After Hours Summary: Alcoa dips on Q4 earnings; XPO +16% on plan to explore strategic alternatives
After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: SAVE +1.4% (provides Q4 operating metric guidance)
Companies trading higher in after hours in reaction to news: XPO +15.9% (to explore strategic alternatives for one or more business units), TNDM +1% (launches t:slim X2 insulin pump with Control-IQ technology in the US)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: AA -2.6%, HWC -1.2%
Companies trading lower in after hours in reaction to news: GWRS -4.2% (stock offering), AGI -1.1% (reports results from gold mine), BCC -0.8% (names new CEO)
Goldman Sachs reports Q4 (Dec) results, beats on revs
- Reports Q4 (Dec) earnings of $4.69 per share, may not be comparable (due to litigation proceedings) to the S&P Capital IQ Consensus of $5.56; revenues rose 23.2% year/year to $9.96 bln vs the $8.56 bln S&P Capital IQ Consensus.
- Net provisions for litigation and regulatory proceedings for the fourth quarter of 2019 were $1.09 billion compared with $516 million for the fourth quarter of 2018.
- Provision for credit losses was $336 million for the fourth quarter of 2019, 51% higher than the fourth quarter of 2018 and 15% higher than the third quarter of 2019.
- The increase compared with the fourth quarter of 2018 primarily reflected higher impairments. Net revenues were $9.96 billion for the fourth quarter of 2019, 23% higher than the fourth quarter of 2018 and 20% higher than the third quarter of 2019. The increase compared with the fourth quarter of 2018 primarily reflected significantly higher net revenues in Asset Management and Global Markets
Gapping down
In reaction to disappointing earnings/guidance:
- TGT -7.1%, PNC -1%, UNH -0.5%, DIOD -0.4% (guides Q4 revenue in-line), GS -0.3%
Other news:
- NKTR -15.8% (FDA Advisory Committee vote on oxycodegol gel indicated data from one pivotal study is not enough to support use)
Analyst comments:
- FSLR -4.8% (downgraded to Underweight from Overweight at Barclays)
- BYND -3.2% (downgraded to Mkt Perform from Outperform at Bernstein)
- CDLX -2.5% (downgraded to Mkt Perform from Outperform at Raymond James)
Gapping up
In reaction to strong earnings/guidance:
- FLNT +39.7% (raises FY19 revenue guidance), OGI +24.5%, ACOR +2.6%, BLK +0.7%
M&A news:
- POPE +24.3% (to be acquired by Rayonier (RYN))
Other news:
- RMTI +12.9% (enters license and supply agreements with Sun Pharma to commercialize Triferic in India)
- EXPR +1.9% (announces restructuring of its corporate workforce)
- GSK +1% (Dovato the once-daily, single-pill, 2drug regimen for the treatment of HIV-1 infection, granted marketing approval by Japan Ministry of Health, Labour and Welfare
- ATHX +0.7% (names Ivor Macleod CFO)
Analyst comments:
- MNTA +14.4% (upgraded to Overweight from Neutral at JP Morgan)
- PCG +5.3% (upgraded to Buy from Neutral at Citigroup)
- GLUU +2.4% (resumed with an Overweight at KeyBanc Capital Markets)
- APHA +2.2% (upgraded to Neutral from Sector Underperform at CIBC)
- ECHO +1.9% (upgraded to Positive from Neutral at Susquehanna)
- MAXR +1.9% (upgraded to Neutral from Underperform at Credit Suisse)
- ZUO +1.7% (initiated with a Outperform at First Analysis Sec)
- CHRW +1.7% (upgraded to Positive from Neutral at Susquehanna; upgraded to Overweight from Equal Weight at Barclays)
- HUN +1.6% (initiated with a Buy at BofA/Merrill)
- WERN +1.4% (upgraded to Positive from Neutral at Susquehanna)
- OCSL +1.3% (upgraded to Overweight from Equal Weight at Wells Fargo)
- ZNGA +1.2% (resumed with an Overweight at KeyBanc Capital Markets)
- B +1% (upgraded to Buy from Neutral at UBS)
- CW +1% (upgraded to Buy from Neutral at UBS)
- PTON +1% (initiated with an Outperform at Wedbush)
- QCOM +0.7% (upgraded to Buy from Hold at DZ Bank)
Early premarket gappers
- Gapping up:
- FLNT +54.8%, OGI +27.3%, RMTI +3.4%, EXPR +1.9%, ZUO +1.7%, BLK +1.3%, PNC +1.1%, BAC +1%, DAL +0.8%, GSK +0.7%, ATHX +0.7%, USB +0.5%
- Gapping down:
- NKTR -13.8%, TGT -7.5%, BYND -3.9%, UNH -0.5%
‘LVMH of China’ faces disruption to its cotton supplies
Textile group Shandong Ruyi blacklisted after failing to pay court-ordered arbitration
Shandong Ruyi is facing serious disruption to its access to cotton supplies after the company, once hailed as the “LVMH of China”, was placed on an industry blacklist that will halt much of its trading in the commodity with major global groups.
Details from a recent arbitration case with a Bangladeshi group, in which Shandong Ruyi was ordered to pay compensation but has not, have also shone a spotlight on the extent of the Chinese company’s difficulties in paying off debts.
The Liverpool-based International Cotton Association added Shandong Ruyi this month to its list of companies that have failed to pay arbitration awards connected to corporate disputes.
That will bar association members, which include many of the cotton industry’s largest traders such as Cargill and Louis Dreyfus, from trading with the Chinese textile group.
Shandong Ruyi is a major purchaser of cotton due to the clutch of global brands it bought in a $4bn shopping spree in recent years, including Paris-based SMCP, UK clothing maker Aquascutum and Savile Row tailor Gieves & Hawkes.
The move has the potential to freeze Shandong Ruyi’s access to purchasing cotton from major suppliers and squeeze production at its brands, according to several people familiar with the cotton industry. An ICA spokesperson said the association could discipline members who continue to trade with companies on the blacklist.
Many Chinese groups that made costly overseas acquisitions in recent years have struggled to manage, and pay for, their new global empires.
Over a period of three years Shandong Ruyi agreed to more than 15 global acquisitions that eventually put it in control of a long list of name brands including the Carloway Mill, one of the last producers of handwoven Harris tweed on Scotland’s Isle of Lewis. As a result, its total debt ballooned from Rmb15bn ($2.2bn) at the end of 2015 to Rmb28bn at the end of 2018.
According to an ICA document seen by the Financial Times, Bangladeshi textile group Valleycot Marketing bought 7,000 tonnes of Australian cotton from Shandong Ruyi between 2016 and 2017 but the Chinese company delivered only a portion of that order.
Valleycot initiated arbitration against Shandong Ruyi in February 2019 and was awarded about $1m in compensation, the documents showed. But the Chinese company has not paid even part of it.
“Since the publication of the award, Shandong Ruyi has expressed their inability to pay up even a fraction of the award due to their financial woes,” said Khondoker Shahriar, Valleycot chief executive.
Shandong Ruyi did not respond to a request for comment.
Shandong Ruyi was founded as a textile manufacturer in northern China in the 1970s but began rapidly expanding into the world of fashion starting in 2015.
The accumulation of fashion assets earned it the moniker “the LVMH of China”, likening it to the Parisian group that takes its name from luxury brand Louis Vuitton, champagne house Moët et Chandon and cognac distiller Hennessy.
But over the past year it has faced problems paying for its trophy acquisitions. Last year, Shandong Ruyi was forced into restructuring and required a bailout from the local government in Jining city where it is based. It narrowly avoided a default on renminbi-denominated bonds last month.