After Hours Summary: Rough earnings session for several names including PLT -29%, SNAP -11%, F -9%, MTCH -7%, KLAC -5%; IRET trades higher as it gets added to S&P SmallCap 600After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: USNA +19.7% (light volume), JKHY +4.1%, CB +3%, IPHI +2.7%, CERN +2.4%, PAGP +2%, YRCW +2%, ETH +1.7%, QGEN +1.7%, MCHP +1.5%, OI +1.5%, PAA +1.5%, PRU +1.5%, AINV +1.4%, MWA +1%, CMG +0.8%, GTES +0.8%, POWL +0.6%, BE +0.5%, M +0.4% (guides lower, to close stores), RNR +0.3%, DIS +0.2%, CCK +0.1%, GL +0.1%, VIAV +0.1%
Companies trading higher in after hours in reaction to news: ORN +12.1% (announces contract award), IRET +5.3% (to be added to the S&P SmallCap 600), PHAS +3.6% (presents case study highlighting PB1046 hemodynamic data), RAPT +1.6% (commences 2 mln share offering), BBY +1.5% (issues statement regarding previously announced independent review of allegations against CEO), TSLA +1.3% (in reaction to late day pullback), GTES +0.8% (names new CFO)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: PLT -28.5%, KN -15%, SNAP -10.7%, F -9.3%, GNW -8.9%, NEWR -8.2%, MTCH -7.5%, BOOT -7.3%, SWI -7.1%, OLN -6.2%, KLAC -4.8%, TCS -3.7%, FISV -3.5%, RRR -2.7%, MODN -2.5%, EGHT -2.4%, PCTY -2.2%, PDM -2%, SCSC -1.5%, TENB -1.5%, GILD -1.3%, CNXN -1.1%, STX -1.1%, APAM -0.7%, ALL -0.5%, ESE -0.2%, AFL -0.1%, ATO -0.1%, MANH -0.1%, NBIX -0.1%, UNM -0.1%
Companies trading lower in after hours in reaction to news: ZIOP -16% (stock offering), TTWO -5.5% (VP-Creative at Rockstar Games Dan Houser will be leaving), IMXI -3.7% (announces partnership with Ripple), TENB -1.5% (names new COO), NKE -1.4% (provides update on coronavirus impact in Greater China), GMS -1.3% (acquires Trowel Trades Supply; terms not disclosed), TWTR -0.9% (says users may not deceptively share synthetic or manipulated media)
>>> Up
* Antofagasta Raised to Hold at Deutsche Bank
* BASF Raised to Hold at Bankhaus Metzler; PT 59 euros
* Bavarian Nordic PT Raised to 330 kroner at Jefferies
* Bechtle Raised to Buy at Bankhaus Metzler; PT 154 euros
* Card Factory Raised to Hold at Peel Hunt
* EasyJet Raised to Hold at SocGen; PT 1,440 pence
* Eurocash Raised to Buy at Goldman; PT 23.90 zloty
* KAZ Minerals Raised to Buy at Deutsche Bank
* Resurs Holding Raised to Buy at SEB Equities; PT 65 kronor
* Siemens Gamesa Raised to Neutral at Alantra Equities
* Tele2 Raised to Buy at New Street Research; PT 165 kronor
* Umicore Raised to Buy at Berenberg
* Valvoline Raised to Neutral at JPMorgan; PT $21
>>> Down
* AA PLC PT Cut to 30 pence from 50 pence at Berenberg
* BASF Cut to Hold at Berenberg
* Covestro Cut to Sell at Berenberg
* Gamma Communications Cut to Neutral at Citi
* MTU Aero Cut to Neutral at JPMorgan; PT 265 euros
* Siltronic Cut to Sell at Berenberg
* XP Power Cut to Neutral at Citi
>>> Initiation
* Adyen Rated New Buy at Rosenblatt Securities Inc
* CareTech Rated New Buy at Berenberg; PT 550 pence
* Civitas Social Housing Rated New Hold at Berenberg
* Empiric Student Rated New Hold at Berenberg; PT 105 pence
* GCP Student Living Rated New Buy at Berenberg; PT 220 pence
* Grainger Rated New Buy at Berenberg; PT 400 pence
* Impact Healthcare Rated New Buy at Berenberg; PT 130 pence
* PRS REIT Rated New Buy at Berenberg; PT 130 pence
* Residential Secure Income Rated New Hold at Berenberg
* Rostelecom Resumed Neutral at Citi
* Sigma Capital Group Rated New Buy at Berenberg; PT 180 pence
* Target Healthcare Rated New Buy at Berenberg; PT 145 pence
* Triple Point Social Rated New Buy at Berenberg; PT 110 pence
* Unite Group Rated New Buy at Berenberg; PT 1,425 pence
* Urban & Civic Rated New Buy at Berenberg; PT 450 pence
>>> Call
* Card Factory Raised at Peel With Shares Pricing in ‘Disaster’
* Plenty of Opportunities in U.K. Residential Property: Berenberg
* Siltronic Cut to Sell at Berenberg, Citing Wafer Oversupply
Free Float 142mil shares almost 90mils shares traded in 2 days...
Top US executive at SoftBank’s $100bn Vision Fund to leave
Exclusive: Michael Ronen negotiating exit after expressing concerns over ‘issues’ at tech group
A top US executive at SoftBank’s $100bn Vision Fund is leaving after expressing concerns about “issues” at the technology conglomerate, which has suffered a string of setbacks over the last year, including a soured investment in WeWork.
Michael Ronen, a former Goldman Sachs banker who joined SoftBank in 2017, told the Financial Times he had been “negotiating the terms of my anticipated departure” for several weeks.
Mr Ronen was the managing partner of its US investment office and in charge of the Vision Fund’s US investments, leading its bets on transportation and logistics start-ups such as Getaround, GM Cruise and Nuro.
SoftBank is also in discussions about Ron Fisher’s future at the company, according to three people briefed on the talks. Mr Fisher is one of Mr Son’s longest-serving lieutenants and was a leading advocate of SoftBank’s outsized bet on WeWork, people with direct knowledge of the matter told the Financial Times.
A SoftBank spokesperson said Mr Fisher was “a valued member of the SoftBank family” and was “not going anywhere”.
A series of disastrous investments have shaken confidence in the Vision Fund and left its founder Masayoshi Son struggling to raise any outside capital for its sequel fund.
Mr Fisher, SoftBank’s vice-chairman, joined in 1995 and is among Mr Son’s closest advisers. While Mr Son signed off on SoftBank’s $10bn-plus investments in WeWork, it was Mr Fisher who sat on the board of the co-working office-space provider and who worked closest with management on its strategy and growth plans, some of these people said. Mr Fisher could not be reached for comment.
One of the people briefed on the negotiations said that Deep Nishar, a former LinkedIn and Google executive, and Colin Fan, a former Deutsche Bank executive and close associate of SBIA chief Rajeev Misra, are likely to take on Mr Ronen’s responsibilities in the Americas.
The departure of Mr Ronen comes as people close to the discussions told the Financial Times that SoftBank and Mr Son had failed to raise any outside investment for the company’s second Vision Fund.
In July Mr Son unveiled a roster of investors including Apple, Microsoft and the National Bank of Kazakhstan for the fund, which he said committed a total of $108bn — even without any funding from the first Vision Fund’s largest outside backers, Saudi Arabia and Abu Dhabi.
However, none of the would-be investors have yet to firm up their non-binding commitments in the second Vision Fund. Despite that, SoftBank has provided around $5bn in backing for the second Vision Fund to begin making investments, said one person with knowledge of the fundraising efforts.
The Gulf investors who contributed $60bn to the first Vision Fund have become worried about the perception of pouring money into SoftBank funds following several high-profile flops from the first Vision Fund, people familiar with the discussions said.
Lossmaking WeWork ultimately proved a devastating bet for SoftBank as plans to list its shares failed and instead forced it to secure a multibillion-dollar rescue from SoftBank late last year to avoid insolvency.
SoftBank, which has announced new management at WeWork, is now pressuring other companies it has backed to cut their losses and increase their profits.
SoftBank’s share price has tumbled 25 per cent since last April when it hit its highest level since the early 2000s before a string of high-profile SoftBank-backed companies had embarrassing stock market debuts — including Uber and Slack.
Some of its poor performance has been masked by share price gains at Chinese ecommerce group Alibaba, which has seen its shares climb sharply and reached a market value of $600bn. SoftBank owns a 25 per cent stake in Alibaba.
Elsewhere, Business Insider reported this week that Michelle Horn, a former McKinsey partner who joined SoftBank as its chief people officer last year, has also departed.
European markets regulator takes another shot at ‘dark pools’
Watchdog also offers concession on post-Brexit share trading
Europe’s markets regulator is boosting its campaign to limit share trading that takes place away from exchanges in so-called dark pools, concluding that sweeping new rules introduced two years ago have only been partially successful.
The European Securities and Markets Authority also suggested that EU investors and banks would continue to be able to trade UK shares in London following the end of the year, when the Brexit transition period ends. The move could help to defuse tensions between regional regulators over how to divide up oversight of Europe’s stock markets from 2021.
In a consultation paper on Wednesday, Esma said it was looking to further improve transparency in Europe’s equity markets — an objective set by its flagship legislation Mifid II, which was introduced in early 2018. But market participants complain that it has made trading more opaque.
“While we consider that [it] has been partially successful, we also see some significant remaining challenges which should be tackled by a targeted review of the legislation,” said Steven Maijoor, chair of Esma.
The changes being considered include limiting the number of regulatory waivers that allow investors to trade in a dark pool — marketplaces where the price is only disclosed after a deal has been executed.
Varghese Thomas, chief operating officer at technology provider TradingScreen, said it was a common misconception that dark trading is secretive and risky. “The truth is that dark trading exists due to strong demand from investors to trade larger volumes of stock, especially in less-liquid smaller and mid-cap stocks, where at times it can be difficult to do so on an exchange.”
Esma also wants to tighten the rules around “systematic internalises”: more lightly regulated invite-only markets that are run largely by banks and high-frequency traders. The regulator is considering restricting them to trading in illiquid shares. It estimates that close to 20 per cent of shares in Europe are traded every day in these venues, up from less than 2 per cent before the introduction of Mifid II.
It is also looking to head off a potential fight with the UK’s Financial Conduct Authority about oversight as London’s markets break away from the EU.
Esma has identified some 6,200 companies available to EU-registered investors to trade on European exchanges if the UK were to leave the single market without being granted “equivalence”, a status that allows investors to freely trade across borders.
Although Britain left the EU last week, the topic is expected to be an important bargaining chip in the trade discussions between the two sides.
Without equivalence granted by the EU, the UK — which plans to replicate Mifid II rules — may be forced to retaliate with its own list. The prospect of separation alarms EU fund managers who could face higher trading costs.
Esma said it hoped a clarification of the rules would make it “less likely that third countries will impose a trading obligation to EU shares”.
Share trading venues such as Turquoise, which is owned by the London Stock Exchange, CBOE Europe and Aquis Exchange have set up operations in the EU in case investors are barred from trading in London.
EU and US carmakers warn ‘weeks away’ from China parts shortage
Hyundai closes South Korea plants as coronavirus outbreak ripples through supply chains
Executives at several carmakers and motor parts suppliers warned that plants in Europe and the US were only weeks away from being forced to close as disruptions caused by the coronavirus outbreak in China rippled through the global manufacturing supply chains.
The warning came as Hyundai said on Tuesday that it had to shut down all its car factories in South Korea after running out of components from China. The world’s fifth-biggest carmaker by sales said it was searching for new sources of engine wire-harness after problems in the supplies of the core electric componentry from China.
“There is a concerted effort to mitigate it before it really bites,” said a senior director at one global car group, adding that its plants had three to four weeks to remove Chinese parts from their supply lines or risk halting production as well.
Carmakers are reliant on a global network of suppliers, with parts originating in China often passing through companies in several countries before being placed into vehicles at factories in Europe or the US. Pressure is building on supply companies to maintain output and protect staff, with partsmakers Continental and Thyssenkrupp both holding crisis meetings earlier this week.
“We are working closely with our suppliers and customers to minimise any disruptions,” said Continental, which runs 50 sites in China, and makes key parts for most major European carmakers.
The disruptions show how coronavirus is wreaking havoc in supply chains across sectors, notably in the vital tech sector, as travel restrictions prevent normal resumption of work after the lunar new year in Wuhan, central China, where the outbreak originated, and elsewhere in the country.
Many companies have said they expect to resume production in China next week in accordance with guidelines from authorities, but the plan could be reviewed if the coronavirus, which has infected 20,689 and killed 427, continues to spread.
Analysts expect the impact on car sales and parts procurement in China from the coronavirus outbreak to be bigger than during the Sars outbreak in 2003 because the world’s second-largest economy has become a much bigger manufacturing hub for the motor industry, including electronic parts.
“Restrictions on movement and other measures have raised the risk of disruption to supply chains, and we see potential for a stalling in automobile production within China,” analysts at Nomura said. “We also see a risk that supply chain issues could have knock-on effects on production in Japan and elsewhere in Asia.”
Many vehicle manufacturers are still scrambling to assess how they will be affected by a Chinese shutdown, several executives told the Financial Times.
“It’s almost impossible to know where the pinch points will be,” said Justin Cox, head of global production at LMC Automotive. “We just don’t know right now how big the problem is or how long this will go on for.”
He added: “A lot of carmakers will have back-up supply options, so they can switch suppliers. But if there is such a loss of output globally, there might not be enough to go around. If it does run out, they have to stop.”
Carmakers in Germany, which make the bulk of their profits in China, have announced the temporary closures of their production plants in the country, as have large car-parts suppliers.
Meanwhile, Japanese carmaker Nissan on Tuesday said it was considering extending a shutdown of its joint-venture operations in China, in line with other carmakers including Toyota, Honda and Ford. For its two plants in Hubei province, which is at the heart of the outbreak, Nissan said production was expected to restart some time after February 14.
Earnings at Volkswagen and BMW operations in China are expected to fall by at least 5 per cent in the first half of 2020, after the companies suspended production in the country, according to analysts at research firm Bernstein.
Hyundai’s operations in South Korea are expected to resume by early next week and the shutdown did not affect Kia Motors, its other car brand, the Korean carmaker said.
But analysts warned that supply disruptions could last longer than expected. “They can start producing the parts in South Korea but this will drive up the cost, which will erode profitability,” said Lee Hang-koo, a researcher at the Korea Institute for Industrial Economics and Trade. Suppliers’ earnings could also be hurt too “if the problem drags on”.
The German automotive industry — including partsmakers such as ZF, which has 40 plants in China — generates about €600m in sales per working day from China, according to Ferdinand Dudenhöffer, a professor at the University of Duisburg-Essen.
Volkswagen, which operates 15 jointly owned plants and employs 100,000 staff in China, insisted that its supply chain was “on track to be fully functional in time for start of production, and planned deliveries to customers remain unchanged”.
Rival BMW also said there was “no impact” on its supply chain, which includes batteries made by Chinese companies such as CATL. General Motors, which runs plants in Korea, said it was “monitoring” the situation closely.