FT : Chinese carmaker BAIC takes 5% stake in Daimler

Chinese carmaker BAIC takes 5% stake in Daimler
Investment to secure alliance with German group against inroads by rival Geely

China’s BAIC has bought a 5 per cent stake in Daimler for about €2.5bn in a move analysts said was aimed at cementing the carmaker’s partnership with the German luxury automotive group and preventing rival Geely from undermining the alliance.

BAIC chairman Xu Heyi said in a statement that the investment was intended to strengthen the company’s ties with Daimler, which has held a stake in the Chinese carmaker’s Hong Kong-listed arm, BAIC Motor, since 2013.

Chinese carmaker Geely, which owns Volvo Cars and Lotus, acquired a 9.69 per cent stake in Mercedes-Benz-manufacturer Daimler for $9bn in early 2018 in a sign of the group’s global ambitions.

“BAIC sees Geely as a threat. The joint venture between Daimler and BAIC is the core of the group’s business,” said John Zeng, managing director of research group LMC Automotive Shanghai.

China’s passenger vehicles market, the largest in the world by sales of new vehicles, shrank last year for the first time since the 1990s because of a reduction in buyer subsidies and weak consumer confidence.

Sales have continued to decline in the first half of 2019. But luxury foreign brands have been less affected by the downturn than cheaper marques, making Chinese manufacturers increasingly dependent on foreign joint ventures for profits.

Mercedes-Benz sold more than 650,000 cars in China last year and just under 350,000 in the first half of 2019.

Although BAIC manufactured Daimler’s combustion engines in China, Geely’s involvement with the German carmaker represented a long-term threat, Mr Zeng said.

Geely and Daimler formed a smart car joint venture in March, which will build electric Smart cars in China to be sold globally.

“Daimler has not made its final decision on electric vehicles yet,” he said, adding that Geely’s founder Li Shufu had a “long-term vision” for his partnership with Daimler.

Strengthening its partnership with Daimler would help BAIC weather the downturn in China given Mercedes’ strong position in the still growing premium end of the market, according to Yale Zhang of Automotive Insights, a Shanghai consultancy.

“The premium sector is most resistant to the shrinking market because people in big cities still have money,” Mr Zhang said. He said BAIC’s traditional marques and its joint venture with South Korean carmaker Hyundai were struggling.

Daimler chairman Ola Källenius said in a statement that the company was pleased BAIC was now a long-term investor in Daimler. “The Chinese market is and remains a crucial pillar of our success — not only for sales but also for our product development and production,” Mr Källenius said

Mercedes marque cars sold in China are manufactured either through a BAIC joint venture set up in 2005 or a separate venture in Fujian province, in which BAIC owns a 35 per cent stake. The two companies also run a joint research and development centre in Beijing.

>>> US Early premarket gappers

Early premarket gappers

Gapping up:

  • CHMA +9.4%, AVCO +7.3%, LOGI +6.1%, GPK +5.4%, BIIB +5%, AUDC +4.9%, VFF +4.3%, HAS +4.1%, CETV +4%, SAN +3.2%, SNAP +3%, PII +2.9%, FBC +2.5%, SWK +2.4%, MAXR +2.3%, HXL +2%, PHM +1.6%, PHM +1.6%, INTC +1.4%, ASR +1.2%, ACC +1%, BRO +1%, E +0.7%, UBS +0.7%, LPL +0.7%

Gapping down:

  • ACAD -14.6%, CCO -7.2%, ZION -6%, STLD -5.2%, RARX -3.4%, CDNS -3%, HSTM -1.6%, QCOM -1.2%, CNC -1.1%, KEY -1%, WHR -0.6%

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance:

  • ZION -5.9%, TTS -5.5%, STLD -5.2%, CNC -2.8%, HOG -2.3%, CDNS -1.9%, HSTM -1.6%, WHR -1.2%, FITB -0.9%, AMTD -0.8%, TRV -0.8%

M&A news:

  • QUAD -2% (LSC Communications and Quad/Graphics (QUAD) terminate $1.4 bln merger agreement instead of challenging DOJ's lawsuit)

Other news:

  • LKSD -13.8% (LSC Communications and Quad/Graphics (QUAD) terminate $1.4 bln merger agreement instead of challenging DOJ's lawsuit)
  • ACAD -13.7% (announces top-line results from Phase 3 ENHANCE trial of pimavanserin as adjunctive treatment for patients with schizophrenia; did not achieve statistical significance on the primary endpoint)
  • CCO -7.2% (proposes to sell 100 million shares of common stock)
  • RDFN -4.2% (following RLGY and AMZN collaboration)
  • LCI -3.8% (after closing up more than 40% on the day)
  • IONS -3.2% (Biogen (BIIB) reports SPINRAZA Q2 sales -6% sequentially (+15% yr/yr) to $488 mln (vs. estimates of around $530 mln))
  • ZG -2.6% (following RLGY and AMZN collaboration)
  • QCOM -1.4% (following WSJ report that Apple may buy Intel's smartphone-modem chip unit)
  • RARX -1.1% (proposes $100 mln public offering of common stock)

Analyst comments:

  • CADE -1.7% (downgraded to Mkt Perform from Outperform at Keefe Bruyette)
  • SFM -0.9% (downgraded to Perform from Outperform at Oppenheimer)

>>> US Gapping up

In reaction to strong earnings/guidance:

  • PII +10%, LOGI +6.2%, GPK +5.4%, AUDC +5.2%, FBP +4.9%, CETV +4%, DGX +4%, PNR +3.7%, SAN +3.6%, IRDM +3.5%, ATI +3.1%, EDU +3%, HAS +2.9%, FBC +2.5%, KO +2.5%, SHW +2.5%, LMT +2.5%, SWK +2.4%, PHM +2.4%, UTX +2.3%, JBLU +2.3%, UBS +2.1%, HXL +2%, KMB +2%, CR +1.3%, ASR +1.2%, ACC +1%, BRO +1%, MTG +0.8%, LPL +0.7%, BIIB +0.5%

M&A news:

  • INTC +1.2% (WSJ reporting that Apple (AAPL) may buy Intel's smartphone-modem chip unit)

Other news:

  • RLGY +39% (Realogy & Amazon (AMZN) partner to launch TurnKey)
  • CHMA +28.1% (announced 'positive' top-line data from its Phase 3 CHIASMA OPTIMAL clinical trial evaluating Mycapssa for the maintenance treatment of adults with acromegaly)
  • MYOV +26.9% (to host call at 8:30 a.m. ET tomorrow to discuss results from second Phase 3 study evaluating once-daily relugolix combination therapy in women with uterine fibroids and from bioequivalence study)
  • AVCO +10.2% (established strategic partnership with GE Healthcare)
  • MRNS +4.8% (reports data from Magnolia and Amaryllis Phase 2 studies in women with postpartum depression)
  • MAXR +2.3% (chosen by NASA to integrate pollution monitoring payload on an upcoming commercial satellite)

Analyst comments:

  • INFN +6.5% (upgraded to Buy at B. Riley FBR)
  • KPTI +6.2% (upgraded to Overweight from Neutral at JP Morgan)
  • SNAP +3.2% (upgraded to Buy from Hold at Stifel; initiated with Buy at Rosenblatt)
  • VFF +3% (initiated with Buy at Craig Hallum)
  • COLM +2% (upgraded to Buy from Neutral at BofA/Merrill)
  • MUR +1.4% (upgraded to Buy from Neutral at Goldman)

WWD : Stella McCartney’s Fall Campaign Calls on Consumers to Protect the Planet

Stella McCartney’s Fall Campaign Calls on Consumers to Protect the Planet
The campaign features Jane Goodall, Amber Valletta and members from climate activist group Extinction Rebellion.

LONDON — Stella McCartney is calling on consumers to protect the planet with her fall 2019 campaign. It’s as much of a fashion statement as it is a political one with individuals such as Amber Valletta, members of the climate activist group Extinction Rebellion and primatologist and chimpanzee expert Jane Goodall taking part.

Shot by the British photographer Johnny Dufort, it features Valletta on the Welsh coast. Dressed in a pale pink dress and a faux fur coat, she’s pictured standing on lush green grass. It acts as a stark contrast to another image where she’s seen wearing a multicolored fringe dress and lying on top of a globe on a rocky gray shoreline.

In another picture, members of Extinction Rebellion — Deya Ward, Ruby Munslow and Tori Tsui — stand with models Chu Wong and Emma Laird on a hillside. They’re wearing colorful jacquard dresses made with sustainable viscose.

A short film, set to be released in September, accompanies the images. Also shot by Dufort, the video is narrated by Goodall, who also recites a poem penned by author Jonathan Safran Foer.

Best known for his novel, “Extremely Loud & Incredibly Close,” Safran Foer’s poem for McCartney includes statements that encourage consumers to think about their impact on the planet. One phrase says: “Here is where we have our long moment, where we cannot help but leave things differently than how we found them, and have the choice to leave things better.”

Safran Foer also collaborated with McCartney on her men’s spring 2020 and women’s resort collection. It features phrases and slogans written in his own handwriting and a chunky knit with the words “We Are the Weather,” which is also the title of Safran Foer’s upcoming book.

The campaign, which breaks on July 23, will be supported by a social media initiative. A video series, “How to Save the World,” will feature across the brand’s accounts as a means to share information on the climate crisis.

McCartney’s label has long been rooted in sustainability since its launch in 2001. More than 60 percent of her collections are made from sustainable materials. She will continue to push that sustainability message as her company joins the LVMH stable and she becomes a special advisor to LVMH chairman and chief executive officer Bernard Arnault.

WWD : Barneys Seen Inching Closer to Bankruptcy

Barneys Seen Inching Closer to Bankruptcy
Industry sources are buzzing about a potential filing this week.

Time might be running out for Barneys New York, with industry sources fearing a bankruptcy could come as early as this week.

The luxury department store acknowledged last week that it was “actively evaluating opportunities to strengthen our balance sheet and ensure the sustainable, long-term growth and success of our business.”

That statement spooked an already nervous vendor base and sources said factors, a vital source of trade financing in fashion, have stopped approving orders to the retailer. While another investor could come in or other financial arrangements made, these solutions increasingly look like long shots.

Two sources said a bankruptcy filing could come this week, with one indicating that it could come by Wednesday.

“Because they went public with it, they kind of scared everybody off,” one industry source said, citing the company’s reaction to news reports. “My sense is that something’s got to happen quickly; I’m sure most people aren’t shipping to them. This is a pretty crucial time of year not to be getting receipts.”

Barneys is continuing to explore the possibility of bringing in an investor or strategic partners to help improve its balance sheet, and is talking with landlords to renegotiate leases.

It also doesn’t seem to have lost the confidence of some suppliers.

On Monday, two sources indicated that many vendors have continued to ship to Barneys and that fall one for July selling was shipped to the store. “Many vendors continue to ship daily and there is plenty of new merchandise on the shelves,” said one source.

Barneys, after being contacted Monday on rumors of a bankruptcy filing this week and that some vendors are holding back orders, had no comment, other than reiterating its statement of over a week ago, which indicated: “At Barneys New York, our customers remain our top priority and we are committed to providing them the excellent services, products and experiences they have come to expect. We continue to work closely with all of our business partners to achieve the goals we’ve set together and maximize value.”

While some vendors have held out hopes that the situation would work itself out, it is a tenuous one for the retailer. The company needs to drive sales to cover its costs and a flow of fresh merchandise to get those sales, but that becomes difficult to maintain the more worried vendors get.

Fall two shipments for August delivery and fall three shipments for September delivery seem more uncertain. It’s unclear to what extent vendors will continue to support the luxury store in the coming days or how many have already decided to discontinue shipping to the retailer.

“Barneys is keeping market appointments and moving ahead in terms of what they are supposed to do,” said one fashion supplier who requested anonymity, and said the retailer was not behind in its payments as of last week.

Another source indicated that Barneys chief executive officer Daniella Vitale has communicated with the retailer’s team to the extent that she can, considering the fate of Barneys is yet to be determined and the decision rests with its principal owner, Richard Perry, and where he sees the best financial recovery for himself and for the future of the company. One source said Vitale is encouraging the Barneys workers to focus on the business and its customers.

Barneys, which is controlled by Perry, has long been a source of financial intrigue, with rumors that it was struggling steadily circulating.

But last year an arbitration with the landlord for the company’s Madison Avenue flagship allowed an annual rent increase to more than $30 million a year from $16 million, pressuring the flow of money through the business.

That increase might have been the final straw.

Antony Karabus, ceo of HRC Retail Advisory, said: “A company of that size cannot just withstand such an enormous, sudden increase in fixed costs…it’s just impossible, especially at a time when competition is growing dramatically with all the direct players growing their e-commerce. It’s just extremely difficult.”

Some smaller vendors that relied excessively on Barneys would get hit hard if the luxe chain does slip into insolvency. However, most have been girding for trouble.

“The vendor community should have been somewhat prepared,” said Matt Kaden, managing director at MMG Advisors Inc. “Any vendor in their matrix should have been looking to move any sort of concentration into other channels. For smaller vendors who are largely dependent on Barneys, that might mean the end of them.”

If Barneys were to file — again — it would amount to another blow to the fashion establishment, which has been shaken by the rise of e-commerce, influencers, designers’ own stores and so on. Barneys also has a special place in the fashion world as the champion of many small designers and a launch pad for the up-and-coming.

“What does a bankruptcy mean for fashion?” Kaden said. “It doesn’t feel great, but for the vendor community, most will survive it. There’s not going to be a domino effect, but certainly I think the retail community is on watch that you better be performing with excellence or maybe you’re next in line.”

FT : Hermès sales beat expectations on strong Asian demand Few signs trade tensi

Hermès sales beat expectations on strong Asian demand
Few signs trade tensions have had an impact on demand from Chinese consumers

Hermès said on Tuesday that its sales beat market expectations in the second quarter, as the French luxury group continued to be boosted by Asian demand for its goods and global trade tensions showed little sign of having an impact.

Stripping out foreign exchange fluctuations, the maker of Birkin and Kelly handbags and silk scarves said that sales grew 12.3 per cent to €1.67bn in the three months between April and June. This was ahead of the 11.6 per cent sales growth recorded in the first quarter.

Overall Hermès sales reached €3.28bn in the first half of the year, slightly ahead of the €3.24bn analyst estimates compiled by Bloomberg.

Eric du Halgouët, the group’s chief financial officer, said on a call with reporters that Hermès got off to a “very strong start to the year,” with a continuation of trends from the first quarter to the second. All of this was despite a high comparison basis with the previous year.

During the first half Hermès recorded growth across all regions and business lines, led by Asia (ex-Japan), which continued its strong growth trajectory and was up 18 per cent at comparable exchange rates.

Hermès said that it was boosted by several new store openings and renovations in recent months in Asia. So far the French group, like its luxury rivals LVMH and Kering who are due to report this results this week, hasn’t seen a slowdown in Chinese demand, which investors fear may be hit by trade tensions with the US.

Elsewhere Hermès said that Japan and America both gained 10 per cent during the first six months of the year, while Europe (ex-France) was up 9 per cent and its home market of France, where anti-government gilets jaunes protests dragged on sales earlier in the year, gained 4 per cent.

>>> What to look at today - 23rd of July 2019

European and U.S. equity futures edged higher Tuesday as investors braced for a busy week of U.S. corporate earnings and potential developments in trade negotiations. Oil stabilized after recent gains amid tensions in the Persian Gulf.
Stocks in Asia rose, led by indexes in Tokyo, while gains were more modest in Hong Kong and Shanghai. U.S. futures ticked higher after technology shares led an advance on Wall Street Monday. Trading has been thin, with volumes kept below average as the Northern European summer gets into full swing.
The yen weakened as the dollar gained against major peers. The British pound added to losses after a forecast showed Brexit may have already pushed the U.K. into a technical recession, and ahead of the announcement of Prime Minister Theresa May’s replacement. Treasury yields held around 2.05%.


Macro :
-Next U.K. Prime Minister Faces Crises at Home and Abroad

Keep an eye on :
- AKZA NA : Akzo Nobel Offers Little Value After Specialty Sale, Citi Says
- AMS SW : *AMS SEES 3Q REV. $600M TO $640M, EST. $525.5M
- ATRS AV : Gazit to Buy Remainder of Atrium European At EU3.75/Share
- BEZ LN : Enel Says Total Net Production in 1H Rose to GWh 112,889
- BFIT NA : Basic-Fit First Half Adjusted Ebitda EU69.7 Mln
- BMW GY : BMW Shares Cheap Ahead of CEO Change, Morgan Stanley Says
- IAG LN : British Airways Pilots Vote to Strike as Airline Heads to Court
- CMBN SW : Cembra Money Bank Sees Full Year EPS CHF5.20 To CHF5.50
- CON GY : Continental Cuts Outlook on Surprise Slowdown in Auto Production
- CON GY : Continental’s Full-Year Guidance Cut May ‘Spook’ Market: Citi
- DAI GY : Daimler Gets China’s BAIC As New Key Holder (5%)
- DBK GY : Deutsche Securities to Close Equity Sales in S. Korea: Daily
- EDEN FP : Edenred 1H Net Rises 18%; Sees Record FY Ebit of EU520M-EU550M
- ENEL IM :
- ELE SM : Endesa First Half Ebitda Matches Estimates
- EO FP : Faurecia First-Half Operating Income EU645 Million, Down 0.4%
- FDM LN : FDM Group 1H Revenue GBP134.4M; Remain Confident in Outlook
- FEVR LN : Fevertree Sees FY in Line, Remains Mindful of Tough Comparators
- GET FP : Getlink Confirms Div. Growth Policy, Medium-Term Outlook
- RMS FP : Hermes Sales Growth Beats Analyst Estimates, Fueled by Asia
- IDIA SW : Idorsia First Half Operating Loss CHF239 Mln -->-1.8%
- IFX GY : Infineon’s Cypress Deal Brings Plenty of Benefits: Loop Capital
- ISAT LN : U.K.’s CMA Pushes Back Inmarsat Deal Comments Deadline to Aug. 5
- JOUL LN : Joules FY19 Revenue Rises, Says YTD Performance In Line
- JuN3 GY : Jungheinrich Cuts Forecasts for 2019 on ‘Gloomier’ Environment
- KNIN SW : Kuehne + Nagel 2Q In Line in a Tough Environment: Bernstein
- NTGY SM : Naturgy Is Close to Purchase of Medgaz Stake: El Confidencial
- NHY NO : Norsk Hydro Second Quarter Underlying Profit Misses Estimates
- NHY NO : Norsk Hydro Joins Alcoa in Trimming 2019 Aluminum Demand Outlook
- NYR BB : Nyrstar Gets HY, Convertible Bondholders’ Nod for Restructuring
- OSR GY : AMS Re-Evaluates Possible New Offer for Osram (1)
- PAG LN : Paragon Operating in Line; Sees FY Net Interest Margin Higher
- PEABB SS : Peab Management Bought Shares; CEO Invested ~SEK5.36m
- PZC LN : PZ Cussons Sees Eco Conditions in Key Markets ‘Challenging’
- RAND NA : Randstad Second Quarter Revenue Meets Estimates
- RKH LN : United Oil & Gas to Buy Rockhopper’s Egyptian Assets for $16m
- SAN FP : Sanofi Signs Roche Deal for Exclusive U.S. OTC Rights to Tamiflu
- SAN SM : Santander Sees Profit Hit by Charges for Job Cuts, Restructuring
- FTI US : TechnipFMC Wins ‘Significant’ North Sea Contract
- UBSG SW : UBS Second Quarter Net Income Beats Highest Estimate
- UTG LN : Unite Group Sees Rental Growth Outlook of 3%-3.5% for 2019/20
- VELO DC : Veloxis Boosts Sales, Profit Forecasts on Tacrolimus Shortage