(Berenberg) French Telcos - No consolidation in 2017. Iliad Buy SFR Sell

Consolidation is not the panacea: After a number of attempts to consolidate the French telecoms market, telcos are again poised to hold M&A talks during 2017, following the country’s presidential elections in Q2. We, however, are not strong believers that consolidation will happen in 2017, although Bouygues Telecom’s position remains uncertain. Instead, we believe that the operational story will drive the stocks in 2017 and the divergence in strategies opens investment opportunities.

- We initiate coverage of Iliad with a Buy rating and a price target of €250
- We initiate coverage of SFR Group with a Sell rating and a price target of €24.50
- We initiate coverage of Orange with a Hold rating and a price target of €16.00
- We maintain our Hold rating on Bouygues and raise our price target from €31.00 to €35.70

(SG) LVMH - Further bolstered by sector’s accelerating sales growth – to remain

LVMH - Further bolstered by sector’s accelerating sales growth – to remain above peers
Our Buy rating is underpinned by two factors. The first is absolute: business model stabilisation. After declining for three years, the EBIT margin remained almost flat in 2015-16 and should increase in 2017, with lower capex/sales and a now stable tax rate of 31-32% (vs under 30% previously). The second is relative: the c.18% EBIT margin, which is back above the still-falling sector average (now c.16%), and a current capex/sales ratio of c.5.0% (vs c.6% for the past 10 years), below the sector average of 5.5-6.0%.

>>> What to look at today - 23rd of January 2017

Friday US markets on close: Dow +0.5%, S&P500 +0.3%, Nasdaq +0.3%
- Best Sector in S&P500: Financials / Worst Sector in S&P500: Healthcare
- Biggest gainers: SWKS +13.0%; CF +6.1%; QRVO +4.7% / Biggest losers: BMY -11.3%; TDG -9.9%; ENDP -4.3%
- At the close: VIX 11.5 (-1.2pts); Treasuries: 2-yr 1.18% (-1bps), 10-yr 2.47% (+1bps), 30-yr 3.05% (+1bps)
Asian indices open the week mixed and USD is under modest pressure; Analysts citing ongoing disappointment with Pres Trump's lack of detail on his economic objectives during the inaugural address and fear of the new US protectionism. Nikkei225 is the biggest decliner on Yen strength, with USD/JPY falling nearly 100pips below 113.50. Shanghai Composite is helped by Friday PBoC announcement of a temporary RRR cut for top 5 banks to support seasonal funding demands ahead of the Lunar New Year. Oil prices saw some early volatility with an upward thrust after comments from Saudi and Russian oil ministers that production cuts by OPEC and non-OPEC members are satisfactory and even ahead of schedule.
Japan PM Abe also reportedly working toward a formal meeting with the new US leader; The agenda is said to focus around affirming US commitment to protect disputed Senkaku islands against China aggressions, though the US transition team has also reportedly requested that Fin Min and vice Fin Min of Japan attend; Separately, a Nikkei report notes Japan's top pension fund GPIF is considering increasing investment in US high-yield govt bonds as it reduces holdings of JGBs.

Nikkei -1.29% Hang Seng -0.06% CSI +0.12% Shanghai +0.25%

Eur$ 1.0746 CNH 6.8217 CNY 6.8558 JPY 113.31 GBP 1.2435 CHF 0.9983 RUB 59.6191 WTI$ 53.05 -0.32%

S&P -0.31% EuroStoxx -0.52% FTSE -0.46% Dax -0.45% SMI -0.40%

Macro :
- Ukraine’s Poroshenko May Meet Trump After Mid-Feb.: Ukrinform
- Algeria Going Beyond Agreed OPEC Oil-Supply Cuts: Boutarfa
- A hot new hedge fund expects 'hundreds of billions of dollars' in tech deals (CSOD, AAPL, DIS)
- Hedge fund legend David Einhorn is making a big bet on GM (GM)
- Italy’s Gentiloni Sees Solution to EU Request on Budget: RAI

Keep an eye on :
- ABE SM : Abertis Is Poised to Buy Most of CDC’s Sanef Stake: Le Monde
- ATLN VX : Actelion Says Maestro Study Didn’t Meet Primary Objective
- ALV GY : Allianz, Intesa Sanpaolo Interested in Generali: La Stampa
- ATC NA : Altice Has Had Contacts With Canal+, Weill Tells Figaro
- APPL US : Foxconn Weighs $7 Billion U.S. Factory With Apple, Nikkei Says
- BAYN GY : Bayer Optimistic on Monsanto Deal, Tagesspiegel Says
- BCP PL : Sonangol Wants to Raise Stake in Banco Comercial, Expresso Says
- BRK/A US : Berkshire Makes 2nd German Acquisition: Handelsblatt
- BMW GY : BMW’s Works Council at Odds With Management on Startup: Spiegel
- BMPS IM : Paschi Management Met With Italy’s Padoan on Next Steps: Sole
- BMPS IM : Dombrovskis Urges Italy to Act Soon on Paschi, Budget: Stampa
- CA FP : Elior Chief Said to Be Shortlisted for Carrefour CEO: Challenges
- CPI LN : Capita lifted by rumours of interest from PE sector - FT
- CERV IM : Cerved Sees 2016 Ebitda Trend in Line With First 9 Months: Sole
- CGG FP : CGG Sold $58.6m Senior Notes Due 2021; Cuts Vessel Costs
- CBK GY : Commerzbank Wants 10k New Corporate Clients: Boersen-Zeitung
- ACA FP : Credit Agricole: Goodwill Impairment of EU491M Against LCL
- DBK GY : Deutsche Bank CFO Sees London Staying Europe’s Finance Hub: Welt
- DGE LN : United Spirits 3Q Profit Jumps Fourfold, Sales Climb 6.2%
- ELIOR FP : Elior Chief Said to Be Shortlisted for Carrefour CEO: Challenges
- G IM : Allianz, Intesa Sanpaolo Interested in Generali: La Stampa
- G IM : Assicurazioni Generali’s Minali to Step Down as CFO: Il Sole
- ISP IM : Allianz, Intesa Sanpaolo Interested in Generali: La Stampa
- BAER VX : Julius Baer Advisers Share Negative Rate Risk: SonntagsBlick
- LMCA US : Formula 1 Sale Said to Be Revamped; Ecclestone to Step Down: Sky
- LHA GY : Lufthansa on radar of Abu Dhabi sovereign wealth fund - German TV
- LLOY LN : Lloyds Says Retail Strategy Not Changed Because of Brexit: FT
- LONN VX : Lonza Chairman Soiron May Stand for Re-Election in April: SZ
- MS IM : Mediaset says has no interest in three-way shareholding partnership with Vivendi and Telecom Italia
- NESN VX : Nestle, General Mills, Others Said to Bid for Weetabix:Telegraph
- NOVN VX : Novartis CEO Jimenez May Step Down in 2 Years: SonntagsZeitung
- PWTN SW : Panalpina to Focus on Smaller Acquisitions, Higher Margins: FuW
- LIGHT NA : Philips Lighting 4Q Sales Below Estimates; Dividend EU1.10/Shr
- RR/ LN : U.K. Probes More Companies Based on Rolls-Royce Evidence: FT
- RHK GY : Rhoen-Klinikum Names Stephan Holzinger CEO
- SSABA SS : SSAB Is in No Rush to Sell Ruukki Construction, CEO Tells DI
- SKAB SS : Skanska CEO Says Nordic Region Is Doing Very Well, DI Reports
- SU FP : Schneider to Adapt U.K. Footprint to Post-Brexit Conditions: CEO
- SGSN VX : SGS FY Profit Falls 1.1% to CHF543m; Plans CHF250m Share Buyback
- SIE GY : Siemens CEO Says Trump May Be ‘Opportunity’ for Business: FAZ
- SKY LN : BT, Sky Set to Vie for Champions League TV Rights: Telegraph
- SNAP IPO : Snapchat Parent Said to Pay Banks 2.5% of IPO Proceeds: WSJ
- SNAP IPO : Snap Said to Stress Addicted Users to Justify $20b Value
- GLE FP : SocGen to Pay $50m to Settle U.S. Mortgage Claims
- TLG GY : TLG Immobilien Preliminary 2016 FFO Rises About 20% to EU77M
- TUI1 GY : TUI Sees Strong 2017 Demand for German Bookings: Rheinische
- DG FP : Vinci CEO Sees Growth in Contracting Business in 2017: Investir
- VIV FP : Altice Has Had Contacts With Canal+, Weill Tells Figaro
- VOD LN : Liberty Global Has Cash for Networks, Share Buybacks, FAZ Says

>>> Europe : Brokers Upgrades & Downgrades - 23rd of January 201

>>> Up
*Aixtron Raised to Hold at Baader-Helvea, PT EU3.60
*Antofagasta Raised to Buy at Citi, PT 870p
*Banca Generali Raised to Outperform at MedioBanca, PT EU30
*Deutsche Telekom Raised to Overweight at JPMorgan, PT EU19.50
*Dish Raised to Overweight at Morgan Stanley, PT $75
*Husky Energy Raised to Buy at Goldman
*Elis Raised to Buy at HSBC
*Phoenix Raised to Buy at Berenberg, PT 821p
*Puma Raised to Buy at Deutsche Bank, PT EU300
*Puma Raised to Neutral at JPMorgan, PT EU238
*RAI Way Raised to Buy at Jefferies, PT EU4.90
*Salmar Raised to Buy at DNB Markets, PT NOK275
*SSE Raised to Add at AlphaValue

>>> Down
*Admiral Cut to Sell at Deutsche Bank, PT 1670p
*Austevoll Seafood Cut to Hold at DNB Markets, PT NOK82
*Cenovus Energy Cut to Sell at Goldman
*Euronav Cut to Hold at Bank Degroof Petercam, PT EU8
*GAM Holding Cut to Underperform at Credit Suisse
*Inmarsat Cut to Neutral at BofAML, PT 710p
*Jupiter Cut to Underperform at Credit Suisse
*Leroy Cut to Hold at DNB Markets, PT NOK495
*Marine Harvest Cut to Hold at DNB Markets, PT NOK165
*Mediolanum Cut to Neutral at MedioBanca, PT EU8.20
*Nordea Cut to Neutral at SpareBank; PT Raised to 110 Kronor (Friday Afternoon)
*Norway Royal Salmon Cut to Neutral at Swedbank, PT NOK196
*Tarkett Cut to Hold at HSBC, PT EU37
*Zodiac Aerospace Cut to Neutral at Credit Suisse, PT EU29.47

>>> PT Change


>>> Initiation
*Inwit Rated New Hold at Jefferies, PT EU5
*Ocado Rated New Underperform at Bernstein, PT 190p
*Orange Rated New Hold at Berenberg, PT EU16
*SFR Group Rated New Sell at Berenberg, PT EU24.50

>>> Call
>> Stock
*DASSAULT SYSTEM ADDED TO EUROPE 1 LIST AT BOFAML
*VOLKSWAGEN ADDED TO CONVICTION BUY LIST AT GOLDMAN

>>> Berkeley turns down Bovis merger proposal from Schroders - report

Berkeley turns down Bovis merger proposal from Schroders

Berkeley Group [LON:BKG] dismissed a proposal to consider merging with rival UK-based housebuilder Bovis Homes [LON:BVS], The Daily Telegraph reported. Berkeley insiders said the company preferred to focus instead on expanding via partnership deals, such as its joint venture with the National Grid, the item reported.
The largest shareholder in Bovis, Schroder Investment Management, had written to Berkeley to suggest an all-stock merger which would be worth around GBP 5bn (USD 6.2bn), the report said. Bovis unexpectedly put out a profit warning late last year and chief executive David Ritchie resigned, the item noted.

>>> Asian Update

Asia Mid-Session Market Update: Shanghai outperforms after temporary RRR cut for top banks; USD under pressure as Trump's inauguration address seen as thin on substance


***Friday US markets on close: Dow +0.5%, S&P500 +0.3%, Nasdaq +0.3%***
- Best Sector in S&P500: Financials
- Worst Sector in S&P500: Healthcare
- Biggest gainers: SWKS +13.0%; CF +6.1%; QRVO +4.7%
- Biggest losers: BMY -11.3%; TDG -9.9%; ENDP -4.3%
- At the close: VIX 11.5 (-1.2pts); Treasuries: 2-yr 1.18% (-1bps), 10-yr 2.47% (+1bps), 30-yr 3.05% (+1bps)

***Weekend US/EU Corporate Headlines***
- BNCN: Reports Q4 $0.43 (adj) v $0.43e, R$69.6M v $77.5Me; To be acquired by Pinnacle Financial Partners in all stock transaction valued at $1.9B deal
- KATE: Reportedly Coach and Kors have expressed interest in Kate Spade - press
- AMZN: Said to have signed contracts with auto parts makers - NY Post
- YHOO: Said to be facing SEC investigation over data breaches and how it disclosed the information to investors - financial press

***Politics***
- (US) Pres Trump signs executive order related to healthcare, pushing agencies to create more flexibility on compliance with Obamacare (ACA)
- (JP) Japan Cabinet approval rating +4ppts to 55% - Mainichi
- (FR) National Front presidential candidate Le Pen: Brexit will have a domino effect across Europe; have to allow for countries to choose to leave the EU or euro zone

***Key economic data:***
- (JP) Japan Nov All Industry Activity Index m/m: 0.3% v 0.4%e
- (JP) Japan Q3 survey of senior loan offers: Loan demand from households 8 v 10 prior
- (KR) South Korea Jan First 20-days Exports y/y: +25.0% v +11.6% prior; Imports y/y: +25.9% v +9.4% prior
- (TW) Taiwan Dec Unemployment Rate: 3.8% v 3.8%e

***Asia Session Notable Observations, Speakers and Press***
- Asian indices open the week mixed and USD is under modest pressure; Analysts citing ongoing disappointment with Pres Trump's lack of detail on his economic objectives during the inaugural address and fear of the new US protectionism. Nikkei225 is the biggest decliner on Yen strength, with USD/JPY falling nearly 100pips below 113.50. Australia markets are weighed by disappointing guidance from Brambles, while Shanghai Composite is helped by Friday PBoC announcement of a temporary RRR cut for top 5 banks to support seasonal funding demands ahead of the Lunar New Year.
- Oil prices saw some early volatility with an upward thrust after comments from Saudi and Russian oil ministers that production cuts by OPEC and non-OPEC members are satisfactory and even ahead of schedule.
- UK press reports that PM May will be the first foreign leader to meet Pres Trump, and the US administration is considering offering UK a bilateral trade deal similar to what it currently has with the EU that allows worker movements and other benefits of minimum regulatory hurdles.
- Japan PM Abe also reportedly working toward a formal meeting with the new US leader; The agenda is said to focus around affirming US commitment to protect disputed Senkaku islands against China aggressions, though the US transition team has also reportedly requested that Fin Min and vice Fin Min of Japan attend; Separately, a Nikkei report notes Japan's top pension fund GPIF is considering increasing investment in US high-yield govt bonds as it reduces holdings of JGBs.

China:
- (CN) China Ministry: employment situation still severe in 2017
- (CN) China 2016 urban unemployment rate 4.02% v 4.05% y/y; Below 4.5% official target - Chinese press

Japan:
- (JP) Japan Chief Cabinet Sec Suga: Seeks to strengthen US/Japan ties further
- (JP) Japan PM Abe said to eye a summit with US Pres Trump in early Feb; Hopes to affirm US commitment to protect disputed Senkaku islands' s US govt is requesting that Japan Fin Min and vice Fin Min are included in the visit - Nikkei
- (US) Japan pension fund GPIF said to consider increasing investment in high-yield US govt bonds - Nikkei

Australia/New Zealand:
- (NZ) New Zealand PM English indicating some form of free trade agreement is still possible despite US pulling out of TPP - NZ press

***Asian Equity Indices/Futures (00:00ET)***
- Nikkei -1.0%, Hang Seng +0.1%, Shanghai Composite +0.3%, ASX200 -0.8%, Kospi -0.1%
- Equity Futures: S&P500 -0.2%; Nasdaq -0.3%, Dax -0.2%, FTSE100 -0.4%

***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.0695-1.0750; JPY 113.45-114.40; AUD 0.7550-0.7580; NZD 0.7160-0.7210; GBP 1.2370-1.2445
- Feb Gold +0.8% at 1,214/oz; Mar Crude Oil -0.2% at $53.14/brl; Mar Copper +1.4% at $2.65/lb
- GLD SPDR Gold Trust ETF daily holdings rise 1.2 tonnes to 809.2 tonnes; 2-week high
- (AU) Australia MoF sells A$500M in 4.5% 2020 bonds; avg yield 2.024$; bid-to-cover 4.48x
- (JP) Bank of Japan (BOJ) offers to buy ¥70B in under 1-yr JGBs; ¥410B in 5-10-yr JGBs
- (KR) South Korea Finance Ministry sells KRW0.8T vs. KRW0.8T indicated in 20-year govt bond; Yield: 2.195% v 2.209% prior
- (CN) PBOC to inject combined CNY40B in 14-day and 28-day reverse repos v CNY110B prior
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.8572 V 6.8693 PRIOR

***Asia equities / Notables / movers***
- 2323.HK Topsearch International Holdings Ltd : Guides FY16 net profit increase of at least 8x y/y; +12.4%
- 6502.JP Toshiba: Said to face pressure to secure investment from South Korea's KEPCO to preserve multibillion-pound British nuclear power project - FT / Banks said to be looking at investing in chip spin off - Nikkei; +9.7%
- Ruralco RHL.AU: Reports a strong start to FY17, Q1 results higher y/y; +9.1%
- 6198.HK Qingdao Port International: Shares rise over 10% on reports Cosco Shipping plans to increase its stake in the company to 18% - press; +8.8%
- 5423.JP Tokyo Steel Mfg Co: Analysts expect with price hikes since Dec, likely to raise FY; expect share buyback if profits beat - press; +6.9%
- 005930.KR Samsung Electronics: Said that investigation into Galaxy Note 7 fires finds that battery size is to fault - financial press; +1.9%
- 2317.TW Hon Hai: Said to consider building a new $7B display making plant in the US - NYT citing CEO Gou; +0.7%
- 1033.HK Sinopec Yizheng Chemical Fibre : Guides FY16 net loss CNY16.1B v proft CNY24.5M y/y; -1.3%
- 6178.HK Japan Post Holdings Co : Guides FY16 Op profit CNY3.9B, -60.1% y/y; -1.5%
- 2298.HK Cosmo Lady China Holdings Co Ltd: Guides FY16 profit -60% to -50% y/y; -6.3%
- VRL.AU Village Roadshow: Issues trading update for Village Roadshow Theme Parks; -9.4%
- BXB.AU Brambles: Guides H1 underlying Net ~3% y/y; Rev ~5% y/y; -15.8%