Early premarket gappers
- Gapping up:
- SPPI +65.1%, LUMO +19.9%, AMKR +17.3%, OMF +15.9%, FIX +15%, BSM +12.3%, MEDP +11.3%, VCRA +10.8%, HSTM +10.4%, PII +9.1%, TNET +6.8%, AJRD +5.5%, TCRR +4.3%, AGNC +4.3%, BNTX +4%, IBTX +3.6%, CHMA +3.3%, PRVL +3.3%, SSD +3.2%, MDC +3.2%, BHC +2.7%, LXFR +2.7%, AWI +2.4%, PFG +2%, PFE +1.9%, SPCE +1.3%, JBT +1.2%, HUN +0.9%, PRLB +0.8%
- Gapping down:
- CRMD -19%, NMRD -13.5%, EDU -5.5%, AUDC -5%, NXPI -3.7%, HXL -3.7%, NOV -3.7%, CRSP -3.6%, FFIV -3.3%, JJSF -3.1%, YNDX -2.5%, BTAI -2.4%, ING -2%, PCH -1.4%, ST -1.4%, ARE -0.9%, QTS -0.6%, CINF -0.5%
Exclusive: China's Ctrip in talks with investors to delist from Nasdaq - sources
HONG KONG (Reuters) - Chinese online travel giant Ctrip is in talks with potential investors about funding its delisting from Nasdaq because of rising U.S.-China tensions and the coronavirus-driven hit to its business, sources told Reuters.
Ctrip’s move comes as U.S.-listed Chinese companies face tightened scrutiny and more strict audit requirements from U.S. regulators, while geopolitical tensions escalate between the world’s two largest economies. Those have prompted a number of Chinese companies to abandon a New York listing and move instead to an exchange closer to home.
Ctrip’s delisting discussions, which have not been reported previously, are at an early stage and are subject to change, cautioned the sources, who spoke on condition of anonymity because the matter is not public.
Ctrip, also known as Trip.com Group Ltd (TCOM.O), declined to comment.
There have been six announced take-privates of U.S.-listed Chinese companies worth $9.1 billion so far this year, showed Refinitiv data. The average premiums paid by buyers, however, almost halved to 22% from 42% last year.
Just on Monday, China’s Sogou Inc (SOGO.N) said shareholder Tencent Holdings (0700.HK) made a preliminary offer to buy the rest of the web search firm it did not already control, in a deal that valued the company at about $3.5 billion.
Deals being discussed include a delisting of search engine giant Baidu Inc (BIDU.O), Reuters reported in May.
Both Ctrip and Baidu have held preliminary talks with Hong Kong Exchanges and Clearing (0388.HK) about a possible secondary listing, Reuters reported in January.
Ctrip later decided to delist as the coronavirus outbreak hit its businesses badly in the first half and has weighed heavily on its valuation, said one of the people.
It reported a 42% year-on-year drop in net revenue in the first quarter of 2020 and a net loss of 5.4 billion yuan ($754 million). The company said it expected net revenue to decrease by about 67% to 77% year-over-year for the second quarter of 2020 due to COVID-19’s continued impact.
Its shares have fallen 17% so far this year while the Nasdaq Golden Dragon China Index .HXC, which tracks Chinese firms listed on the U.S. exchange, has gained 22% over the same period.
Ctrip’s diversified ownership structure, however, would present a challenge to getting shareholders’ backing for the delisting plans. Its biggest shareholder Baidu only held a 11.7% stake, followed by Scottish fund manager Baillie Gifford’s 7.7%, as of the end of last year, according to its 2019 annual report .
Its co-founders James Liang and Fan Min and other executives owned a combined 5.9% stake, showed the report.
Founded in 1999, Ctrip went public on Nasdaq in 2003, as part of an early wave of Chinese tech companies lured by high valuations overseas.
>>> Up
* Baloise Raised to Hold at HSBC; PT 157 Swiss francs
* BT Raised to Equal-Weight at Barclays; PT 130 pence
* Centrica Raised to Buy at Jefferies; PT 60 pence
* Faurecia SE Raised to Buy at MainFirst; PT 44 euros
* Faurecia SE Raised to Buy at SocGen; PT 44 euros (+)
* Finnair Raised to Buy at HSBC; PT 60 euro cents
* Games Workshop PT Raised to 9,500 pence at Peel Hunt (+)
* GEA Group Raised to Hold at M.M. Warburg; PT 30 euros (+)
* IMI Raised to Neutral at Credit Suisse; PT 1,150 pence (+)
* Immobel SA Raised to Buy at KBC Securities; PT 80 euros
* Jungheinrich Raised to Hold at Bankhaus Metzler; PT 26 euros (+)
* Scandic Raised to Hold at Jefferies; PT 32 kronor
* SES-imagotag Raised to Add at Portzamparc (+)
>>> Down
* ABB Cut to Sell at LBBW; PT 19 Swiss francs (+)
* Credito Emiliano Cut to Neutral at Banca Akros (ESN) (+)
* Iberdrola Cut to Neutral at Mediobanca SpA
* Mensch und Maschine Cut to Hold at LBBW; PT 50.25 euros (+)
* Pandora Cut to Hold at SEB Equities; PT 400 kroner
* Renishaw Cut to Equal-Weight at Morgan Stanley; PT 4,500 pence
* Tesla Cut to Underperform at Bernstein; PT $900
* Thales PT Cut to 62 euros from 73 euros at Morgan Stanley (+)
>>> Initiation
* DEFAMA AG Rated New Buy at Bankhaus Metzler; PT 20.50 euros (+)
* Deutsche Telekom Rated New Neutral at CaixaBank BPI
* Esker Rated New Buy at Berenberg; PT 165 euros
* Philips Rated New Buy at SocGen; PT 56 euros
* T-Mobile Rated New Outperform at Exane; PT $130
>>> Call
* Centrica Up to Buy After ‘Transformational’ Unit Sale: Jefferies
* Delivery Hero Continues to See Strong Growth, JPMorgan Says (+)
* LVMH 1H Was a ‘Complex Cocktail’ of Bad and Good News: Jefferies (+)
* Michelin 1H Better Than Expected, Guidance Cautious: Jefferies
- EasyJet (EJT1 TH) +3.7%
- Shares fell 8% yesterday
- Spain Lashes Out at the U.K.’s ‘Unbalanced’ Travel Ban
- AstraZeneca (ZEG TH) +2.3%
- AstraZeneca’s Farxiga Met Goals in Chronic Kidney Disease Trial
-
Delivery Hero (DHER TH) +2.2%
- Delivery Hero Raises Guidance Following Growth During Covid-19
-
Peugeot (PEU TH) +2%
- Peugeot Maker PSA Sticks to Financial Outlook Despite Virus Drag
- TUI (TUI1 TH) +1.8%
- TOTAL SE (TOTB TH) +1.7%
- Glaxo (GS7 TH) +1.7%
- HelloFresh (HFG TH) +1.6%
- Vodafone (VODI TH) +1.4%
- LVMH (MOH TH) -2.9%
- LVMH Profit Takes Hit From Store Closures, Travel Restrictions
-
HSBC Holdings (HBC1 TH) -3.1%
- Squeezed by Superpowers, HSBC Eyes Next Step of Reboot (1)
PSA delivers a profit despite pandemic
The owner of Peugeot insists that its $50bn merger with Fiat Chrysler remains on track
PSA, the owner of Peugeot, managed to eke out a profit in the first half of the year despite the pandemic wreaking havoc on the car industry.
The French company said on Tuesday that net profit fell from €1.8bn in the first half of 2019 to €595m this year. Revenues tumbled 34.5 per cent to €25bn.
“This first half result proves the group’s resilience, as a reward of six consecutive years of intense work,” said chief executive Carlos Tavares.
Like all rivals, PSA has been hammered by the drop in demand brought by the pandemic, and the group’s shares are down 30 per cent this year.
Operating margin at the automotive division fell sharply to 3.7 per cent in the first half of 2020, below the 8.7 per cent achieved last year.
PSA said that its $50bn merger with Fiat Chrysler remains on track, but the deal must still be given the green light from regulators in Brussels, which has launched an in-depth investigation.
The fear in Brussels centres on the highly lucrative small van segment, where a combined PSA-FCA would have a third of the European market, more than double the 16 per cent of Renault or Ford, the two closest competitors.
The European Commission has stopped the clock on the investigation as it awaits requested data from both companies. The merged group, which is set to be the world’s fourth-largest carmaker, is to be called Stellantis.
The deal was announced formally in December and Mr Tavarez said PSA is “determined to achieve solid rebound in the second half of the year, while finalising the birth of Stellantis before the end of the first quarter 2021.”
David Solomon DJs in the Hamptons after reaching $3.9B 1MBD settlement
Solomon dropped his beats for a field of well-heeled Hamptonites in Water Mill, NY, on Saturday, where his electronic dance music persona, DJ D-Sol, performed for a drive-in charity concert headlined by The Chainsmokers.
According to one person who attended the show, the 58-year-old DJ D-Sol took the stage for “a pretty long set” and treated concertgoers like the Winkelvoss twins to his new single, “Someone Like You” — an upbeat dance track featuring Polish electropop star Gia Koka.
For Solomon, the event was a chance to blow off steam after Friday’s announcement that Goldman Sachs had finally settled with the Malaysian government over charges stemming from the firm’s role in the 1MDB scandal. Malaysian officials charged that Goldman helped raise billions for the fund that were looted by officials like now-fugitive financier Jho Low, and spent on yachts, parties as well as gifts to Hollywood actor Leonardo DiCaprio and model Miranda Kerr.
Proceeds from Saturday’s “Safe and Sound” event, which called for Hamptonites to throw down between $1,250 and $25,000 for their own socially distanced space to watch the concert, will go to various local children’s charities.
DJ D-Sol has proven a draw on the lofty beach town where, prior to the coronavirus, wealthy Hamptonites would pack local hotspots like Surf Lodge and Gurney’s to watch the financial titan don a bulky headset and indulge in his love for EDM music.
DAX:
- Deutsche Telekom (DTE TH) +1.2%
- Deutsche Telekom Rated New Neutral at CaixaBank BPI
- SAP (SAP TH) +1.2%
MDAX:
- Delivery Hero (DHER TH) +2.6%
- Delivery Hero Raises Guidance Following Growth During Covid-19
- HelloFresh (HFG TH) +1.8%
SDAX:
- Aixtron (AIXA TH) +2.6%
- Intel Ousts Top Engineer After Chipmaker’s Production Delays (1)
- SMA Solar (S92 TH) +2.3%
- Deutsche PBB (PBB TH) +1.5%
- Steinhoff (SNH TH) -4.9%
- Steinhoff Class-Action Suit Dropped as VEB Supports Settlement
LVMH Confident in Recovery as China Confirms Rebound
Chairman and ceo Bernard Arnault reported strong signs of an upturn in activity since June.
PARIS — LVMH Moët Hennessy Louis Vuitton saw a strong rebound in China in the second quarter and expects a gradual return to normal elsewhere in the second half, supported by the solid performance of its top brands, Louis Vuitton and Dior, and a jump in online sales.
The French luxury conglomerate said net profit plummeted 84 percent in the first six months of the year, after the COVID-19 pandemic forced the closure of many of its stores and factories worldwide and grounded travelers, who account for 40 percent of luxury goods purchases in value terms, according to analysts.
“I do not think we have ever seen such a perfectly negative alignment of planets against us,” LVMH chief financial officer Jean-Jacques Guiony said on a conference call on Monday. But the outlook is brightening for the group, which has seen continuous improvements since the lifting of lockdown measures in many countries.
“The month of June was significantly better, and July will certainly see some improvement compared to June,” Guiony said. “We see, month after month, the situation coming back to a more normalized state and we expect this to continue.”
Bernard Arnault, chairman and chief executive officer of LVMH, noted the group had shown “exceptional resilience” during the health crisis. “While we have observed strong signs of an upturn in activity since June, we remain very vigilant for the rest of the year,” he said in a statement.
“Thanks to the strength of our brands and the responsiveness of our organization, we are confident that LVMH is in an excellent position to take advantage of the recovery, which we hope will be confirmed in the second half of the year, and to strengthen our lead in the global luxury market in 2020,” he added.
LVMH, which owns 75 brands ranging from Dom Pérignon Champagne to Bulgari jewelry, reported that sales fell 38 percent in the three months to June 30, following a 15 percent drop in the first quarter. In organic terms, sales were also down 38 percent, beating the Bloomberg consensus forecast for a 42 percent fall.
Organic sales in the second quarter were down 54 percent in Europe and Japan, while the U.S. saw a 39 percent drop. Asia, excluding Japan, performed comparatively better, with a 13 percent decline.
LVMH’s net profit totaled 522 million euros in the first half, with Louis Vuitton, Dior and Moët Hennessy remaining highly profitable. But the group’s gross margin took a hit, due to the depreciation of unsold products and its inability to absorb all the fixed costs of its manufacturing activities.
Most segments recorded losses during the period, with the exception of the key fashion and leather goods division, as well as wines and spirits. Selective retailing — which includes Sephora and DFS, LVMH’s travel-retail business — was hardest-hit, with a loss from recurring operations of 308 million euros in the first half.
Fashion and leather goods posted sales of 3.35 billion euros in the second quarter, down 37 percent in like-for-like terms, broadly in line with expectations. The division posted growth of more than 65 percent in China, while sales in Europe and the U.S. saw a progressive recovery from May.
In the U.S. and Japan, Dior sales rose in June while Vuitton was broadly flat. “I think this is very encouraging for the future,” Guiony said.
Dior has staged a series of high-profile events, including a physical fashion show in Italy for its cruise collection — albeit without the usual guests — and the opening of its traveling exhibition, “Christian Dior: Designer of Dreams,” in Shanghai on Tuesday.
Vuitton, meanwhile, is gearing up to present its spring 2021 men’s collection with fashion shows, open to the public, in Shanghai and Tokyo.
Sales of perfume and cosmetics were down 40 percent against a backdrop of significant destocking by retailers, with LVMH refraining from selling through parallel distribution channels. In the second half, Fresh will open concept stores in China with new services, and Loewe will launch a line of home fragrances.
Guiony said it was too early to extrapolate any forecasts from the global spike in online sales during the lockdown, although he indicated a shift in LVMH’s attitude to e-commerce, which it has traditionally been reluctant to engage in.
”We are very pleased with the business we’ve done on the digital front, particularly in Sephora and in fashion and leather goods, and to a lesser extent in perfumes and cosmetics. It has enabled us to offset part of the lost business in regular distribution channels, so it is encouraging for the future,” he said.
“When I see the amount of business that we’ve been able to generate in the last six months on our e-commerce platform, I think there is a future for these platforms to generate a significant amount of the global sales and to be a real and genuine distribution channel, alongside the brick-and-mortar,” Guiony added.
The watches and jewelry division recorded a 52 percent drop in organic revenue, even though Bulgari saw a strong recovery in China in the second quarter. Meanwhile, organic sales of wines and spirits were down 33 percent, with cognac benefiting from a rebound in sales in China and resilient U.S. demand.
In the selective retailing division, revenues fell 38 percent even as Sephora gained market share and saw strong increases in online sales. DFS was focused on cutting costs and gradually reopening its downtown stores in Venice, Macau and Hong Kong.
“Our top brands have not disappointed — all profitable; less revenue drops than peers; outstanding margins; market share gains; well positioned to become stronger in the crisis, which is exactly what leaders should do,” Guiony said.
“We are optimistic and confident, although there are two things we should not forget in order to be able to react quickly to any change in the environment. First, the resolution of the sanitary crisis lacks visibility and we cannot rule out further difficulties here and there. And two, the travel retail business is and will be suffering for a number of months and quarters before it comes back to normal,” he added.
While LVMH plans to slash its capital expenditures budget by 40 percent this year, it expects to keep its workforce largely intact. “There is no such thing as massive reduction in headcount. There could be some adjustments here and there, but nothing particularly significant,” said Guiony.
“It would be stupid on our side to adjust too much — be it the capital base, the human base, or even to streamline too much some brands — because when things recover, we want to be in good shape to benefit from that,” he explained.
The executive gave a brief update on LVMH’s $16.2 billion acquisition of U.S. jeweler Tiffany & Co., saying half-a-dozen antitrust filings were still pending, though he did not specify in which countries. “Things are moving forward,” Guiony said. “But I don’t really know when all the go-aheads will be given.”
He also declined to estimate the potential impact of U.S. tariffs on French fashion goods, including handbags. “Some are pending, some are threatened. It’s very difficult to make any assessment,” he noted. “It’s a likelihood, that’s right, but it’s not the first time that something like this doesn’t happen at the end of the day.”
Analysts expect the group to outperform the rest of the luxury sector, despite an unfavorable geographic mix.
“LVMH is more exposed to the U.S. market, which will be particularly hit by the delayed lifting of lockdown,” Morgan Stanley noted in a recent research report. The U.S. accounted for 24 percent of the luxury group’s revenues in the first half.
But LVMH was likely to benefit from a “flight to quality” as consumers seek the reassurance of mighty brands like Vuitton, Dior, Fendi and Celine, and gravitate toward classic and bourgeois brands over edgy labels.
“Consumers tend to want to buy products, which are less likely to depreciate in value over time, but also generally want a less ostentatious look,” said Morgan Stanley analysts Edouard Aubin and Elena Mariani.
The LVMH results come on the heels of figures from Compagnie Financière Richemont showing sales fell 47 percent in the three months to June 30 due to store and workshop closures, anemic tourism and a lack of appetite for hard and soft luxury worldwide during the pandemic.
Meanwhile, Burberry reported retail sales fell 48.4 percent in the first quarter ended June 27, despite a powerful rebound in the key markets of mainland China and South Korea. Kering is scheduled to publish its second-quarter results on Tuesday, with Hermès International to follow on Thursday.
>>> Up
* Baloise Raised to Hold at HSBC; PT 157 Swiss francs
* BT Raised to Equal-Weight at Barclays; PT 130 pence
* Centrica Raised to Buy at Jefferies; PT 60 pence
* Faurecia SE Raised to Buy at MainFirst; PT 44 euros
* Finnair Raised to Buy at HSBC; PT 60 euro cents
* Immobel SA Raised to Buy at KBC Securities; PT 80 euros
* Scandic Raised to Hold at Jefferies; PT 32 kronor
>>> Down
* Iberdrola Cut to Neutral at Mediobanca SpA
* Pandora Cut to Hold at SEB Equities; PT 400 kroner
* Renishaw Cut to Equal-Weight at Morgan Stanley; PT 4,500 pence
* Tesla Cut to Underperform at Bernstein; PT $900
>>> Initiation
* Deutsche Telekom Rated New Neutral at CaixaBank BPI
* Esker Rated New Buy at Berenberg; PT 165 euros
* Philips Rated New Buy at SocGen; PT 56 euros
* T-Mobile Rated New Outperform at Exane; PT $130
>>> Call
* Centrica Up to Buy After ‘Transformational’ Unit Sale: Jefferies
* Michelin 1H Better Than Expected, Guidance Cautious: Jefferies