SPECIAL SITUATION:
Renault (RNO: FP) – Best placed to outperform the sector- BUY
After a very strong start of the year and ahead of 1H17 results (July 28, 2017) we focus in this note on Renault’s equity story (rather than looking at it as a holding company) and update our valuation. We view Renault as one of the most interesting companies in the European Auto segment with number of catalysts ahead, and we believe it is well positioned to grow in the next 12-24m (in 1Q17 it significantly outpaced market growth in all regions). In the report attached we discuss in more details the different key elements for the share price and present our SOTP analysis.
Full report attached!
Regards,
Dafna Yagur | Head of Research (Israel)
Makor Capital
Direct +972 3 5453747
Mobile +972 54 6655357
Fax +972 3 7162680
Holding Companies Report
- Altice (ATC NA) / Altice US (ATUS US) – Following the IPO of Altice USA last week, we are adding Altice group to our portfolio and present our SOTP analysis on the next page. On June 21 Altice USA offered 63.9m shares of its Class A common stock at a price of $30 per share. After completion of the offering, Altice will own 70.3% of Altice USA's issued and outstanding common stock, which will represent 98.3% of the voting power of Altice USA. Since the IPO shares of Altice USA increased 13% and now trade at $33.9 per share. The spread is trading at -4% and we would expect that over time it will widen to above 10%, given the extremely highleverage of the group. We expect some volatility in the short term and continue to monitor for now.
- EURAZEO (RF FP) – on June 21 Europcar Group (EUCAR FP) completed a €175 million capital increase by private placement. The company raised 14.6m shares, 10% of its share capital. Eurazeo, which is a shareholder in the company contributed €30m to the transaction and its stake in the group is now 39.2% (41.4% prior to the transaction).
Full report and an updated table of discounts to NAVs based on June 26, 2017 closing prices is attached!
Regards,
Dafna Yagur | Head of Research (Israel)
Makor Capital
Direct +972 3 5453747
Mobile +972 54 6655357
Fax +972 3 7162680
JCDecaux and America Movil to create JV by merging their OOH businesses in Mexico
27 JUN 2017
JCDecaux SA (Euronext Paris: DEC), the number one outdoor advertising company worldwide and América Móvil, S.A.B. de C.V. ("AMX") (BMV: AMX / NYSE: AMX), the leading wireless provider in Latin America and the third largest in the world in terms of equity subscribers, have announced the entering into a joint venture for the out-of-home ("OOH") advertising businesses in Mexico by merging each of Corporación de Medios Integrales, S.A. de C.V., a wholly-owned subsidiary of AMX ("CMI") and Eumex, S.A. de C.V., a controlled entity of JCDecaux SA ("Eumex") into JCD Out Of Home Mexico, S.A. de C.V. ("JCDecaux MX"), a recently-formed entity controlled by JCDecaux SA which holds 100% shares of Fusionante Vendor, S. de R.L. de C.V. ("Vendor"), among other companies.
Entities controlled by JCDecaux will ultimately own 60% shares of JCDecaux MX and the remaining 40% shares of such company will be owned by a wholly-owned subsidiary of AMX.
The closing of the transaction is subject to the satisfaction of certain conditions, including the approval of the Mexican Federal Competition Commission and is expected to close within 2017.
CMI is today actively involved in the street furniture, billboard and shopping mall advertising in Mexico, through the operation of advertising kiosks in Mexico City, bridge advertising concessions in many cities throughout Mexico, including Mexico City, Guadalajara and Monterrey`s Metropolitan Areas, the Guadalajara Metrobus and well-known shopping malls located in Mexico City, mainly.
JCDecaux entered Mexico in 2014 with the acquisition of an 85% stake in Eumex, operating more than 10,000 street furniture advertising panels in 15 cities. On April 1st 2016, JCDecaux strengthened its position with the purchase of 100% of Outfront Media`s Mexican subsidiary, Vendor, operating almost 2,500 billboards and 750 bus routes in more than 350 cities across the 32 states in Mexico.
This alliance is expected to accelerate further developments in the 2nd largest advertising market in Latin American and 12th world economy with a population of approximately 122 million. With very complementary products and a strong footprint in Mexico City`s street furniture, CMI will strengthen JCDecaux`s value proposition to advertisers and cities in the very fragmented Mexican outdoor advertising segment. Total spend in out-of-home advertising reaches approximately USD 590m, which represents roughly 12% of the total advertising market and which growth is expected to speed up with digitalization of the assets. Through this new joint-venture, JCDecaux aims at being a major player of this change by implementing new digital OOH products and services in Mexico.
Arturo Elias Ayub, Head of Strategic Alliances and Multimedia for AMX, said: "We are proud to join forces with JCDecaux, the worldwide leader in outdoor advertising, by merging our Out-of-Home businesses in Mexico and enriching the value proposition for our clients and partners. With a strengthened nationwide network coverage, our customers will benefit from an increased visibility for their campaigns on different displays and complementary formats. We are also proud to jointly participate in the development and reinvention of the OOH advertising industry in the country."
Jean-Charles Decaux, Co-CEO of JCDecaux, said: "We are very pleased with this alliance with América Móvil. It will enable us to offer our clients a better geographical coverage, notably in Mexico City, in street furniture advertising and diversify our portfolio of assets with bridges and shopping malls. We are proud to continue benefiting residents and visitors through our innovative street-furniture assets and delivering valuable audiences to advertisers, thanks to the expertise and the great work of our teams. We also strongly believe that this partnership will pave the way to a jointly beneficial collaboration to answer present and future digitalization, connectivity and data challenges and, thus, allow us to be at the forefront of smart cities solutions to accelerate the development of Mexican cities and transport companies in the coming years."
BOFA-ML
* AXEL SPRINGER - Final deal size 2.25m shrs, priced at EUR 54.9; BAML sole....
* PLAYTECH - Founder selling 10.1% stake at 924p/shr; UBS, Goodbody, Shore.....
BANKIA - Bankia and Banco Mare Nostrum boards sign a merger agreement (4.2).+3%
MINERS - Copper u/c, Iron Ore fut +2.75% & BHP OZ -0.13%, RIO OZ +0.17%...+0.5%
SMURFIT KAPPA - Announce €50/t price inc in recycled containerboard (2365)+0.5%
LONDON METRIC - Sells a Marlow office building for £68.5m, book value (172).u/c
PETROFAC - Trading all inline. Bigger picture still SFO investigation (426).u/c
DEBENHAMS - Looks like recent perf has been poor. Stock has been weak (44.5)u/c
SANOFI - Wins EU approval for Sarilumab in Arthritis. Not material (88.7)...u/c
FAURECIA - Confirms '18 obj & '17 guidance but -ve read from Schaeffler (47)u/c
EDF - ASN says EDF reactor vessel may not function for more than few yrs (9)-1%
D.TELEKOM - Merger discussions of T-Mobile US with Sprint are on hold (16)-1-2%
VALEO - Negative read from Schaeffler warning and cutting numbers o/n (61)-1-2%
CONTI - Negative read from Schaeffler cutting margin guidance overnight(194)-2%
STADA - Tender offer from Bain/Cinven did NOT meet target, -6% aft/hrs (57).-7%
SCHAEFFLER - Warning. Cuts FY17 EBIT margin guide to 11-12% from 12-13%(13)-10%
Mainfirst
*SCHAEFFLER-Cuts Adj Ebit margin to 11%-12%(12%-13%),c.D/G -7%.......-10%
*DSM-CEO says growing by more than 10% in China in Q2,+ve in US......+1%
*JCDECAUX-To create a jv by merging with America Movil-Mexico........+0.5%
*SANOFI-Faces pressure from US on Zika vaccine cost..................-0.25%
*STADA-Tender offer from Bain,Cinven fails to meet target............-7%
*AXEL SPRINGER-ABB General Atlantic sells 2.25m shs @ €54.90........-1.4%
*LONZA-Rec'd regulatory approval for Capsugel acq's,H1 26th July.....+0.5%
*SIEMENS-CEO grows wary as activist investors cast wider net.........U/C
*ROCHE-EC approved a new tablet forumlation of Esbriet...............+0.5%
*STRABAG-Asyad interested in Raiffeisen's stake in Strabag(27.5%)....+1%
*GN STORE NORD-Chairman eyes takeovers to speed up growth-Borsen.....+1%
*FAURECIA-Confirms '18 objectives & '17 o/lk,c/mobility 7% CAGR......+1%
*BMW/VW/DAI-German OEM's may recall 12mln diesel cars................-1%
*CONTI-Read across from Shaeffler warning............................-2%
*DTE-Sprint & T-Mobile talks on hold,Sprint talking to Chart/comcast.-1%
CS Calls
Autoliv +1-2% Autoliv and Volvo Cars announce deal with Nvidia (AI Co)
Deutsche T. -1-2% Sprint in excl. talks with charter, T-Mobile on hold
DSM M/P CEO Says Growing by More Than 10% in China in Q2
GN Store N. M/P Chairman Eyes Takeovers to Speed Up Growth: Borsen
Implenia M/P Announced a major order for CHf150mln
Northgate -2-3% PBT 5% miss with UK being weak in particular
Oils -0.5% US peers -40bps post EU, ADRs all closed at their lows
Petrofac -1-2% Lowers FY Forecast for Integrated Energy Services Unit
Schaeffler -5% Profit warning after last night's close
SKF -1-2% Read from Schaeffler's warning (25% of SKF is Automotive)
Stada -7% Bain/Cinven takeover collapsed
Tele2 +1% CS u/g to Neutral on +ve view on Swedish mobile growth
Macq UK Indications:
* Atlantis Resources ARL- Launches Bond to raise £5m. Unch
* Debenhams DEB- FY Profits will be at lower end of Range. -5%
* Petrofac PFC-. FY Net Profits will be H2 weighted, Report H1 net profit of $135m-$145m, we have $216m. Core Business unaffected, will continue to engage in SFO Probe. -5-10%
* Playtech - Teddy Sagi sells 36.5m shs at 924p (993.5p close) upsized from 32m shs. -3%
* Travis Perkins TPK- Stuart Chambers succeeds Robert Walker as Chairman (ex Arm). Unch
Shareholder Activism Goes Global
The trend is expected to expand.
Activist investors are globalizing.
New York-based Third Point, run by chief executive officer Daniel Loeb, is the latest example. The firm’s latest move — suggesting Nestlé sell its 23.3 percent stake in beauty giant L’Oréal — shines a light on the increasingly international focus of activist shareholders. Third Point has been involved in three other European global activist situations, according to data from Activistmonitor analyst Prithish Ray, and the firm has also been involved with Japanese robotics company Fanuc.
Other funds are getting in on the action, too. According to Ray, Elliott Management Corp. has been involved in 12 European activist shareholder situations, and Southeastern Asset Management was involved in three, including one at Adidas.
Financial experts agree there’s an uptick in the global nature of activism.
“The market for activism is very strong in the U.S. and becoming stronger outside of the U.S.,” said Bruce Goldfarb, ceo of Okapi, an investor advisory firm. “Investors are doing significant research right now all over the globe to find companies where value can be unlocked through a strategy that requires a more active posture from investors in terms of providing suggestions, ideas, operational knowhow, change at the board level or change within the management and capital structure of the company.”
Because stocks in the U.S. are at “very high valuations,” hedge funds are looking at companies in other markets where they may be able to “unlock value,” Goldfarb contends. In 2017, with the availability of Internet-based information, travel, and lower transaction costs because of technology advancements, the international activism practice is easier than ever, he noted. “We have a global society for goods and products and with that, globalization comes the ability to compare and contrast from market to market, and for the activist investors…they have the ability to buy companies anywhere in the world and put their strategic viewpoints to work.”
The pushes of activist shareholders may have faded slightly from the headlines, said Kai Liekefett, head of Vinson & Elkins’ shareholder activist practice — he focuses on defending the companies from the activists — but that’s because the activists have moved to smaller companies. “Activism is at record level in the U.S., and globally it’s still a phenomenon that’s slowly getting traction,” he said, noting cases in South Korea, Australia, Hong Kong and Ireland.
For hedge funds, trading outside the U.S. markets is now fairly common, according to Eleazer Klein, partner at Schulte Roth & Zabel LLP, who provides legal advice to activist investors. “There’s a recognition that globalization and the markets are intertwined to some extent. That’s the reason a lot of investment offices have offices in Asia, in the U.K. and Asia,” Klein said. “It’s a natural progression — they will start using the same types of tools to drive value. As the space continues to mature, that’s another reason [we’re] seeing growth in cross-border [moves].”
Financial sources agreed more cross-border activism is in the cards. “We’re going to see a continued trend of activism all over the globe,” Goldfarb said. “This is coming. It’s already happening — not in great numbers, but it’s clearly happening,” Liekefett said.
Meet the Young French Designer Dressing the Hôtel de Crillon
Twice-nominated for the ANDAM, Hugo Matha imagined a true Parisian wardrobe for the 400-strong staff of the Crillon and its many trades.
They exchanged details — the other man, Jacques Oudinot, was already tapped to be the director in charge of operations of the Hôtel de Crillon, owned by the Rosewood hotelier group, whose renovation was well under way but many months away from completion. The deal was sealed not long after.
At the time, Matha was already making a name for himself in accessories, thanks to his treatment of the clutch as an objet d’art, mixing Plexiglas with exotic leathers, flexible stone or precious woods. The son of winemakers from the Aveyron region in central France, he studied women’s wear design at the Duperré school in Paris before friends convinced him to launch a brand based on the accessories he’d presented alongside his graduate collection.
Soon, a cadre of influential wearers were carrying them. Retailers were supportive: Colette stocked him from his first season and Moda Operandi selected him for a trunk show. Matha was nominated for the ANDAM awards in 2015 and 2016, as well as moonlighting as an accessories consultant for several well-known brands.
His selection coincided not only with his desire to design clothes again, but also with the hotel’s ambition to become a true hub of Parisian life. “[The hotel] is part of Paris and embodies Paris in a way, too,” Oudinot said. “It made sense to highlight French design talents, like Hugo.”
Matha has designed 90 garment variations — including tuxedos for women, the blue worker’s jacket made famous by late photographer Bill Cunningham and a never-seen-before belt-bag — for the 400-strong staff who will be on hand from July 5, when the Hôtel de Crillon reopens after its four-year renovation.
“The hotel is such an iconic landmark in Paris that I wanted to do an homage to French style,” Matha said in early June, amid racks upon racks of new garments freshly delivered by French high-end uniform manufacturers Chic at Work.
More often seen a simple black T-shirt and impeccably cut denim, the designer was wearing black wool trousers, a crisp white shirt and a bow tie designed in collaboration with Parisian neckwear brand Cinabre — the uniform of the brasserie’s servers.
Oudinot couldn’t resist trying on a sleeveless double-breasted seersucker jacket that will be seen on the bartenders. Both looked ready to step out for a night on the town.
“The clothes were designed as elegant everyday Parisian fare, not just uniforms,” Matha explained.
YNAP Stock Rises on Rumors of an Alibaba Investment
If nothing else, the rumors show just how the big digital players are taking on the mantle of consolidator.
Is Jack Ma’s appetite for fashion big enough to take a significant stake in Yoox Net-a-porter Group, giving his Chinese e-commerce giant, Alibaba, a steady and credible supply of Western brands?
For hopeful Yoox shareholders, the answer is a resounding, “Yes.”
Shares of Yoox rose 8.7 percent to 25.41 euros in Milan, giving the company a market capitalization of 3.4 billion euros as reports, citing equity traders, swirled that Alibaba was interested in taking a stake in the Milan-based company led by founder and chief executive officer Federico Marchetti. Alibaba’s stock didn’t fare as well, slipping 0.2 percent to $142.73 on Wall Street.
A spokesman for Yoox declined to comment on “market speculation” and a representative for Alibaba did not respond to a WWD query Monday.
Such reports can be hard to gauge. Investors swap stories constantly and sometimes the ultimate source has an interest in seeing a particular stock rise and crafts a story or half-truth that almost makes too much sense to ignore.
Although WWD was unable to verify the rumor, it does have a certain logic that makes it ring true — two retail investment banker contacted Monday hadn’t heard the rumor, but one noted, “anything is possible these days” and the other said “anything is possible when you are Alibaba.”
That sense of possibility combined with Alibaba’s acquisitive nature, its growing war with rival JD.com was more than enough to go on for traders. And suddenly the market seems ready for deals. Wal-Mart Stores Inc. bought Jet.com last year and just inked a deal to add Andy Dunn’s Bonobos, while Jeff Bezos’ Amazon.com put together a $13.7 billion cash deal to buy Whole Foods earlier this month.
And hitting closest to home for Alibaba, JD.com last week agreed to buy a $397 million minority stake in Farfetch, which will help it bring global luxury names to its e-commerce and social media eco-system. That deal was, in part, an effort to bring in goods that are seen as reliably from the brand on the label, getting a leg up in a market that is rife with fakes.
At a conference in Detroit last week, Ma reiterated his stance on counterfeits and called them a “cancer” on the business. He also laid out his vision for global commerce.
“Global buy and global sell will happen in the next 10 years,” Ma said. “If you want a coconut from Thailand, in 72 hours you’ll receive it.”
And presumably the same is true of a coat from Milan.
Ma has been aggressively driving Alibaba forward and willing to spend big to create the commercial world he envisions, investing in local services, media, health care, logistics, retail and web platforms abroad.
In some cases, a first investment was followed by a later deal to buy control of the target company. Alibaba, for instance, bought into department store company Intime retail in July 2014 and took the retailer private with its founder in May. The e-commerce company said the investment would “support our strategy to transform conventional retail by leveraging our substantial consumer reach, rich data and technology.”
And in April 2016, Alibaba spent $1 billion for a controlling stake in Lazada, which operates e-commerce platforms in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, with local language web sites and mobile apps.
The new giants, including Alibaba, Amazon, Wal-Mart, JD and so on, are increasingly seen as buyers of brands and platforms as they angle to take share from each other, lock up future opportunities and position themselves for an increasingly global market.
“The luxury market places and the luxury pure-play retailers are eminently desirable to all these companies because they can’t put those products on their platforms,” said one e-commerce source.
Expanding for these mammoth companies is a matter of build versus buy, with the latter option seemingly becoming more attractive.
Jun 27 2017 | 12:02am ET
Hedge funds lost ground last week as strength in CTAs was tempered by a decline in energy prices that impacted macro funds, according to new data from Lyxor Asset Management.
The Lyxor Hedge Fund Index fell -0.3% for the week through June 13, 2017, Lyxor said in its latest Weekly Brief. The measure now stands barely positive for the year to date, at +0.1%.
The company’s CTA Broad Index outperformed, gaining +0.9% on support from long positions on European and Japanese equities and short positions on agriculturals and energy, Lyxor said. Lower 10Y Treasury yields hit short-term models. Global Macro, on the other hand, fell -1% as energy prices continued to plunge.
L/S Equity and Event Driven managers recorded positive returns of +0.2% and +0.4%, respectively, for the period. Leading the pack so far this year is Event Driven, up +5.5%.
The first half of the year has seen a sharp divergence in returns between Event Driven and Global Macro strategies, Lyxor observed in the research note. “If history is any guide, the underperformance of Global Macro funds so far in 2017 should not be seen as a reason to alleviate them in a portfolio,” said Lyxor senior strategist Philippe Ferreira. “Actually, in the second half of last year, Macro funds experienced a sharp rebound, while the performance of Event-Driven funds eased.
“As a great U.S. novelist once said, ‘history doesn’t repeat itself, but it does rhyme’,” he added. “In that context, we maintain the overweight stance on Event-Driven strategies [and] upgrade Macro funds to overweight. Within Macro funds, we have a preference for EM and diversified strategies compared to fixed income/ FX specialists.”
“We also advise to fund the increased exposure to Macro funds via a lower weighting of L/S Equity Market Neutral funds, which continue to struggle with sector rotations.”
Lyxor’s Weekly Brief aims to identify trends in hedge fund investing while leveraging the proprietary information accessible through the company’s managed account platform.
Lyxor’s Hedge Fund indices are based on the universe of funds available on the platform determined on a monthly basis to be eligible for inclusion. Participating funds represent $12 billion of assets under management and replicating $220 billion in AUM as of March 31, 2017.
Dow +0.07% S&P +0.03% Nasdaq -0.29% Russell +0.13%
US Market closed near the flat line on a very quiet day - Most MENA markets and slew of Asian markets closed due to end of Ramadan. Volumes thinner as we head to July 4th weekend. Focus this Thurs as NKE, WBA, STZ, MU all report, and also have China PMI that evening. Retail very strong on talks RAD/WBA deal may go through, and also Auto retailers on fire after APPLE deal with HERTZ (+13.5%) and GOOGLE deal with AVIS (+14.2%). Crude off lows after last week weakness. Banks also tad higher after underperformed last week. Techs weak on rotation trade to consumers. NSA +4% on S&P SmallCap 600 addition news, WDC -2% following guidance (STX also lower). Veryquiet session also in Asia, Commodities are steady otherwise with gold recouping overnight losses that were in part chalked up to fat finger incident. It has also been a quiet day in mainland press, where the broader focus remains on the regulatory crackdown on bank lending
Nikkei +0.38% Hang Seng -0.24% CSI -0.31% Shanghai -0.17%
Eur$ 1.1197 CNH 6.8468 CNY 6.8423 JPY 111.72 GBP 1.2735 CHF 0.9722 RUB 58.8172 WTI$ 43.42 +0.09%
S&P -0.05% EuroStoxx -0.20% FTSE -0.04% Dax -0.25% SMI +0.18%
Macro :
- Beware the Inflated Share-Price Target in Europe’s Oil Industry
- Draghi Rings a Dovish Bell on Interest Rates: Macro Squawk Wrap
- China Encourages Foreign Companies to Keep Profits in China: Li
- Japan’s Public Pensions Foreign Securities Holdings Fall in 1Q
- Three GOP Senators Oppose Health Bill, Enough to Block Advance
- Germany Said Pressing for Recall of 12m Diesel Cars: Reuters
Keep an eye on :
- ABI BB : AB Inbev to Focus on Profit, Not Market Share in Germany: SZ
- AAPL US : Apple Acquires Eye-Tracking Company SensoMotoric For AR Tech
- SPR GY : Axel Springer Holder General Atlantic to Sell 2.25m Shares
- SPR GY : Axel Springer Offering Prices at EU54.90/Share: Terms
- BMW GY : BMW’s Dingolfing Plant to Produce BMW 8-Series Sports Car: PNP
- DBK GY : Deutsche Bank Wasn’t Only ‘Mirror’ Trader: Russian Central Bank
- DTE GY : Sprint Enters Talks With Charter, Comcast on Wireless Deal: WSJ
- DSM NA : DSM CEO Says Growing by More Than 10% in China in Second Quarter
- DYS LN : Dyson to Open Flagship Stores in Germany in 2018: CEO to Welt
- GN DC : GN Store Nord Chairman Eyes Takeovers to Speed Up Growth: Borsen
- GS US : Citi’s Horowitz Lowers Goldman 2Q Estimates on Trading Outlook
- HTZ US : Apple Working With Hertz Unit to Manage Small Autonomous Fleet
- ROG VX : Roche’s New Esbriet Tablet Formulation Approved in Europe
- SAN SM : Santander to Integrate Fully-Owned Securities Issuing Companies
- SAN SM : Santander Said to Launch Share Sale July 7 Or 10: Confidencial
- SAN FP : Sanofi, Regeneron Drug for Rheumatoid Arthritis Wins EU Approval
- SAN FP : Sanofi Faces Pressure From U.S. Senators on Zika Vaccine Cost
- SHA GY : Schaeffler Reduces Earnings Guidance for 2017
- SHA GY : Schaeffler Warning May See Tough Week for Suppliers: Jefferies
- SNAP US : Hedge Snap Shares Before Lock-up Expiration, MKM Recommends
- SAZ GY : Stada Confirms Targets As Offer By Bain, Cinven Fails
- SAZ GY : Stada CEO Says Respects Vote of Shareholders: Statement
- VAO GY : Vapiano Says 7.99m Shares to Be Placed at EU23 Each in IPO
- VOLVB SS : Volvo Cars, Autoliv Add Nvidia as Partner on Self-Driving Autos
- WFM US : Whole Foods Cut at Gordon Haskett; Rival Bidder Unlikely