Dow -0.14% S&P -0.29% Nasdaq -0.26% Russell -0.69%
US Market closed lower. The health care sector (-0.7%) finished the day behind the broader market as investors digested the latest news. Conversely, utilities (unch) and technology (+0.2%) finished at the top of the day's sector standings with the technology group profiting on gains from large-cap components like AAPL & GOOGL. The remaining sectors--financials, consumer discretionary, industrials, materials, consumer staples, and real estate--finished with losses between 0.1% and 0.6%. US after hours AVAV +8%, HRB +7%, CLNE +6% following earnings/guidance, RH +1.9% on WSM M&A speculation ... URBN -5%, BOJA -4.6%, AERI -2.6% following earnings/guidance, several names lower following offerings. Asia equity markets are mixed despite another day of modest declines on Wall St in both equity and bond markets. Investors look ahead to Wednesday's release of ADP and Friday's non-farm payrolls to confirm expectations of this month's Fed hike, as only a very weak print on the jobs front would derail that view. In other economic data, Japan Q4 Final GDP improved slightly from Prelim levels but missed expectations. Consumption growth remained flat, though the CAPEX component was revised sharply higher to 2.0% from 0.9% prelim, also beating 1.7% est.
Nikkei -0.47% Hang Seng +0.37% CSI -0.21% Shanghai -0.17%
Eur$ 1.0567 CNH 6.9028 CNY 6.8997 JPY 113.72 GBP 1.2207 CHF 1.0137 RUB$58.1319 WTI$ 52.78 -0.68%
S&P -0.17% EuroStoxx +0.03% Dax -0.19% FTSE -0.15% SMI -0.09%
Macro :
- China Imports Surged in February as Exports Missed Estimates
- Draghi’s Caution on Inflation Signals ECB Stimulus Stays for Now
- Fed Hikes Shouldn’t Derail the Equity Rally... Yet: Macro Man
- U.K. Considers Ways Tax Can Extend North Sea Projects: Telegraph
- U.K.’s May Fights Back After Another Brexit Law Defeat in Lords
Keep an eye on :
- ABN NA : ABN Amro in ‘Growth Mode’ in Asia Corporate Banking: DeRooij
- ANA SM : Acciona Buys 82.4% of Geotech Holdings for A$197m
- ADS GY : Adidas Forecasts 2017 Profit Rising 18%-20%, Raises 2020 Targets
- AGFB BB : Agfa 4Q Adj. Ebit Beats Ests.; Pension Deficit Climbs to EU976m
- AIR FP : Lockheed Unit Awarded $1b U.S. Air Force Contract
- AF FP : Air France-KLM Feb. Passengers Rise 2.9%, Lifted by Transavia
- ARM LN : Softbank Set to Sell $8b Stake in Arm to Vision Fund: FT
- APAM NA : Aperam, Sofina to Replace Ahold Delhaize, Elia in BEL20 Index
- AXIA SM : Axiare Patrimonio Offering 7.19m Shares in Placement, Terms Show, €13 / share
- BALTA IPO : Balta Said to Prepare IPO in Brussels: Tijd/L’Echo
- BKIA SM : Spain Ready to Hold 15-20% of Bankia Private Placement: Cinco
- BEFB BB : Befimmo Signs First Tenant of Quatuor in Brussels North District
- BEI GY : numbers just released
- BOKA NA : Boskalis 2016 Ebitda EU661m vs EU885 a Year Ago
- CYAD BB : Celyad Gets FDA Approval to Start NKR-2 CAR-T cells THINK Trial
- ACA FP : Credit Agricole Said to Weigh $2.4B Saudi Bank Stake Sale, Credit Agricole Earns Dilution High With Saudi Bank Sale: KBW
- CSGN VX : Credit Suisse CEO Says Hard to Find Good Lending Opportunities
- AM FP : Dassault Aviation 2016 Adj. Net Falls Short of Estimates
- DBK GY : Deutsche Bank 2018 Cost Target May Not Be Achievable, Citi Says
- DB1 GY : Deutsche Boerse Will Need Acquisitions to Grow: CEO Kengeter
- DEQ GY : Deutsche Euroshop Prelim. FY Rev EU205.1m, est. EU199.8m
- DPW GY : Deutsche Post 4Q Ebit EU1.11b vs. EU1.12b Est.; 2017 Growth Seen
- PBB GY : Deutsche Pfandbriefbank FY Pretax Profit Rises Helped by Heta
- EIT IM : Italy Must Control Any Eventual RAI Way, EI Towers Combination
- ENG SM : EU Questions Spain Over Enagas, Red Electrica Caps: Expansion
- ELE SM : CVC, KKR and Blackstone reactivate the purchase of Endesa with the support of Madrid and Rome http://bit.ly/2mkne6z
- ENI IM : Eni acquires 50% stake in Block 11 Offshore Cypris
- GLEN FP : Glencore’s Glasenberg, QIA Executive, May Join Rosneft Bd: Rtrs
- GBB FP : Bourbon to Reschedule Maturities on EU910.8M of Debt
- LIN GY : Linde, Praxair to Set Up Holding Co. in Dublin: Handelsblatt
- NOVOB DC : Novo Expects to Fall Short of 2020 Goal of 40 Million Patients
- NP3 SS : NP3 Chairman Has Sold Stake in Company, Will Step Down: Direkt
- ONTEX BB : Ontex Sees 2017 Rev. Growth Ahead of Mkts in All Divisions
- ONXEO FP : Onxeo Net Loss Widens; Co. Says Cash Provides Visiblity to 2018
- SNAP US : Instagram Stories launches geostickers as its Snap attack continues
- S US : Sprint CFO Says Unlimited Data Is Probably Not Sustainable
- SEV FP : Suez taps Quebec pension in GE Water bid, sources say
- TOM2 NA : TomTom Selected by Volvo Cars to Power Drive Me Programme
- TMG NA : TMG FY 2016 Revenue Drops 6.9% to EU421M on Lower Ad Sales
- WDI GY : Wirecard to be selective acquirer as it looks to increase international scale, executive says
>>> Up
*Actelion Raised to Overweight at JPMorgan, PT CHF292
*Aldermore Group Raised to Buy at Peel Hunt
*CentralNic Group Raised to Buy at Peel Hunt
*Direct Line Raised to Neutral at Macquarie
*Infineon Raised to Buy at Kepler Cheuvreux, PT EU20
*Just Eat Raised to Overweight at Barclays
*Norsk Hydro Raised to Buy at Goldman, PT NOK60
*Novartis Raised to Buy at SocGen
*RAI Way Raised to Outperform at MainFirst, PT EU5
*Umicore Raised to Buy at Berenberg, PT EU56
>>> Down
*BT Cut to Neutral at Goldman
*Bucher Cut to Hold at Kepler Cheuvreux
*Go-Ahead Cut to Sector Perform at RBC, PT 1925p
*NH Hotel Group Cut to Reduce at Intermoney Valores, PT EU4.20
*Randgold Cut to Underperform at RBC, PT 5900p
*Sulzer Cut to Reduce at HSBC, PT CHF94
>>> Initiation
*Air France-KLM Rated New Outperform at Main First Bank AG
*AstraZeneca Rated New Overweight at Barclays
*Deutsche Bank Resumed Hold at HSBC, PT EU16
*EasyJet Rated New Underperform at Main First Bank AG, PT 700p
*Glaxo Rated New Equal-Weight at Barclays
*IAG Rated New Outperform at Main First Bank AG, PT EU8.50
*Lufthansa Rated New Outperform at Main First Bank AG, PT EU17
*Novartis Rated New Underweight at Barclays
*Roche Rated New Overweight at Barclays
*Ryanair Rated New Neutral at Main First Bank AG, PT EU15
*Sanofi Rated New Underweight at Barclays
*Shire Rated New Overweight at Barclays
>>> Call
>> Stock
*VODAFONE ADDED TO CONVICTION LIST AT GOLDMAN; WAS BUY
*KPN REMOVED FROM CONVICTION LIST AT GOLDMAN; STAYS BUY
Airbus reveals Flying car Concept
Airbus has been talking about its Vahana flying autonomous vehicle project for a while now, but at this year’s Geneva Motor Show, it’s showing off a concept design created in partnership with Italdesign. The demonstration vehicle offers modular functionality, meaning it an operate both on the ground and in the air, and Airbus thinks it’s one potential answer to the growing problem of urban traffic congestion.
As you can see, it’s suitably sci-fi in its design sensibilities, but it’s designed with practicality in mind. The concept vehicle is intended to work with others to form a network that can be summoned on demand, with passengers hailing a ride form an app on their mobile device. The capsule-based design can connect to either ground or air conveyance modules, letting customers specific their preferred method of transit. It’s also designed to be used in concert with other, existing transportation methods for maximum efficiency.
Airbus and Italdesign call their creation the ‘Pop.Up System,’ which includes the artificial intelligence platform that uses what it knows about any individual user, and available routes and transit options to determine the best travel options. The main vehicle itself is a passenger capsule, which holds the rider and which can be paired with either ground and air modules, as well as, Airbus suggests, with hyperloop systems down the line once that tech becomes more widely available.
There’s a third part of Pop.Up that ensures this whole project touches all bases when it comes to current tech hype – an interface that will respond and interact with the user in a “fully virtual environment” while in transit. They’ve thought of everything.
Well, except making this thing real: It’s very much still a concept, though its 8.5-foot long monocoque carbon-fibre passenger pod is built-to scale and on the show floor at Geneva, as are the wheeled ground module and quadcopter drone air transit system.
It’s unlikely to ever be ferrying passengers around, at least in this state, and in the near future, but it’s a very cool design that can at least make us want to work a bit harder to get to a place where it is a viable, everyday option for navigating our expanding and increasingly dense cities.3333
Richard Hayne: The Retail Bubble Has Burst
The Urban Outfitters ceo said U.S. retailers overexpanded and are now paying the price.
Richard Hayne, chief executive officer of Urban Outfitters Inc., has a new and very unfavorable comparison for retail today — the housing market of 2008.
“Our industry, not unlike the housing industry, saw too much square footage capacity added in the Nineties and early 2000s,” Hayne told Wall Street analysts Tuesday, after his company reported sagging profits as more sales shift online.
“Thousands of doors opened…and created a bubble and like housing, that bubble has now burst,” he said. “We are seeing the results, doors shuttering and rents retreating. This trend will continue for the foreseeable future and may even accelerate.”
J.C. Penney Co. Inc., Macy’s Inc. and Sears Holdings Corp. are all closing stores, while a number of well-known chains have faded into insolvency recently, including The Limited, BCBG and The Wet Seal Inc.
“The U.S. market is oversaturated with retail space and far too much of that space is occupied by stores selling apparel,” said Hayne, noting America has six times the retail space per capita of either Europe or Japan.
It’s a dynamic that is driving prices in the market down as stores hit the promotional button to drive sales and attract customers.
To navigate the choppy waters, the ceo said Urban would put its money behind its best opportunities, diversify and conserve its liquidity.
“Our highest priority is where we’ve had the most recent success, digital,” Hayne said. “Last year we made many improvements to our capabilities in this channel. We developed a single platform for all brands. This enables [the company] to be more scalable and efficient in developing and growing on front-end enhancements across all brands, both on mobile and on web sites. We have improved our functionality around check-out, payment, search, inventory visibility, in-store pickup, ship-to-store, mobile capabilities and speed on all web platforms.”
Hayne was careful to say the company — parent to its namesake brand as well as Anthropologie and Free People — was not abandoning retail, but is viewing stores as an equal partner with the web.
The reading of the landscape is made all the more stark by the fact that Urban is one of the few retailers that is still growing, with plans to open 15 doors in North America this year, down from 26 stores last year and 29 the year before.
And square-footage growth might eventually get easier as the bubble deflates.
“It makes little sense to enter into many new long-term leases at this time, but all signs indicate that a similar lease will be less expensive in the near future,” Hayne said.
Last year, Urban’s earnings slid 2.8 percent to $218.1 million, or $1.86 a diluted share, on a 2.9 percent drop in sales, to $3.55 billion.
CVC, KKR and Blackstone reactivate the purchase of Endesa with the support of Madrid and Rome
The venture capital funds want to take advantage of the new agreement between Italy and Spain to take over the power plant, an operation for which it already has credits for 15,000 million
Endesa is once again in the spotlight of the big venture capital funds. According to confirmed sources close to the board of the power company, CVC, Blackstone and KKR have rescheduled to gain control of the energy company, currently in the hands of the Italian state through Enel. The good tuning between the governments of Madrid and Rome facilitates the operation, which amounts to 15,000 million euros .
Advisors to both CVC and Blackstone have held meetings to discuss the deal with Borja Prado, the current president of Endesa, named precisely by Enel. But the group's chief executive, who can not take any decision to represent all minority shareholders, has sent them to Enel, which owns 70% of the capital of the second Spanish power company and, therefore, the only one with a real voice and vote To approve or not the proposal. To date, Francesco Starace , CEO of Rome-controlled transalpine multinational, has opposed selling Endesa to private equity funds, especially since the Spanish bank serves as a piggy bank, since under its mandate it allocates 100% of The benefits to dividends.
Starace said in November that do not want to "sell Endesa", but the truth is that its mandate expires next May and its main backer, former Prime Minister Mateo Renzi, is no longer head of government. The next March 20 It will be known whether or not he is in charge of the multinational, although the appointments in Enel tend to be peculiar.In principle, Starace is scheduled to renew as the first executive, but the same said his predecessor, Fulvio Conti, 48 hours before being replaced In April 2014. In fact, in Italy Starace sounds like relief of the current CEO of Eni, the public oil company, involved in a corruption case.
The President of the Government, Mariano Rajoy (d), and the Prime Minister of Italy, Paolo Gentiloni. (EFE).
The President of the Government, Mariano Rajoy (d), and the Prime Minister of Italy, Paolo Gentiloni. (EFE).
According to different sources, the visit of Paolo Gentiloni, Italian Prime Minister, to Mariano Rajoy at the end of January has relaxed the tension. Heads of both governments held a meeting in which they discussed the interest of CVC, KKR and Blackstone, and the two parties said they would not impede the purchase by international funds. On the contrary, Italy could do very well the nearly 15 billion that would enter for its 70% of Endesa, especially given the delicate state of health of some of its banks.
In fact, among the first measures adopted by Gentiloni after being named prime minister on December 11, is the concession of a line of credit of 20,000 million euros the day before Christmas Eve to avoid bankruptcy, among others, Monte dei Paschi Di Siena. A full-blown bailout that will worsen public accounts, already very famished and with a serious problem of structural deficit.
Just a week ago, the European Commission warned Gentiloni that it will impose disciplinary action if it does not stop the deficit from growing until, according to internal forecasts, it reaches 133% of gross domestic product (GDP). The warning puts more pressure on Rome to deliver on its promises made in a letter to the EU executive on 7 February that it has committed to reduce its red numbers by 0.2% of GDP this year through measures Would be adopted by the end of April.
'Spanishize' a covert company
CVC and Blackstone are working on the operation with the shadow help of Goldman Sachs and JP Morgan , as well as having pre-granted lines of credit from several national and international banks, financial sources have confirmed. For its part, Enel has the unofficial advice of Credit Suisse , since the interest of the two venture capital firms has not yet materialized in a firm offer. KKR , who has also probed the operation, has the support of Lazard, who has already traveled to Rome to speak first-hand with the Italian government . The funds have Borja Prado to continue as president - the stock has risen 51.85% since the OPV of November 2014,
Although CVC, Blackstone and KKR are two private equity companies -British and US- which usually operate from lax countries such as Luxembourg , and given the amount to which the Endesa purchase would go - the company capitalizes 21.4 billion - the two funds Would be willing to admit long-term Spanish investors who would take a minority stake, but enough to defend the slogan of Spanishisation of a company that was privatized at the end of the nineties of last century by the Government of Jose Maria Aznar and that Finally ended up in public hands, but Italian.
In addition, following Italy's decision to keep assets in Latin America, Endesa has been closed to an electricity company that can only operate in Spain and Portugal. Their chances of growth are minimal. They barely buy renewable assets for sale by some of the funds that have been made to companies in distress, such as Renovalia or Eolia. From the top management of the group, Endesa is considered to be "in the hood" and has become a dividend cow for Enel.
Asia Mid-Session Market Update: Japan Q4 final GDP revised higher on stronger CAPEX; China Trade in deficit for the first time in 3 years
***US Session Highlights***
- (US) JAN TRADE BALANCE: -$48.5B V -$48.5BE (widest deficit since Mar 2012): China: -$31.3B v -$27.8B prior
- (US) JAN FACTORY ORDERS: 1.2% V 1.0%E
- (CA) CANADA JAN INT’L MERCHANDISE TRADE: C$0.8B V C$0.8BE (3rd straight surplus)
- (US) President Trump tweets: "I am working on a new system where there will be competition in the Drug Industry. Pricing for the American people will come way down!”
- (SA) Saudi Oil Min Al-Falih: Saudi output is now below 10M bpd after cuts; production cutting deal is working well - CERAweek conf comments
- (US) Atlanta Fed cuts Q1 GDP forecast to 1.3% from 1.8%
- (US) Commerce Sec Ross: US trade deficit data shows there is much work to be done
***US markets on close: Dow -0.1%, S&P500 -0.3%, Nasdaq -0.3%***
- Best Sector in S&P500: Technology
- Worst Sector in S&P500: Energy
- Biggest gainers: HUM +2.5%, VIAB +1.8%, ALB +1.7%, FFIV +1.6%, BBY +1.5%
- Biggest losers: FTR -5.1%, ENDP -4.4%, SWN -4.2%, ESRX -3.8%, SIG -3.6%
- At the close: VIX 11.5 (+0.2pts); Treasuries: 2-yr 1.33% (+2bps), 10-yr 2.51% (+2bps), 30-yr 3.11% (+1bps)
***US movers afterhours***
- HRB: Reports Q3 -$0.49 v -$0.46e, R$452M v $451Me; H&R Block return volume outperformed industry results compared to IRS data; +7.8% afterhours
- AVAV: Reports Q3 -$0.09 v -$0.34e, R$53.2M v $50.7Me; guides initial FY17 $0.20-0.35 v $0.50e, R$260-280M v $283Me; +7.0% afterhours
- CLNE: Reports Q4 -$0.02 v -$0.09e, R$101.8M v $96.5Me (2 est); +7.0% afterhours
- APC: Guides initial FY17 capex $4.5-4.7B v ~$2.9B y/y; -1.2% afterhours
- URBN: Reports Q4 $0.55 v $0.56e, R$1.03B v $1.04Be; -1.6% afterhours
- BOJA: Reports Q4 $0.28 v $0.21e, R$139.4M v $140Me; Guides initial FY17 $0.87-0.93 v $1.02e; R$560-569M v $592Me; -4.8% afterhours
- GEO: Files to sell 6M shares through JPM, SunTrust, BCS, Merrill (8% of shares outstanding); -5.0% afterhours
***Politics***
- (US) State of Hawaii to sue the Federal Govt to block implementation of the revised Executive Order on travel - press
- (US) Atlanta Fed said to be considering Raphael Bostic as the next President, replacing retiring (Feb 28th) Dennis Lockhart (moderate, non-voter) - financial press
- (US) CNBC's Kudlow: Sources say Commerce Sec Ross now opposes border adjustment tax
- (UK) Govt ministers said to call for PM May to call a snap election to give her a clear mandate for her Brexit plan - UK press
***Asia Key economic data:***
- (CN) CHINA FEB TRADE BALANCE (CNY-TERMS): -60.4B V +172.5BE; First deficit since Feb 2014
- (JP) JAPAN Q4 FINAL GDP Q/Q: 0.3% V 0.4%E; ANNUALIZED GDP: 1.2% V 1.5%E
- (JP) JAPAN JAN BOP CURRENT ACCOUNT TOTAL: ¥65.5B (2-year low) V ¥270BE; ADJ CURRENT ACCOUNT TOTAL: ¥1.26T V ¥1.46TE; TRADE BALANCE BOP BASIS: - ¥853B (first deficit in a year) V - ¥800BE
- (JP) JAPAN FEB BANK LENDING (INC TRUSTS) Y/Y: 2.8% V 2.5% PRIOR; BANK LENDING (EX- TRUSTS) Y/Y: 2.9% V 2.6% PRIOR
- (NZ) NEW ZEALAND Q4 MANUFACTURING ACTIVITY (SA) Q/Q: 0.8% V 0.4% PRIOR; VOLUME Q/Q: -1.8% (biggest decline since Q2 of 2013) V 2.1% PRIOR
- (NZ) New Zealand Feb ANZ Truckometer Heavy M/M:+2.3% v -1.0% prior
***Asia Session Notable Observations, Speakers and Press***
- Asia equity markets are mixed despite another day of modest declines on Wall St in both equity and bond markets. Investors look ahead to Wednesday's release of ADP and Friday's non-farm payrolls to confirm expectations of this month's Fed hike, as only a very weak print on the jobs front would derail that view. After yesterday's advance, the Energy sector lagged all others, and the soft patch may carry over as API petroleum saw a large build - its 6th in 7 weeks - despite the claims from Saudi Oil Min that demand is picking up. Regionally, Nikkei225 lagged as USD/JPY remained below ¥114 despite the uptick in US yields, weighed down by chip equipment stocks. JPY was also firmer as risk aversion was felt in US equity futures - S&P eminis hit 1-week lows of 2,360. Hang Seng outperformed with rallies in Geely Auto and China Unicom.
- In other FX majors, AUD was supported by a research note out of Goldman estimating 60% chance of an RBA rate hike as soon as November, but came in on release of disappointing China trade data. In CNY terms, trade fell into deficit for the first time in 3 years, with Exports undershooting at Y/Y 4.2% v 14.6%e and Imports surging 44.7% v 23.1%e. Some of the deviation will likely be attributed to the timing of Lunar New Year coming in late Jan this year vs early Feb last year. Also of note in China, Foreign Min Wang said Beijing is working to expand cooperation with US while also calling on Washington to back away from THAAD missile system in South Korea and for North Korea to stop its nuclear development.
- In other economic data, Japan Q4 Final GDP improved slightly from Prelim levels but missed expectations. Consumption growth remained flat, though the CAPEX component was revised sharply higher to 2.0% from 0.9% prelim, also beating 1.7% est.
China
- (CN) China Feb iron ore total inventory 12.1Mt, +44.3% m/m - Chinese press
- (CN) China Foreign Minister Wang Yi: One belt and One road initiative is critical amid protectionism
- (CN) PBoC Dep Gov Yi Gang: China to steadily promote global use of Yuan - press
Japan
- (JP) Japan investors sold net ¥1.69T of US sovereign debt during Jan (3rd consecutive sale, longest streak since June 2013)
- (JP) Japan PM Abe: Japan completely out of deflation
- (JP) Japan Fin Min Aso: easy cuts to corporate tax rates would harm trust in system
Australia/New Zealand
- (AU) CitiGroup Australia to limit its mortgage loans for overseas borrowers to high net worth clients with minimum deposits of A$250K amid concerns of capacity, as most other Australian banks withdrew from lending to foreign clients - AFR
- (AU) Hearing Goldman Sachs said to be calling for a RBA rate hike as soon as this Nov
- (NZ) Fonterra Global Dairy Trade Auction: Dairy Trade price index: -6.3% v -3.2% prior; 2nd straight decline, biggest decline since Feb 2nd (out in US session)
- (NZ) Westpac lowers FY16/17 milk payout target to NZ$5.90 from NZ$6.20 following today's auction price decline - NZ press
- (NZ) ANZ: New Zealand Feb non-tradable inflation 0.2% m/m, 2.2% y/y
Korea
- (KR) Korean press speculates Korea's currency swap total may be halved due to tensions with China on THAAD deployment
- (KR) South Korea Fin Min Yoo: Economy showing signs of recovery - press
***Asian Equity Indices/Futures (00:00ET)***
- Nikkei -0.5%, Hang Seng +0.5%, Shanghai Composite +0.1%, ASX200 -0.1%, Kospi flat
- Equity Futures: S&P500 -0.2%; Nasdaq -0.2%; Dax -0.2%; FTSE100 flat
***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.0570-1.0595; JPY 113.85-114.10; AUD 0.7575-0.7630; NZD 0.6980-0.7020
- Apr Gold flat at $1,225/oz; Apr Crude Oil flat at $53.20/brl; May Copper +0.1% at $2.66/lb
- (US) Weekly API Oil Inventories: Crude: +11.6M v +2.5M prior (6th build in the past 7 weeks; Highest build since Feb 7th)
- (SA) Saudi Oil Min: Global oil demand is picking up
- (US) DoubleLine's Gundlach: Reiterates 10-year yield to drop below 2.25% before rising again
- (CN) PBOC SETS YUAN MID POINT AT 6.9032 V 6.8957 PRIOR; weakest Yuan setting since Jan 12th
- (CN) China MoF sells CNY20B in 5-yr bonds; avg yield 3.0265% v 3.0387% prior; bid-to-cover 1.85x
- (CN) PBOC to inject combined CNY30B v CNY30B prior in 7-day, 14-day and 28-day reverse repos
- (AU) Australia MoF (AOFM) sells A$800M in 2.25% 2028 Bonds; avg yield: 2.9816%; bid-to-cover: 3.78x
***Asia equities / Notables / movers by sector***
- Consumer discretionary: SVW.AU Seven Group Holdings -0.2% (considers privatization); 3099.JP Isetan Mitsukoshi -4.2% (Mizuho cuts rating)
- Financials: 1375.HK Central China Securities Co -0.7%; 813.HK Shimao Property +6.0% (Feb result); 978.HK China Merchants Land +3.3% (FY16 result)
- Industrials: QUB.AU Qube +3.1% (Peer DP World raised charges at ports in Melbourne and Sydney)
- Technology: 6502.JP Toshiba Corporation +2.6% (no signs for Q3 earnings delay); 7741.JP Hoya Corp +2.2% (Morgan Stanley raises rating)
- Materials: 5406.JP Kobe Steel +0.9% (Mizuho raises rating)
- Healthcare: 570.HK China Traditional Chinese Medicine Co +1.0% (profit alert); MYX.AU Mayne Pharma -1.8% ( US President Trump tweeted about new system for lower drug prices in America); CAJ.AU Capitol Health +3.3% (Credit Suisse raises rating)
- Telecom:763.HK ZTE Corp +5.9% (FY16 result, US settlement)
VINCI (OP, TP EUR84.0): We raise our 2017-19E EPS f’casts c2-6% following FY-16 results, on contribution from acquisitions in late 2016, and better growth in Concessions and Contracting. We see further upside in both segments on a 12-month view on the back of an improving contracting outlook and i margin improvements. We forecast over €1bn p.a. in cash-flow after dividends and growth CAPEX. We do not anticipate any change in Vinci's 50% dividend payout policy in the near term, but see DPS growth in-line with Vinci's c9% 2016-19E EPS CAGR, with upside to EPS from accretive.
Wirecard to be selective acquirer as it looks to increase international scale, executive says
Wirecard AG [WDI:DE] will be selective as it scouts for tuck-in acquisitions across Europe, Southeast Asia, the Middle East, Latin America and North America, said Executive Vice President and Managing Director Susanne Steidl.
The Bavaria, Germany-based banking software company’s recent purchase of Citi’s [NYSE:C] prepaid card services unit marked its first foray into the US market and cemented its position as a global player, Steidl said. Now its strategy is to scale its business on all of the continents in which it operates through opportunistic acquisitions and the cross-selling of its end-to-end payment processing services, she said.
Electronic payment firms with customer portfolios and financials that improve Wirecard’s top and bottom lines are attractive, Steidl said. It may also look at businesses with financial technologies that enhance its e-commerce ecosystem for merchants, airlines, telecoms and service providers, she said.
The company reported EUR 1.2bn in cash and equivalents as of 30 September.
In the past, Wirecard has said it prefers deals under EUR 200m, according to this news service’s database. Last year, it bought Romania-based Provus for EUR 32m and Brazil-based MoIp Pagamentos for EUR 37m. Terms of its acquisition of Citi Prepaid Card Services, which was announced in June 2016, were not disclosed.
At a Goldman Sachs Technology and Internet Conference in San Francisco last month, Steidl told investors Wirecard liked the Citi deal because it delivered customers with longstanding relationships and an experienced management team that can sell its e-commerce and payment processing products.
There is ample opportunity to target parts of the US market that Citi previously had not, she added.
Because Citi initially obtained its prepaid card assets from its acquisition of Ecount in 2007, the business unit came with an operational infrastructure that was easy to separate from Citi, Steidl said.
Entering international markets through acquisitions has been a successful strategy for Wirecard so far, said Steidl, explaining that once it enters a new region it identifies the customers it wishes to target and customizes its offerings. Brazil, for instance, is comprised of many small merchants so Wirecard takes a different approach there than in South Africa, where she said the needs of clients look much different.
Other times Wirecard has forged strategic partnerships to extend its geographic reach, such as the alliance it formed with Sydney-based Cuscal to bring Wirecard’s merchant acquiring services and payment processing platform to Australian and global merchants with an Australian footprint.
The company has generated organic revenue growth of more than 20% in recent quarters.
Steidl acknowledged Wirecard has previously attracted takeover interest but she declined to elaborate.
Wirecard’s shares closed at EUR 45.37 on Tuesday, giving it a market capitalization of EUR 5.61bn.