>>> FFP invests EUR 70m in Tikehau Capital

FFP invests EUR 70m in Tikehau Capital

FFP is investing EUR 70m as part of the EUR 510m share capital increases carried out by the Tikehau Capital group. Through its investment, FFP is supporting the development of a fast-growing group operating in the asset management sector, which shows low correlation with its existing holdings. FFP and Tikehau Capital have already carried out one joint investment, in Eren Renewable Energy in 2015.

With EUR 8bn of assets under management, Tikehau Capital – via its long-term investment vehicle Tikehau Capital Partners, its asset management company Tikehau Investment Manager and Salvepar, a listed investment company focused on minority holdings – is a major European asset management and investment group. It has generated rapid growth in the last few years. The current capital increases will enable it to continue its global development strategy and accelerate its international expansion through both organic and external growth.

FFP, alongside Singapore's sovereign wealth fund Temasek and insurance group MACSF, is buying a 5.5% stake in the group's holding company Tikehau Capital Advisors (TCA), which is controlled by its founders Antoine Flamarion and Mathieu Chabran alongside partners and top management, who are collectively investing EUR 17m in the transaction. FFP will be represented on TCA's Board of Directors. FFP is also investing in Tikehau Capital Partners (TCP), to own a 5,2% stake in that longstanding investment vehicle.

Robert Peugeot made the following comments: "I am delighted that FFP is joining the Tikehau Capital's founders and their team in supporting the development of a major player in asset management, a sector that represents an attractive new diversification for FFP. The strengthening of Tikehau and FFP's relations should enable us to seize investment opportunities that create value over the long term."

(Exane) Investments Banks - Investable banks?

* Tight capital and earnings at risk, not a great combination
We added Credit Suisse and UBS to the ‘Exane 20’ list on Monday last week, as part of the key Underperform ideas, and reiterated our Underperform recommendations on all three IBs in the report INVESTMENT BANKS: Brexit: Reiterate caution. Despite the underperformance we have seen since then, and since the start of the year, we continue to see the risks for these names skewed to the downside relative to the sector. In this note we are cutting our estimates and valuation, to reflect weaker markets. We were already well below consensus, and see structural
problems exacerbated by recent events.

* Credit Suisse and Deutsche Bank screen especially poorly
It is still no clearer what the implications of the referendum vote are for the UK, Europe and the Global economy, and whilst there has been some stabilisation in share prices, we expect ongoing volatility. Within the mix we see capital markets activity most negatively impacted, even if some of the issues diminish and there is a spike in near term activity. This has a corresponding impact on capital generation. As we illustrate in our report BANKS: It will take a while until the dust settles, in a stress scenario it is hard to see a floor for Deutsche Bank and Credit Suisse. UBS fares better as capital is stronger and there is less restructuring related risk, but it also sees significant downside risk from current levels and we cut our 2016 dividend estimate to 30c (from 60c).

* We cut our estimates but do not discount a stress scenario at this stage
We have made further negative revisions to wealth management for Credit Suisse and UBS, where we see an intensification of the pressures we highlighted in CREDIT SUISSE, UBS GROUP: Is the way we model wealth management wrong?, and we have made some cuts to IB revenue estimates. The cuts to DB estimates are more limited as we cut recently (see DEUTSCHE BANK: How is this going to play out?), but given greater uncertainty over earnings and capital, we have increased our cost of equity estimate. We cut our TPs to CHF9/EUR10/CHF11 for Credit
Suisse/Deutsche Bank/UBS respectively and reiterate our Underperform ratings.

(Makor) : Share Class Weekly Report

July 4, 2016 

 

MAKOR: Share Class Weekly Report

 

Good morning, 

 

Hope u had a nice week end. 

 

Please find attached our weekly share class report for 4 July 2016.

 

 

Focus Situation: Share Class book, July 2016 

 

This is our share class weekly # 6. We now include in our table below the sizes of position we put. 

 

As a reminder, the latest trades pushed are at the bottom of the table, the most recent ones are at the top and the close trades are in grey. 

 

We admit that returns are gross of all fees (exec, PBs, borrow …). 

 

Last week  

- we unwound FOXA US / FOX 

- did an in & out on a short RYAAY US / RYA ID with a 3.75% gross return 

- entered a short CCL US / long CCL LN 

- entered a short RO SW / long ROG VX. 

- unwound HEN GY / HEN3 GY with a total profit of 3.41% over June & July 

 

We are not far from exit levels on RDSA LN / RDSA NA (target 99.5%).

 

Have a great week, 

 

 

 

  

  ​     ​     ​

 

Makor Capital

 

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ISRAEL
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Fax        +972 3 7162 680

 

   

Research Disclaimer

 

This publication has been prepared by Makor Capital Limited (“Makor Capital”) and is intended for professional or qualified investors only. Makor Securities London Ltd (“Makor Securities”)is distributing this material to its clients who are Eligible Counterparties or Professional Clients under FCA Rules. It may also be disseminated to persons who are Investment Professionals within the meaning of the Financial Services and Markets Act 2000 (Financial Promotion Order 2005).  In the United States, Makor Capital only distributes this material to major US institutional investors (as that term is defined in Rule 15a-6 of the Securities and Exchange Act of 1934) and to SEC-registered broker-dealers or  banks acting in a broker–dealer capacity. This material is not intended for distribution to any other persons and should not be redistributed.  If you do not fall into any of these categories you should disregard it.

 

This material is a marketing communication.  It is not investment research and has not been prepared in accordance with legal requirements designed to promote the independence of investment research. It is not subject to any prohibition on dealing ahead of the dissemination of investment research under U.K. law. This material is not a research report and is not intended to be a research report as defined under U.S. securities laws and regulations.  This material is not intended to provide information reasonably sufficient upon which to base any investment decision.   

 

This material does not take into account the particular investment objectives, financial situation or needs of individual clients or other recipients. Before acting on this material, clients and other recipients should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. 

 

This material should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. 

 

In the United States, Makor Capital does not offer securities services to U.S. persons except pursuant to SEC Rule 15a-6 only to major US institutional investors and SEC registered broker-dealers or  banks acting in a broker–dealer capacity. Transactions in the United States must be effected through the U.S. broker-dealer, Oscar Gruss & Son Incorporated. Oscar Gruss & Son has not prepared, reviewed or distributed this material.

 

Some of this material is produced by providers which Makor Securities believes to be reliable, but Makor Securities does not warrant or represent (expressly or impliedly) that it is accurate, complete, not misleading or as to its fitness for the purpose intended and it should not be relied upon as such. 

Opinions expressed will be the current opinions of those producing this material as of the date appearing on this material only. We expect those producing the material in  this publication to update it on a timely basis but can give no undertaking that they will do so and regulatory compliance or other reasons may prevent  them from doing so (or us from disseminating updated material).  

 

Members and employees of Makor Securities London Ltd, employees of Makor Capital, Makor Capital Markets may from time to time have long or short positions in securities, warrants, futures, options, derivatives or other financial instruments referred to in this material. For Makor Securities, this information is set out in our Conflicts of Interest Policy which is available on request.  Policies for the production of research from other research providers are available on request.  Unless otherwise stated, share prices provided within this material are as at the close of business on the day prior to the date of the material.

 

Neither the whole nor any part of this material may be duplicated in any form or by any means. Neither should any of this material be redistributed or disclosed to anyone without prior consent. This material is issued for general information and discussion purposes only. None of  Makor Securities, Makor Capital, Makor Capital Markets accepts  liability whatsoever for any direct, indirect or consequential loss or damage of any kind arising out of the use of all or any of this material. 

 

The services, securities and investments discussed in this material may not be available to, nor are suitable for all investors. Investors should make their own investment decisions based upon their own financial objectives and financial resources and it should be noted that investment involves risk, including the risk of capital loss. Past performance is no guide to future performance. In relation to securities denominated in foreign currency, movements in exchange rates will have an effect on the value, either favourable or unfavourable.

 

All investors. Investors should make their own investment decisions based upon their own financial objectives and financial resources and it should be noted that investment involves risk, including the risk of capital loss. Past performance is no guide to future performance. In relation to securities denominated in foreign currency, movements in exchange rates will have an effect on the value, either favourable or unfavourable.

 

Entities

 

Makor Securities London Ltd is authorised and regulated by the Financial Conduct

Authority (FCA registration number 625054) 

 

Makor Capital, company number 514456466, is incorporated in Israel and is a 100% held

subsidiary of Makor Holdings Pte Ltd incorporated in Singapore. 

 

Makor Capital Markets SA, company number CH-660.2.999.011-0 is incorporated in Switzerland

and is also a 100% held subsidiary of Makor Holdings Pte Ltd.

 

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(JPM) Equity Strategy - Stay focused on beneficiaries of falling yields, market

Stay focused on beneficiaries of falling yields, market internals are not risk-on; UK to keep outperforming, FX hedged; Remain OW EM vs DM


Should one join the latest bounce? It might struggle to sustain – positioning not cleaned out, political uncertainty to stay, activity could weaken…

 On 24th June, a number of indices recorded their largest one-day fall in at least 25 years, including SX5E
and IBEX. Many pundits used the event as an opportunity to convert to bears, and we have seen a deluge
of apocalyptic-like warnings over the subsequent days. These could be the reasons for the encouragingly
resilient market performance seen last week. From a contrarian’s standpoint, it might be tempting to
turn more bullish and to look to add risk in a portfolio. The question is, should the latest bounce
continue and morph into a full-blown tradeable rally, such as the one we had in the Feb-April timeframe?
 We do not believe that we will see a sustained upmove. Positioning is not washed out, market internals
are not positive and political uncertainty will linger, despite some hopes for a compromise resurfacing
last week. The financial industry clearly underestimated – and likely continues to underestimate – the antiestablishment
shift in politics seen over the past few years. We advise to fade the most recent bounce, as:
 1) Positioning is not depressed. Retail outflows suggest positioning is light, but HF beta is in fact
elevated and speculators are net long SPX futures. Seasonals are not attractive. Contrarian sentiment
indicators are not particularly subdued, as seen in Bull-Bear at mid range.
 2) Political uncertainty is bound to linger, with elevated headline newsflow risk. Perversely, if the initial
fallout from the UK decision does not end up being too negative, this might embolden other parties to
follow suit.
 3) Activity is subdued. The Feb-April rebound was accompanied by an improvement on this front, with
global restocking drive and an upturn in China. We think this support will be missing this time around. The
consensus view on the Street is that US real GDP growth will run at 2% pace in 2H. In contrast, the latest
business expectations reading within US services PMI is the lowest on record. Chinese
manufacturing PMIs are unwinding the bounce seen in Q1.
 4) EPS revisions have turned negative again. The hurdle rate for the rest of ’16 is very optimistic –
S&P500 EPS are expected by consensus to accelerate from $27 in Q1 to $32 in Q4, which would be a
new all-time high. Even using these lofty consensus EPS projections, the P/E multiple for the S&P500 is at
the top of the range, at 17.9x for ’16e, not offering much upside potential.

(JPM) Aerospace & Def. : Farnborough Air Show 11th / 15th of July

Farnborough Air Show (FAS) Preview - likely to reinforce our cautious view on Civil Aerospace


FAS will take place July 11-15th in the UK. Air shows tend to be dominated by Civil Aero (CA) news rather than Defence, and this preview is focused on CA only. In recent months we have been increasingly cautious on CA stocks. We expect a subdued FAS, with relatively low orders, discussion on recent softer news flow (air traffic, airlines, growing macro/political risks), and a big focus on short-term execution challenges. We can flag one positive: with sterling at c30 year lows vs the $, for US visitors the entry tickets and hot dogs will be a lot cheaper.

* Increasingly soft news flow from airlines and on the global economy: As we
have argued in recent notes, the CA cycle remains at a strong absolute level,
with large backlogs, record airline profits, and above-average global air traffic
growth. But, share prices tend to be driven by incremental data, and the
direction of news flow has been much softer recently. (1) Airlines have flagged
weaker yields and excess capacity (Table 2). (2) Some airlines have deferred
existing orders (Latam Airlines, Delta) or delayed plans to place new orders
(Garuda Indonesia). (3) On June 2, IATA reduced its forecast for FY16 global
traffic growth to 6.2% from 6.9%. (4) We believe the Brexit vote, and likely
negative consequence for European GDP growth, brings downside risk to
IATA’s recent traffic forecast, airline profits (we have already seen warnings
from IAG and EasyJet), and potentially, civil aero aftermarket sales and aircraft
deliveries. (Figure 1 shows recent airline sector performance across the globe.)

* We don’t expect many orders at FAS: There are always some new orders at
air shows. But the usual pre-show trade press speculation about possible orders
has been noticeably lacking in recent months. In addition, neither Airbus nor
Boeing appears to be planning to launch any new products, which usually
stimulates new orders. Boeing is considering narrowbody options with some
combination of MAX 7.5, MAX 10 and middle-of-the-market offering in the
mix, but it is still early and we don’t expect announcements at FAS.
* Execution risks will be center stage: Large jet OEMs and suppliers have their
hands full with multiple late-stage development programmes (A330neo, 737
MAX, 787-10) and programmes in the early phase of a major production ramp
(A320neo, A350). Whilst these products should be drivers of long-term growth
and profits, staying on schedule and on cost is always a concern. Airbus seems
to be facing the greatest short-term challenges (A320neo, A350, A400M).

* Other civil end markets have risks: (1) Companies are likely to reiterate the
increasingly challenging markets for business jets and civil helicopters. (2) CA
aftermarket growth in Q1 16 averaged 7.8%, the best quarter since Q1 14. We
attribute this to the lagged effect of lower oil prices and good air traffic growth.
This bounce could last a few quarters but we remain wary of long-term
structural pressures and recent softer data (macro / slower air traffic growth).

* Supplier profitability in the spotlight. OEMs -- especially Boeing -- are
working aggressively to take cost out of the supply base, potentially generating
margin headwinds at suppliers. This issue does not lend itself to any major
development at FAS but we expect it to be a topic of discussion at the year’s
biggest gathering of investors and industry participants.

(JPM) Nestle : Exploring the impact of a potential Hershey takeout

Nestle - Overweight PT : CHF88

In the wake of Mondelez’s attempt to acquire Hershey (please refer to our US colleague Ken Goldman’s note),
we analyse the potential read across for Nestle. Note that the Hershey board yesterday rejected Mondelez’s
offer. The return of the KitKat license could be c1% accretive for Nestle, in our view, while we do not see it as a
priority for Nestlé to chase a USD23bn confectionery deal hence we ascribe limited probability it will enter the
race to acquire Hershey. In our Nestle model, published on tab “NESN-HSY_model”, we provide a deal model
to allow investors to play along with various assumptions on potential transactions as well as global market
share in confectionary. Contact your J.P. Morgan representative, or reply to this email for a copy.
* The KitKat license in play. Hershey owns the US right to the KitKat brand. Our colleague estimates sales of
US$542m and EBITDA US$179m in 2015 and believes the Kit Kat license would revert back to Rowntree
(now Nestle) with no payment from either party, according to the 1979 agreement between Hershey and
Rowntree (then owner of KitKat). While it is unclear to us whether the original agreement was modified or
would hold under any deal structuring, we believe the accretion for Nestle would be 0.6% to1.0% (assuming
US$2.5bn to zero payment).
* Confectionery remains an ambiguity within Nestle’s portfolio. Nestle derives c10% of its sales from
Confectionery. In our report Nestle 2.0, we argued that the division seems less of a fit within Nestle’s strategy
while it is also disadvantaged on a global basis: ‘Nestlé’s long-term commitment to confectionery within its
“Health & Wellness” strategy remains a question mark, in our view, given the long-term risks of a consumer
backlash against unhealthy foods as Soft drinks and Cereals are experiencing. Besides, our analysis shows the
division is still very much in a 'double or quit' box, as we do not see an organic solution to address Nestlé's
lack of scale and brand equity in WE and NA confectionery’.
* Hence, it is unclear if Nestle would chase Hershey as a target. Balancing the pros and cons, we do not
think an outright US$23bn acquisition of Hershey would be a priority. On the Pros side: 1) Nestle would build
scale in NA, 2) this could help streamline the US portfolio by speeding up the disposals of Frozen Foods and
Ice cream, 3) Hershey chocolate brands could flourish outside the US thanks to Nestle global platform
(Hershey derives only 15% of sales outside the US). On the Cons side: 1) we see most potential globally for
premium chocolate and Hershey brand positioning may not totally fit the bill, 2) Nestle is in the midst of a
management change and timing may not be ideal, 3) there will be some small antitrust issues in the US
confectionery, 4) while Nestle sought to buy Hershey in 20021, we do not believe it showed interest in the
subsequent consolidation of the global confectionery market (Mars bought Wrigley in 2008 and Mondelez
bought Cadbury in 2009), hence raising doubt that a potential US$23bn deal in confectionery would now be a
priority, 5) we rather see substantial value-creation in a potential JV, which may be difficult to enact with
Hershey (we had exposed the value-creation in a potential merger of Nestlé confectionery with Ferrero in
Nestle 2.0).

>>> ML pre-market indications

ML Indications:

KIER - Inline. All divisions performing well with strong pipelines of biz.+2%
MINERS - Copper +0.7%, Iron Ore fut -0.67% & BHP OZ +2.1%, RIO OZ +4%.....+2%
DEUTSCHE BANK - CEO Cryan says that bank will not need a capital hike.....+2%
NOVARTIS - Spec to sell 33.3% stake in Roche to investors by end of yr..+1-2%
COBHAM - Positive. Contract extension worth A$1.2bn over 10 years.........+1%
LUFTHANSA - +ve. Hires ex-swiss unit executive Svennson to fill CFO gap...+1%
ROCHE - Novartis said to be looking into selling its stake by yr end......u/c
SWEDISH MATCH - Submits applications for UK court to review ban of snuff..u/c
TUI - CEO reits target of increasing op profit by 10% in next 3 yrs.......u/c
BUREAU VERITAS - We DOWNGRADE to Underperform, increasingly GDP sensitive.-1%
MITIE - We DOWNGRADE to Neutral. Will feels slowing economic growth.......-1%
ISS - We DOWNGRADE to Underperform, PO 230p. 15% of ops are in the UK.....-1%

>>> What to look at today - 4th of July 2016

Asian equity markets continue to rally, taking cue from another strong session of gains in the US on Friday. With 4 straight session of gains, US markets have now erased the 2-day plunge that followed the surprise UK Brexit vote. Political uncertainty - this time in Australia - has again contributed to volatility to start the US holiday-thinned week. FX majors, USD/JPY traded in a 40pip range below 102.80, NZD/USD was little changed around 0.7170, and GBP/USD initially fell 30pips below 1.3240 but then rose above 1.33. Precious metals - particularly silver, which rose 5% above $20 for the first time in nearly 2 years - also extended their gains. FT reported that UK Fin Min Osborne intends to cut corporate tax rate from 20% to 15% to help support business investment in the economy post-Brexit, which would make UK rate the smallest in the G20. ECB's Coeure said it was too early to say if monetary policy will be affected by Brexit amid expectations of inevitable further easing to make up for anticipated growth hit from UK departure. In Germany, Bundesbank's Weidmann however called for fiscal vigilance in spite of Brexit decision, stating it should not be a factor that softens budget rules.

Nikkei +0.55% Hang Seng +1.47% CSI +1.61% Shanghai +1.86%

Eur$ 1.1133 CNH 6.6778 CNY 6.6631 GBP 1.3281 CHF 0.9737 RUB 63.8057 WTI $ 49.23 (+0.51%)

S&P +0.30% EuroStoxx +0.38% Dax +0.35% SMI +0.49%

Macro :
- Greece Mulls Exempting ‘New Money’ From Cap Controls: Stournaras
- France’s Macron: Euro Clearing Should Move to Paris Post Brexit
- Italy’s Renzi Said to Be Ready to Defy EU Over Bank Rescue: FT
- U.K.’s Osborne Considers Cutting Corporate Tax Rate to 15%: FT

Keep an eye on :
- AAPL US : Apple May Be Able to Buy Tidal for Under $500m: Piper Jaffray
- AGS BB : Ageas Sees 2Q P&L Impact EU5.9m from Relative Performance Note
- AREVA FP : Brazil to Export Enriched Uranium for First Time: Agencia Brasil
- CS FP : Axa’s Buberl Says Any U.K. Economic Slowdown May Affect Unit
- BBRY US : U.S. Senate Tells Staffers It Won’t Issue More BlackBerrys: WSJ
- BMPS IM : ECB Asks Monte Paschi for 3-Yr Plan on NPLs, Repubblica Says
- CABK SM : Caixa May Ask Brazil Treasury for BRL5b in Funding: Folha
- COB LN : Cobham Awarded 10-Year, A$1.2b QantasLink Contract Extension
- CSGN VX : Credit Suisse CEO Says Won’t Break Up Bank: SonntagsBlick
- CSGN VX : Credit Suisse Triples Special Bonuses to Retain Staff: FT
- DBK GY : Deutsche Bank CEO Wants to Retain Asset Management Unit: Spiegel, Deutsche Bank's Cryan Backs Organic Growth Returns, Spiegel Says
- ENEL IM : Enel Talks on Metroweb Said Extended to July 20: Reuters
- NXT FP : Euronext CEO Says Brexit Makes Euro Zone, Euronext More Relevant
- FB US : Israel Minister Criticizes Facebook, Calls It ‘Monster’: Reuters
- HOG US : Harley Sale in High $50s-Low $60s Gets Close to 20% IRR: RBC
- IT IM : Italmobiliare sells Italcementi 45% stake to HeidelbergCement; takes 5.3% stake in HeidelbergCement
- KU2 GY : China’s Midea Buys Stake in Germany’s Kuka for $1.3 Billion
- LNKD US : Google, Facebook Said to Have Looked at Buying LinkedIn: Recode
- LSE LN : Consob Sent Letter to LSE on Borsa Italiana After Brexit: Sole
- LHA GY : Lufthansa Appoints Melker Schorling CEO Ulrik Svensson as CFO
- NESN VX : Nestle Quezac Sale Stymied by Dispute With Union, Figaro Reports
- NOVN VX : Novartis to Sell Roche Stake This Year, SonntagsZeitung Says
- PHIA NA : Philips Said in Tentative Talks to Sell Lumileds, Times Reports
- PUB FP : Publicis Groupe and Tencent in Data, Content, Collaboration Pact
- RCS IM : Cairo Communication Raises RCS Bid, Drops Some Conditions
- RCS IM : Cairo Says RCS Can ‘Significantly’ Increase Revenue: La Stampa
- RIO LN : Rio Tinto Chief Commits to London Head Office After Brexit Vote
- ROG VX : Novartis to Sell Roche Stake This Year, SonntagsZeitung Says
- ROG VX : Roche to Cut About 350 IT Jobs Over 1 1/2 Years: Basler Zeitung
- RDSA NA : Shell’s Van Beurden: Can’t Afford Costly Investment: Telegraph
- RDSA NA : Shell CEO Says Company Could Cut More Jobs, Telegraph Reports
- SPLS US : Staples Hires KPMG to Weigh Possible U.K. Unit Sale: Telegraph
- SYNN VX : Syngenta CEO Says Argentina’s Improvements Noticeable: La Nacion
- TEF SM : 02 Customers May Be Able to Buy Shares in Listing: Telegraph
- TSLA US : Tesla Delivered 14,370 Vehicles in 2Q 2016 Vs 17,000 Forecast
- TKA GY : ThyssenKrupp, Tata Merger May Be Delayed: Handelsblatt
- FP FP : Brexit Not Good News for Macro Environment: Total CEO Pouyanne
- TUI LN : Tui’s Joussen Sees Op Profit Rising 10% Annually: Rheinische P.
- UCG IM : Weimer Says Mustier Excellent UniCredit CEO Choice: Handelsblatt
- VIE FP : Lower Pound Will Marginally Impact Profit: Veolia CEO Frerot
- VOW3 GY : Macri Wants VW, Daimler to Invest $250m in Argentina: La Nacion
- VOW3 GY : VW CEO Mueller Rejects Compensation for European Customers: Welt
- VOW3 GY : Volkswagen Could Cut Labor Costs by Semi-Retirement: SZ