>>> Europe : Brokers Upgrades & Downgrades - 20th of August 2018

>>> Up
* Bayer Reinstated at Credit Suisse With Outperform; PT 95 Euros
* CVS Group Upgraded to Outperform at RBC; PT 11.90 Pounds
* KAZ Upgraded; De-Risking a Way Off But Will Help Case: Liberum
* Randgold ADRs Upgraded to Buy at Desjardins; Price Target $95
* RBS Upgraded to Buy at Citi
* R. Stahl Upgraded to Hold at HSBC; PT 24 Euros
* United Internet Upgraded to Buy at HSBC; PT 53 Euros

>>> Down
* Boozt Downgraded to Hold at Berenberg

>>> Initiation
* Akasol Rated New Buy at Bankhaus Lampe; PT 70 Euros

>>> Call

FT : Japan’s Shiseido touches up M&A strategy



Japan’s Shiseido touches up M&A strategy

Asia’s biggest cosmetics group shifts focus to AI and personalised beauty

Shiseido is reshaping its acquisition strategy following an ill-fated expansion into the US with a $1.7bn deal in 2010, as Asia’s largest cosmetics group by sales prepares for the possibility that ecommerce will upend the $465bn global beauty industry.

 Having spent decades selling their products at department stores and specialised shops, companies from Estée Lauder and L’Oréal to Shiseido are turning to start-ups to enable cosmetics to become connected and customised. Beauty companies are increasingly using artificial intelligence and smartphone apps to provide personalised skincare, to stand out from their rivals.

 The Japanese company has purchased three start-ups in the US in the past two years — MatchCo, Giaran and Olivo Laboratories — for undisclosed sums to acquire technologies in artificial skin, customised make-up and artificial intelligence. In March, French cosmetics giant L’Oréal bought ModiFace, a Canadian beauty tech company focused on augmented reality and AI. 

 “If we keep on doing things in the traditional way, our business will face decline,” Yoichi Shimatani, Shiseido’s chief research and development officer, said in an interview. “Customers now want personalised beauty.

” As part of its new initiative, Shiseido now offers a device called Optune, which is leased to customers for a monthly fee. Using a smartphone app, the system scans and analyses a user’s skin condition and mood and, also factoring in weather conditions, identifies a personalised mix of optimal skincare products.

Ecommerce is another growing business. Online sales made up just 7.8 per cent of the $465bn market for beauty and personal care goods last year but the segment has grown steadily from 4.2 per cent in 2012, according to Euromonitor.

 Shiseido expects ecommerce to account for 15 per cent of its global sales by 2020 compared to 8 per cent last year, with the key driver being China, where it expects the ecommerce segment to rise to 40 per cent. 

As the industry shifts, Shiseido plans to increase its R&D staff to 1,500 by 2020, up from 1,000 in 2014, by hiring experts in digital technology, AI and data science. 

 Shiseido has sharpened its focus on digital technology and ecommerce under Masahiko Uotani, who took the helm of the struggling Japanese group in the spring of 2014. Since then, shares in Shiseido have surged 321 per cent and annual sales topped ¥1tn ($9bn) last year for the first time since the company was set up in 1872, boosted by demand from Chinese tourists and surging sales of anti-ageing products. 

 Nevertheless, the group, which owns the Elixir and Maquillage brands, has yet to stem losses in the US. Last year it took a writedown of $623m on Bare Escentuals, the New York-based natural make-up company it bought eight years ago. 

 “The acquisition was carried out just before the final year of its three-year business plan so it was inevitable that the deal was viewed as a means to reach its numerical target,” said Wakako Sato, an analyst with Mizuho Securities. “Both the timing and objective were not appropriate.” 

 Under Mr Uotani, Shiseido’s mergers and acquisitions strategy had shifted from building scale to one focused on technologies that could be applied more broadly to existing businesses, said Ms Sato. “This shift in M&A strategy is evidence of a change in management mindset.”

>>> What to look at this Week- End - 18th & 19th of August 2018

Global markets were forced to contend with elevated bouts of volatility this week, but ultimately US stock indices stayed within reach of the all-time highs hit earlier this year. Emerging market FX swings precipitated a spike in risk off sentiment through mid-week. A plunging Turkish Lira brought about worries regarding European bank exposure, and
contagion fears were exacerbated by another move lower in the Yuan which approached levels not seen in nearly a decade. China growth concerns emerged after another string of disappointing economic data came alongside weak corporate reports by several Chinese tech darlings. US stock markets continued to outperform the rest of the globe and the Dollar index surged above 96. Treasury prices also benefited modestly from risk-off flows keeping yields subdued and flattening the US 2-10 year spread back below 25 basis points. Late in the week equities surged on news the US and China would restart trade negotiations in Washington next week ahead of a multilateral summit in November. For the week the S&P



Macro :
- As Euro Crisis Ends, Italy Stokes Fear of a Revival, Concern comes amid market jitters over Italian debt, attacks by politicians in Rome on Europe’s establishment - WSJ - https://on.wsj.com/2vWbvzg


Keep an eye on :
- C US : ValueAct takes $1.2 billion stake in Citigroup: letter - Reuters - https://reut.rs/2Pdw8iB
- JE/ LN : Prudential lines up Just Eat boss to spearhead demerger of M&G - http://bit.ly/2N3XpTe
- PRU LN : Prudential lines up Just Eat boss to spearhead demerger of M&G - http://bit.ly/2N3XpTe
- SPM IM : Saipem’s robots set to cap undersea oil blowouts - FT - https://on.ft.com/2OKNmTo
- VPK NA : Vopak conducting strategic review of four European oil terminals

FT : Saipem’s robots set to cap undersea oil blowouts

Saipem’s robots set to cap undersea oil blowouts
System adopted by industry-funded group backed by the likes of BP and ExxonMobil

Italian oil and gas services company Saipem has developed a new undersea system capable of remotely capping oil well blowouts in shallow water as part of an industry-wide push to improve response times following BP’s Gulf of Mexico disaster in 2010.

The system, known as Offset Installation Equipment, solves a problem that has long vexed the oil industry — how to get access to well blowouts when surface clean-up and containment operations stop ships from entering exclusion zones directly above the damaged wells.

The system, which was tested offshore Italy in March, has now been adopted by Oil Spill Response Limited, an industry-funded group backed by BP, Chevron, ConocoPhillips, ExxonMobil, Petrobras, Royal Dutch Shell, Equinor (formerly Statoil) and Total SA.

Saipem’s design, which utilises huge underwater balloons, robotic guides and complex pulley systems, has been adopted as a means of moving so-called capping stacks into place from up to 500 metres away.

These massive near 100 tonne blocks can be placed over blown out wells, buying oil companies time to seal and kill oil spills at source.

“It was essential to find a way to move the capping stack while staying away from the well,” said Diego Lazzarin at Saipem, who helped design and test the system.

“It’s like moving over one hundred Fiat 500s, underwater, from 500 metres away and placing it within an inch of precision.”

Four capping stacks have been placed in Norway, Singapore, Brazil and South Africa to provide global coverage and ensure relatively quick access in the result of a future well blowout. Saipem’s Offset Installation Equipment is stored and maintained in Trieste, Italy.

Mr Lazzarin said the Saipem system should allow blowouts to be capped in “just a few days” compared to the months it took BP in 2010, when they had to design and build its capping stack from scratch.

“I think that we are safer than before for sure,” Mr Lazzarin said.

The system is the result of six years’ work by the Subsea Well Intervention Project, which was established by the industry in the wake of BP’s Deepwater Horizon disaster, when almost 5m barrels of crude leaked before the company could successfully seal the well.

While BP’s incident occurred in very deep water, which presented its own challenges, shallow water well blowouts could also be problematic because sea currents were less likely to move the oil away from above the well, limiting vertical access from ships.

Matt Clements, director of subsea well intervention at Oil Spill Response Limited, said it gave the industry an important tool for responding quickly to shallow water blowouts.

“There is no other equipment in the world that can do this,” Mr Clements said.

“It’s a significant investment from industry designed specifically for scenarios when you cannot get direct vertical access to the wellhead. It will save an awful lot of time.”

FT : Volvo chief calls for complete elimination of car tariffs

Volvo chief calls for complete elimination of car tariffs
Hakan Samuelsson steps up calls to end trade war between US, China and Europe

The chief executive of Volvo Cars has called for the complete elimination of tariffs on cars between the US, China and Europe, stepping up calls to end a global trade war.

Hakan Samuelsson said removing barriers would bring consumers “more choice, better cars and more value for money” and lead to more “jobs, growth and prosperity” around the world.

Writing in the Financial Times, he said he was “deeply worried by the plans of world leaders to impose double-digit tariffs on car imports”, saying nations must resist the “siren call of protectionism . . . there are no winners in a trade war, only losers”.

Volvo is owned by China’s Geely and recently opened its first US facility in South Carolina. Geely is planning to hold an initial public offering later this year valuing the premium carmaker at $30bn, the Financial Times reported last week.

The car industry, which relies on complex supply chains and ships finished vehicles all over the world from a global network of plants, is particularly affected by trade disputes.

Tension between the US and China continues to rise, with Washington and Beijing set to introduce punitive tariffs of $16bn on August 23, on top of the $34bn imposed last month.

China will send a trade delegation to the US at the end of the month, in the first formal attempt at negotiations since Washington imposed tariffs on Chinese goods.

Earlier talks between the pair fell apart after negotiations failed to fulfil requirements set by the US.

The global trade war was sparked by US President Donald Trump, who was elected on a promise to protect American jobs, and is seeking to change a series of arrangements — from trade with China and the EU to the North American Free Trade Agreement — that he sees as putting the US at a disadvantage.

There are some signs of cooling in the US spat with the EU, with fresh talks and an agreement by the US not to impose fresh tariffs on cars imported from Europe.

But the IMF and several central banks have warned that the escalating confrontation over trade will hurt the global economy.

Mr Samuelsson said the company was “a textbook example of the benefits of free trade”, selling cars in more than 100 markets from production bases in China, Europe and the US.

“Free trade and open markets create jobs, wealth and economic growth,” he wrote. “It is what made our companies thrive, it is what allowed us to be successful and invest in overseas markets, providing a livelihood for hundreds of thousands of people around the globe.”

FT : Rome dismisses operator’s €500m Genoa bridge recovery offer

Rome dismisses operator’s €500m Genoa bridge recovery offer
Autostrade says collapsed viaduct in Genoa can be replaced within eight months

Italy’s coalition government has rejected an initial offer of €500m from Italy’s biggest motorway operator Autostrade per l’Italia for building work and compensation after the collapse of a motorway bridge in Genoa killing 43 people.

Matteo Salvini, deputy prime minister and leader of the far right League, called it “a minimum wage offer”. Luigi Di Maio, leader of the Five Star Movement and the other deputy prime minister, said the state would not accept “charity” from Autostrade.

“We demand credible redress and there will be no bartering,” Mr Di Maio said.

Last week’s collapse of the Morandi viaduct led to recriminations from government figures against Autostrade, the road operator charged with maintaining the motorway, and the Benetton family, which owns more than 30 per cent of Autostrade’s parent company Atlantia. Shares in Atlantia fell more than 20 per cent after Rome threatened to revoke Autostrade’s licence.

After a state funeral on Saturday for some of the victims of the collapse Giovanni Castellucci, Autostrade’s chief executive, said the company had established a fund for the “immediate needs of the victims, to be administered by the municipality”, and a compensation fund for all those who had lost their houses.

While expressing “profound sadness”, Mr Castellucci did not take responsibility for the accident on behalf of Autostrade. He pointed out that the bridge was built in the 1960s, by another entity, and said an “in-depth investigation” was needed to establish fault.

Italy’s coalition government has rejected an initial offer of €500m from Italy’s biggest motorway operator Autostrade per l’Italia for building work and compensation after the collapse of a motorway bridge in Genoa killing 43 people.

Matteo Salvini, deputy prime minister and leader of the far right League, called it “a minimum wage offer”. Luigi Di Maio, leader of the Five Star Movement and the other deputy prime minister, said the state would not accept “charity” from Autostrade.

“We demand credible redress and there will be no bartering,” Mr Di Maio said.

Last week’s collapse of the Morandi viaduct led to recriminations from government figures against Autostrade, the road operator charged with maintaining the motorway, and the Benetton family, which owns more than 30 per cent of Autostrade’s parent company Atlantia. Shares in Atlantia fell more than 20 per cent after Rome threatened to revoke Autostrade’s licence.

After a state funeral on Saturday for some of the victims of the collapse Giovanni Castellucci, Autostrade’s chief executive, said the company had established a fund for the “immediate needs of the victims, to be administered by the municipality”, and a compensation fund for all those who had lost their houses.

While expressing “profound sadness”, Mr Castellucci did not take responsibility for the accident on behalf of Autostrade. He pointed out that the bridge was built in the 1960s, by another entity, and said an “in-depth investigation” was needed to establish fault.