>>> What to look at today - 22nd of January 2019

Asian stocks and U.S. futures fell Tuesday as investors mulled the latest batch of headlines on global growth and trade, while Treasury yields pushed lower and the yen higher.
Without any direction offered from American markets that were shut for a holiday Monday, shares declined from Tokyo to Sydney to Shanghai to Seoul. European futures also pointed lower. News that the IMF was cutting its global growth forecast to the weakest in three years merely cemented an already downbeat mood. The offshore yuan weakened after President Xi Jinping stressed the need to maintain political stability in an unusual meeting that suggested fresh concerns about the implications of the slowing economy.

Nikkei -0.47% Hang Seng -1.02% CSI -1.33% Shanghai -1.18% Shenzen -1.17%

Eur$1.1351 CNH 6.8167 CNY 6.80 GBP 1.2861 JPY 109.41 CHF 0.9977 WTI $ 53.47

S&P -0.71% EuroStoxx -0.35% FTSE -0,34% Dax -0.48% SMI -0.37%

Macro :
- May’s Brexit Plan B Still Leaves Her Needing Opposition Votes
- Labour Calls for Vote That Could Trigger Brexit Referendum Rerun

Keep an eye on :
- ACPH BB : Acacia Pharma Reports Supportive Safety Data for Barhemsys
- ADS GY : Adidas CEO Sees Sales, Profit Growing This Year: Sueddeutsche
- ARBN SW : Arbonia Full Year Revenue Misses Lowest Estimate
- BOTHE BB : Bone Therapeutics, Asahi Kasei Reviewing Preob Licensing Options
- CSGN SW : Ex-Credit Suisse Banker Faces Fresh Forgery Probe in Geneva
- DAI GY : Daimler Said to Build Electric Car Battery Factory in Poland
- DBK GY : Hafez Sabet Sues Deutsche Bank, Others for Over EU11 Billion
- EL US : Founder of Estee Lauder-Backed Deciem Dies, CP Says (Correct)
- GALE SW : Galenica Full Year Sales Miss Lowest Estimate
- WL6 GY : Heidelberg Pharma Gets Milestone Payment From Link Health
- BOSS GY : Hugo Boss Fourth Quarter Sales Beat Highest Estimate
- GET FP : Getlink FY Rev. Meets Estimate
- GVNV NA : GrandVision Fourth Quarter Comparable Sales +2.9%
- KOMN SW : Komax Full Year Orders CHF496.7 Mln
- KINVB SS : Kinnevik Shareholders Regret Stenbeck Departure From Board: SVD
- SDF GY : K+S Sees EU110 Mln Germany Drought Impact on 2018 Ebitda
- LAND LN : Landsec Launches Office Space-Sharing Brand Myo: FT (Earlier)
- LNA GY : Linde Board Authorizes up to $6B Share Buyback Program
- LOGN SW : Logitech Raises FY Adj. Operating Income Outlook to $340m-$345m
- LHA GY : Lufthansa Invests in Price Forecasting Specialist Hopper
- NOKIA FH : France Considers Measures to Better Control Huawei: Les Echos
- ORA FP : Orange Faces Possible Fines From Regulator Arcep: Les Echos
- ORK NO : Orkla Should Consider Expanding Into Services, Chairman Tells DN
- QIA GY : Qiagen Positioned to Benefit in Molecular Diagnostics: Lampe
- LEON SW : Raiffeisen Schweiz’s Investigation Found No Criminal Wrongdoing
- RCO FP : Remy Cointreau 3Q Rev. EU348m, Est. Was EU343m
- RNO FP : Tokyo Court Again Rejects Ghosn’s Request for Bail
- REP SM : Repsol 4Q Upstream Production 722,000 Barrels/Day
- SAE GY : Shop Apotheke Full Year Revenue Misses Lowest Estimate
- SGSN SW : SGS Full Year Adjusted Operating Income Meets Estimates
- SOI FP : Soitec Raises FY Sales Outlook; Extends Samsung Foundry Pact (1)
- SNH GY : Steinhoff to Publish Update for December Quarter by End-February
- SWMA SS : Swedish Match a Winner in New Tobacco World: Citi
- TOM2 NA : TomTom Sells Telematics Business to Bridgestone for EU910m ,TomTom to Return EU750m to Holders on Unit Sale to Bridgestone
- TRYG DC : Tryg Fourth Quarter Combined Ratio Reported Misses Estimates
- UBSG SW : UBS Full Year Dividend Per Share CHF0.70
- VIFN SW : High Dosage of Vifor’s Venofer Significantly Lowers Death Risk
- WMH LN
- WES NA : Wessanen Proposes Reappointment of CFO Ronald Merckx

>>> Europe : Bokers Upgrades & Downgrades - 22nd of January 2019

>>> Up
* AB InBev Upgraded to Top Pick at RBC
* Air France-KLM Raised to Overweight at Morgan Stanley
* Arkema Upgraded to Outperform at MainFirst; PT 122 Euros
* Equiniti Upgraded to Buy at Peel Hunt
* Givaudan Upgraded to Outperform at MainFirst; PT 2,700 Francs
* Hochtief Upgraded to Buy at SocGen; PT 154.50 Euros
* Lanxess Upgraded to Outperform at MainFirst; PT 58 Euros
* Lufthansa Upgraded to Overweight at Morgan Stanley; PT 25 Euros
* Restore Upgraded to Buy at Peel Hunt
* Smart Metering Upgraded to Buy at Peel Hunt
* Stora Enso Upgraded to Buy at SEB Equities; PT 14 Euros
* Swedish Match Upgraded to Buy at Citi
* Under Armour Upgraded to Buy at Goldman; PT $28
* UPM Upgraded to Buy at SEB Equities; Price Target 29.50 Euros
* Voestalpine Upgraded to Overweight at JPMorgan; PT 31 Euros

>>> Down
* Altria Downgraded to Underweight at Morgan Stanley
* BASF Downgraded to Neutral at MainFirst; PT 75 Euros
* BillerudKorsnas Cut to Hold at SEB Equities; PT 120 Kronor
* Croda Downgraded to Underperform at MainFirst; PT 47.50 Pounds
* EasyJet Cut to Equal-weight at Morgan Stanley; PT 12.90 Pounds
* Gap Downgraded to Sell at Goldman; PT $23
* Henkel Downgraded to Neutral at MainFirst; PT 92 Euros
* Henkel Downgraded to Add at AlphaValue
* Henkel Downgraded to Neutral at Goldman; PT 100 Euros
* IAG Downgraded to Underweight at Morgan Stanley
* Italgas Downgraded to Sell at Citi
* K+S Cut to Underperform at MainFirst; Price Target 17 Euros
* Luxoft Holding Downgraded to Hold at Berenberg
* Novo Nordisk Downgraded to Hold at SEB Equities; PT 330 Kroner
* Outokumpu Downgraded to Underweight at JPMorgan; PT 3.60 Euros
* Red Electrica Downgraded to Neutral at Citi
* Royal Dutch Shell Downgraded to Underweight at Morgan Stanley
* Shell Cut to Underweight at Morgan Stanley; PT 21.80 Pounds
* SSAB Downgraded to Neutral at JPMorgan; PT 37 Kronor
* Tiffany Downgraded to Neutral at Goldman; PT $104

>>> Initiation
* Circle Property Rated New Buy at Cenkos Securities
* Qiagen Rated New Buy at Bankhaus Lampe; PT 38 Euros

>>> Call
* Swedish Match a Winner in New Tobacco World: Citi
* *EUROPE STAPLES CUT TO UNDERWEIGHT VS MARKETWEIGHT AT BARCLAYS
* *EUROPEAN TECH RAISED TO MARKETWEIGHT VS UNDERWEIGHT: BARCLAYS

>>> Europe Flash: Casino throws a lifeline to key shareholder Rallye

Europe Flash: Casino throws a lifeline to key shareholder Rallye

Supermarket group Casino Guichard Perrachon [EPA:CO] has completed its EUR 1.5bn asset disposal programme with a sale and leaseback deal worth EUR 501m.
Casino announced the deal with Fortress Investment Group this morning (21 January) after completing a smaller transaction worth EUR 100m last week. Both deals are likely to be welcomed by investors amid concerns over leverage at Casino and its holding company parent Rallye [EPA:RAL].
Casino kicked off the EUR 1.5bn asset disposal in June, around the time investor scepticism over the financial condition of it and its parent company was at its most acute. The plan aimed to reduce net debt in Casino's French operating business by EUR 1bn: net debt in France was EUR 4bn at 30 September 2018 out of a group total net debt of EUR 5.4bn. Casino achieved its target through the sale and leaseback transaction with private equity fund Fortress. It involves the sale of 26 hypermarkets and supermarkets valued at EUR 501m. Casino will receive EUR 392m on completion, expected early in 2019, followed by a potential additional payment of EUR 150m, depending on the unit’s performance.
While the Fortress transaction is important in allowing Casino to hit its deleveraging target, a smaller transaction announced on Friday could prove equally significant for different reasons. Casino sold six hypermarkets to co-operative rival E Leclerc for EUR 101m, a deal which valued the stores at 0.7x sales. That’s a valuation multiple which is far above Casino’s stock market EV/sales valuation of 0.2x. The supermarkets were also some of the worst performing in Casino’s network, according to the statement, with annual sales of EUR 150m and trading losses of EUR 8m. If rivals are willing to buy up some of Casino’s worst performing stores for 0.7x sales, what price might they be willing to pay for its better performing assets? At face value, the transaction implies Casino’s current 0.2x EV/sales multiple is too low.
The latter transaction could also help out 51% shareholder Rallye. Rallye’s debt is worth more than the value of its holding in Casino. The only way Rallye is able to avoid breaching a key bond covenant is by arguing that Casino’s market value significantly understates the supermarket’s fair value. Transactions like the one Casino completed on Friday could help to do that, providing a lifeline to its beleaguered parent.

>>> Rheinmetall, BAE Systems to create JV in the UK

Rheinmetall, BAE Systems to create JV in the UK
21 JAN 2019
Rheinmetall [FRA: RHM], the Germany-based defence contractor, and BAE Systems plc [LON:BA], the UK-based aerospace and defense company, have reached an agreement to form a joint venture in the UK.
As part of the agreement, Rheinmetall will purchase a 55% stake in the existing BAE Systems UK-based combat vehicles business, with BAE Systems retaining 45%.
The JV, Rheinmetall BAE Systems Land, will focus on military vehicle design, manufacturing and support business.
Press release:
Rheinmetall and BAE Systems today announced that they have signed an agreement to create a joint UK based military vehicle design, manufacturing and support business. The new Joint Venture will be headquartered at BAE Systems’ facility in Telford, England and will sustain over 400 jobs in the UK, as well as preserve key technology and engineering skills.
Rheinmetall will purchase a 55 percent stake in the existing BAE Systems UK based combat vehicles business, with BAE Systems retaining 45 percent. The establishment of the new Joint Venture is subject to regulatory approvals which are anticipated to be completed in the first half of 2019. Once the approvals have been completed, the Joint Venture will be known as Rheinmetall BAE Systems Land (RBSL).
In addition to managing and growing the existing combat vehicle support business, the intent is for the new Joint Venture to play a major role in the delivery of the British Army’s new Mechanised Infantry Vehicle (MIV) and other strategic combat vehicles programmes.
While initially focused on these major UK programmes, RBSL will also form an integral part of Rheinmetall’s Vehicle Systems Division and will participate in and contribute to various global military vehicle pursuits and contracts. The combination of Rheinmetall’s military vehicles technology and products with the additional capabilities and products brought to the Joint Venture by BAE Systems, such as Trojan, Terrier, Warrior, military bridging and the AS90 self-propelled artillery system will create a European market leader in the military vehicle sector. RBSL will have the potential to create hundreds of additional UK jobs, both in Telford and the wider supply chain.
Ben Hudson, global head of Rheinmetall’s Vehicle Systems Division said “We are excited about the potential the new Joint Venture holds for Rheinmetall, BAE Systems and ultimately our customers. The combined capabilities of our two great companies will offer our customers a comprehensive portfolio of military vehicles and associated technologies both now and into the future. We are proud to invest in the UK and expect to substantially grow the current business and the Telford manufacturing facility over the coming years.”
Jennifer Osbaldestin, Managing Director of BAE Systems Land UK business, said “We are committed to evolving our combat vehicles business so that we better serve our customers’ future interests. Joining forces with Rheinmetall in the UK provides renewed purpose for our vehicles business and allows us to deliver products, services and technology that help land forces excel in their vital roles. We look forward to working together to ensure the Joint Venture is a trusted supplier to the British Army and our international customers.”
Notes
Rheinmetall Defence is a leading supplier of military vehicles and systems. Rheinmetall’s businesses in the UK include Rheinmetall Defence UK (RD UK) and Rheinmetall MAN Military Vehicles UK (RMMV UK), and are well-established suppliers to the MOD. They support the British military in a number of areas, including vehicle systems, ammunition and technical assistance.
BAE Systems has had a combat vehicles manufacturing and support business in the UK for many decades. Under predecessor companies it manufactured and built the Challenger 2 Main Battle Tank and the Warrior, Terrier and prototypes of the BOXER vehicles. The current business helps the MOD and Army maintain and upgrade a range of military vehicles and bridging systems. It employs around 400 people, who are based largely at the company’s Telford facility, as well as at sites in Washington, Filton (Bristol) and Bovington.
The proposed Joint Venture does not include BAE Systems’ munitions and weapons systems businesses or its holding in the CTAI Joint Venture with Nexter.

FT : Billionaire founder of hedge fund Citadel buys £95m London home

Billionaire founder of hedge fund Citadel buys £95m London home
Ken Griffin’s purchase of No 3 Carlton Gardens comes amid high-end property market slump

Ken Griffin, the billionaire founder of the $28bn hedge fund Citadel, has bought a Georgian house near Buckingham Palace in a commitment of about £95m to central London’s real estate as Brexit approaches. 

Mr Griffin “recently purchased 3 Carlton Gardens in St James’s”, according to Julie Andreeff Jensen, his spokesperson. “It is an historic property with a spectacular location, extraordinary elegance and stunning gardens,” she said of the house that shares a driveway with the UK foreign secretary’s official residence. “It is truly a unique opportunity to own a home in London.” 

The deal comes amid a slump in the market for high-end London homes, that after a period of runaway price growth have been hit by tax changes and the prospect of the UK leaving the EU. 

Prices for homes in the UK capital’s most exclusive districts fell 18.4 per cent between their 2014 peak and late last year, according to estate agent Savills. 

The Grade II*-listed 1820s home sold for about £95m, according to people familiar with the purchase. An asking price of £145m was originally discussed but in the past two years the house was marketed for £125m. At least five people bid to buy it, said one person familiar with the deal.

It has been freshly redeveloped by the high-end property developer Mike Spink, complete with a pool, staff quarters and private gardens. Mr Spink bought the property for £65.5m in 2013 in partnership with the private equity investors Evans Randall.

Before then the house was used by the UK’s secret intelligence service MI6 to interview potential recruits.

According to two former Whitehall officials, the building was used to impress candidates before they were offered roles at less distinguished locations, including the service’s former headquarters at Century House in Lambeth or its current home at Vauxhall.

Mr Griffin, whose net worth Forbes estimates at about $9.9bn, founded the Chicago-based multistrategy hedge fund Citadel in 1990 after he began trading convertible bonds from his dormitory at Harvard University. The fund has been building headcount in its London office in recent years. 

While many hedge funds struggled through the volatile markets in the fourth quarter of last year, Citadel’s flagship Wellington fund gained more than 9 per cent. Its global equities and tactical trading funds returned almost 6 per cent and 9 per cent respectively. 

In 2001 Mr Griffin established Citadel Securities, a market-making firm separate from the hedge fund, which has grown to become one of the world’s largest market-makers. 


Mr Griffin, 50, already owns an extensive portfolio of properties in the US. His new London purchase is at the heart of the city’s government district and was associated, along with No 4, with Charles de Gaulle, former French president, during the second world war. 

Mr Griffin reportedly owns the top four floors of the Chicago condominium No 9 Walton, which he bought for $58.75m in late 2017. He owns three other properties in Chicago, and a $200m apartment in New York that occupies three floors of Manhattan’s 220 Central Park South skyscraper. 

The fund manager has also bought six properties in the Palm Beach area in Florida for about $230m, a $60m condo in Miami and two homes in Hawaii for just over $28m.

>>> Prime Minister May: Presents new Brexit proposal

Prime Minister May: Presents new Brexit proposal
- Clear govt's Brexit approach had to change & it has.
- Govt approached cross-party talks without preconditions; regrets Labour leader Corbyn didn't take part.
- Will hold further talk meetings this week.
- Right way to ule out no-deal is to approve deal.
- Extending Article 50 would

>>> Parmigiani owner Sandoz Foundation rejects sale rumours

Parmigiani owner Sandoz Foundation rejects sale rumours

Parmigiani, the Swiss luxury watch brand, is not for sale, NZZ am Sonntag reported.
The Swiss weekly cited Charles Gebhard, delegate of Parmigiani owner Sandoz Foundation, who rejected rumours that the brand is for sale stating that the family intends to keep it.
Parmigiani sells three to four thousand units a year, the report stated.
The original article was published in the Sunday edition on page 25.

FT : PG&E bankruptcy darkens outlook for renewable energy investment

The plan for Pacific Gas and Electric, the California utility, to enter bankruptcy to manage its $30bn wildfire liabilities has sent shockwaves through the US energy industry, raising concerns about the outlook for investment in renewable power in the state and beyond.

Credit ratings for several businesses that supply power to PG&E were cut sharply last week, potentially raising the cost of capital for the industry and creating additional difficulties for California’s plan to source 100 per cent of its electricity from low-carbon technologies by 2045.

Projects that supply PG&E with electricity under long-tmsg 4erm contracts at prices that are well above today’s rates face the threat that in bankruptcy the company will reject those contracts, or insist on renegotiating them at lower levels, hurting the projects’ cash flows and their ability to service their debts.

PG&E said last Monday that it intended to enter bankruptcy on or around January 29. It argued that this would be the best way to address the liabilities, estimated at $30bn-plus, which it faces as a result of its involvement in the devastating wildfires in northern California in 2017 and 2018.

Topaz Solar Farms, owned by Warren Buffett’s Berkshire Hathaway Energy, Genesis Solar, owned by NextEra Energy, and ExGen Renewables IV, owned by Exelon, are among the renewable energy businesses that have been downgraded by rating agencies, along with other suppliers to PG&E including the Panoche Energy Center, a gas-fired “peaker” plant used at times of high demand, and Kinder Morgan’s Ruby gas pipeline. 

Some energy yieldcos, listed companies structured to pay dividends from regular cash flows, have also been hit. Shares in Clearway Energy, which earned 23 per cent of its revenue from PG&E in 2017, fell sharply when the company announced its bankruptcy plan, although they recovered in subsequent days and ended the week down only 6 per cent.

Recommended
John Gapper
Wildfires are too hot for one utility to handle
A bankruptcy of a US regulated utility is a rare event, and companies that agreed to supply PG&E did so on the basis that it was unlikely to fail to meet its obligations. Until this month, PG&E was rated as investment grade by S&P Global, Moody’s and Fitch. Its decision to seek Chapter 11 bankruptcy protection has overturned the assumptions used by its suppliers to finance their projects.

PG&E said in its annual report for 2017 that its commitments under long-term power purchase agreements were about $3.1bn for this year, about $2.2bn in renewable energy, and analysts said it could make substantial savings if it rejected or renegotiated those contracts, which it may be able to do when in bankruptcy. The Genesis and Topaz solar projects were approved and started construction in 2010-11, when solar power costs were much higher than they are today.

Clifford Kim of Moody’s said it was not certain that PG&E would reject its higher-cost long-term contracts, because the law was not fully settled, and California’s government and regulators might step in to support the state’s energy policy goals. But in economic terms the company had a clear incentive to try to reject or renegotiate them, he added.

Topaz Solar, which runs a large photovoltaic plant in central California that sells power only to PG&E, was last week downgraded by Moody’s from Baa2 to Caa2, a drop of nine steps from “moderate credit risk” to “very high credit risk”. 

Gregory Remec of Fitch, which also downgraded Topaz sharply last week, said it was a basic principle that a project’s rating “will never exceed the rating of its counterparty”.

Fitch last week cut its rating for PG&E to CC/RR3, meaning that “default of some kind appears probable”, and unsecured creditors were likely to recover 51-70 per cent of their principal plus interest.

Michael Wara, a specialist in energy and climate policy at Stanford Law School, said bankruptcy for PG&E would “throw into doubt” the future of the developers that have been central to the development of renewable generation in California. The best solution, he argued, would be to fix the underlying problem with large-scale investment in rooftop solar and local battery storage, to reduce customers’ dependence on the grid.