepreneur who knows how to combine creativity with organisation,” said Nerio Alessandri, founder of Italian fitness equipment maker Technogym and a member of the Moncler board.
“He always strives for improvement, innovation and uniqueness.”
Mr Ruffini bought Moncler, then an almost bankrupt 50-year-old French skiwear brand, in 2003. He shifted focus from its traditional wholesale distribution channel to high-end boutiques, pitching the brand as a cross-generational luxury label. The goal was to create an iconic product that would appeal to women and skateboarders alike. He also insisted that Moncler’s traditional shiny nylon laqué fabric be used for menswear too.
Marketing was the next step. Mr Ruffini shunned supermodels and instead used images of dogs, then bears and puffer jackets encased in ice cubes. “I didn’t have my competitors’ advertising budget at the time but I also wanted to tell consumers my project wasn’t the same as any other,” he told the Financial Times.
Mr Ruffini took a similar tack when Moncler listed in Milan 2013. Virginie Morgon, chief executive of French private equity group Eurazeo, which backed Moncler’s initial public offering together with Carlyle, remembers quarrelling with Mr Ruffini over the listing price.
“The room was filled with adverse and assertive energy that went on for hours,” Ms Morgon said. “I missed most of the flights back to Paris but finally made it [back] barely alive.”
The prospectus, too was “extremely unusual”, recalled one analyst: a sleek black book full of pictures on which it was impossible to take notes.
Moncler started out in the 1950s producing goose feather-filled sleeping bags, then shifted to making attire for Himalayan expeditions which Mr Ruffini described as “heavy and gigantic”. Growing up close to Lake Como in the 1970s, where temperatures would drop to -10C during winter, Mr Ruffini was gifted his first pale blue Moncler jacket to ride his Vespa to school.
He went on to work for his father’s eponymous New York-based fashion brand and at 23 returned to Italy to launch casualwear brand New England, which he sold to Italian retailer Stefanel in 2000.
“I invented the New England brand inspired by Nantucket, Martha’s Vineyard, the Kennedys . . . With Moncler I didn’t have to invent anything, I just had to rebuild the brand,” said Mr Ruffini who owns 22.5 per cent of Moncler.
Before buying Moncler, Mr Ruffini had a stint at an Italian company that went bankrupt, said Ms Morgon, and “the torment left him with scarring effects that, in time, would become his brilliant strategic vision and greatest strengths”.
When Moncler listed, the share price leapt, making Mr Ruffini a billionaire. The group, to be rebranded as Double R to reflect two families behind the merged group, now has a market value of €12bn and revenue close to €1.63bn in 2019.
Another milestone for the company has been to eschew a single creative director and seasonal collections, instead focusing on one-off collaborations with regular limited editions, and marketing new lines each month.
Mr Ruffini’s closest aides were sceptical and suppliers panicked. Two years since the shift, Moncler has signed an impressive roster of creative directors from Simone Rocha to JW Anderson and Valentino’s Pierpaolo Piccioli, while also establishing a strong online presence and expanding its global client base.
Peers have hailed Mr Ruffini as a visionary for the switch. “But he likes to repeat the famous quote by Thomas Edison, ‘vision without execution is just hallucination’,” said one senior Moncler executive. “He expects the highest standards and is extremely attentive to details.”
Mr Ruffini is known for his work ethic. His close-knit team had little sleep in the days before closing the Stone Island deal. But the night after it was announced, the Moncler chief asked one close aide if she was heading home. “He makes you feel proud to work for 20 consecutive hours without a break,” said the executive.
Moncler employees expressed similar sentiments after Mr Ruffini won the British Fashion Council’s business leader award last year. A group of 100 staff greeted him on his return from London, chanting “Grazie presidente”.
“At the end of the day,” Mr Ruffini told the FT, “it’s all about the people.”