(Exane) Semiconductor : Semi-auto-matic



Semiconductors are capturing the value add from the automotive supply chain
Our analysis shows semiconductors are driving 80% of automotive innovation and yet represent
only c.3% of a car’s total cost. We estimate semi vendors generate an average EBIT margin of
c.15.5% in Automotive, i.e., more than triple that of carmakers and more than twice that of car
equipment makers. We believe semis will continue to capture the value add of the auto
ecosystem.

We expect 6% revenue CAGR for automotive semiconductors over 2016–20
Despite bearish unit forecasts from our Automotive team, we see automotive semiconductors
growing by 6% CAGR over 2016–20 as semiconductor content per car accelerates to c.6% vs
2.3% historically. This acceleration is driven by the electrification of the car, which should lead
semiconductor content in each vehicle to rise by c.USD360 (vs USD323 today), and autonomous
cars, which should command incremental semiconductor content of USD500 per car. We expect
half of the sector’s growth to come from the electrification of the car and autonomous cars.

We see STM (Yes! STM) and IFX as the winners among existing leaders
Outperforming the industry will essentially be conditional on exposure to ADAS and the
electrification of the car. Largely non-consensual, our bottom-up model shows that STM should
be a winner of current trends thanks to its strong position in ADAS (N1), its market share gains in
microcontrollers and its entry into the electrification of the car via its SiC technology. We expect
the group’s automotive revenues to grow by 8.7% CAGR over 2015–20. Largely consensual, we
expect IFX to also achieve a 8.8% y/y revenue growth over 2015–20, thanks to its very strong
position on the electrification of the car, which should represent about half of its revenue growth.
Among the established players, we expect Renesas, NXP and TXN to lag.

Mobileye and Nvidia the new rock stars of the sector, CEVA and Intel potential challengers
Due to the demanding processing requirements of autonomous cars, we expect Mobileye and
Nvidia to post 39% and 37% revenues CAGR over 2015-20. Ceva and Intel post-Movidius
acquisition could become credible challengers

(Exane) Semiconductor : Semi-auto-matic



Semiconductors are capturing the value add from the automotive supply chain
Our analysis shows semiconductors are driving 80% of automotive innovation and yet represent
only c.3% of a car’s total cost. We estimate semi vendors generate an average EBIT margin of
c.15.5% in Automotive, i.e., more than triple that of carmakers and more than twice that of car
equipment makers. We believe semis will continue to capture the value add of the auto
ecosystem.

We expect 6% revenue CAGR for automotive semiconductors over 2016–20
Despite bearish unit forecasts from our Automotive team, we see automotive semiconductors
growing by 6% CAGR over 2016–20 as semiconductor content per car accelerates to c.6% vs
2.3% historically. This acceleration is driven by the electrification of the car, which should lead
semiconductor content in each vehicle to rise by c.USD360 (vs USD323 today), and autonomous
cars, which should command incremental semiconductor content of USD500 per car. We expect
half of the sector’s growth to come from the electrification of the car and autonomous cars.

We see STM (Yes! STM) and IFX as the winners among existing leaders
Outperforming the industry will essentially be conditional on exposure to ADAS and the
electrification of the car. Largely non-consensual, our bottom-up model shows that STM should
be a winner of current trends thanks to its strong position in ADAS (N1), its market share gains in
microcontrollers and its entry into the electrification of the car via its SiC technology. We expect
the group’s automotive revenues to grow by 8.7% CAGR over 2015–20. Largely consensual, we
expect IFX to also achieve a 8.8% y/y revenue growth over 2015–20, thanks to its very strong
position on the electrification of the car, which should represent about half of its revenue growth.
Among the established players, we expect Renesas, NXP and TXN to lag.

Mobileye and Nvidia the new rock stars of the sector, CEVA and Intel potential challengers
Due to the demanding processing requirements of autonomous cars, we expect Mobileye and
Nvidia to post 39% and 37% revenues CAGR over 2015-20. Ceva and Intel post-Movidius
acquisition could become credible challengers

(CS) European MEdia & Ad Agencies...pdf attacahed

We initiate on Sky, WPP, Publicis and Informa and transfer coverage of RELX (upgrade to OP from N), Pearson (downgrade from N to UP), Wolters Kluwer (upgrade to OP from UP), DMGT (maintain N) and UBM (remain N). Our key calls are the OP rated RELX (high-quality assets with market-leading and sustainable positions, low cyclicality), Sky (overdone threats with opportunities outside the UK and in mobile and weaker Sterling) and WPP (higher yield and FCF growth vs Publicis, a clear financial model, more management stability and leading programmatic advertising and data/analytics assets).

ADVERTISING AGENCIES: We initiate on WPP with an OP rating (TP 2000p) and Publicis with an UP (TP €63): Both stocks trade on similar 2017E P/E and free cash flow valuations, but we believe WPP has 1) more management certainty as Publicis is due to change CEO in early 2017, 2) higher FCF growth over 2017/18E of 15% vs 6%, 3) a higher 2017E dividend yield (3.9% vs 3.3%), 4) lower risk as Publicis will have to work hard on its turnaround, and 5) we estimate an operating margin in 2018 of 16.3%, 100bps below the lower end of Publicis' target range (17.3-19.3%). Our 2017E EPS are c.2% above consensus for WPP and c.2% below for Publicis.

>>> Meggitt takeover speculation dampens as chairman acquires stock

Meggitt takeover speculation dampens as chairman acquires stock

Speculation Meggitt [LON:MGGT] might be targeted for takeover by a competitor was dampened when chairman Nigel Rudd and his wife purchased stock in the UK-based aircraft-parts manufacturer, the Financial Times reported.
Meggitt announced the acquisition of 2,500 shares by the Rudds in a stock exchange announcement yesterday, 21 November.
As reported earlier this week, Meggitt activist shareholder Elliott Management is understood to have been approaching other key investors. Elliott, which acquired a 5.2% Meggitt stake three months ago, is eager to push for a sale or break-up, and has been courting the US conglomerate Honeywell [NYSE:HON] and other prospective buyers, City sources said.
The original report appeared in the Financial Times, page 29

>>> What to look at today - 22nd of November 2016

Dow +0.47% S&P +0.75% Nasdaq +0.89% Russell +0.50%
US Market closed higher. Crude oil moved was one of the catalyst. energy component rallied 4.1% ($48.27/bbl; +$1.89) after several oil producers made upbeat comments regarding the elusive OPEC supply cap agreement. Iranian Oil Minister Bijan Namdar Zanganeh stated that the oil cartel will likely reach a consensus regarding cuts at its official meeting on November 30. Separately, Iraqi Oil Minister Jabbar al-Luaibi indicated that three new proposals will be brought to the group during technical meetings taking place today and tomorrow. Softening in the US Dollar Index (100.85, -0.36, -0.36%) boosted dollar-denominated commodities. ten sectors finishing with gains. The energy (+2.2%), utilities (+1.1%), and technology (+1.1%) sectors ended in the lead while real estate (-0.2%), financials (+0.3%) and health care (+0.3%) rounded out the board. TSN -14.5% on weaker-than-expected quarterly results and disappointing full-year 2017 earnings guidance. Volume were below average with 842mil shares. US After Hours SBLK +8.1%, ENTA +3.1%, SINA +1.5%, PANW -12.5%, DY -11%, PNNT -10.3%, BECN -7.7%, VIPS -7%, GLBS -4.4%, JACK -3.4%, WB -1.8%. In Asia, Yuan fix set firmer for the first time in 13 days. Magnitude 7.3 earthquake reported in Japan; Initial warnings called for 3m tsunami; Subsequently, tsunami waves were much smaller and damage to property was minimal. PM Abe: Global economy faced with large downside risks; TPP is meaningless without participation of US, no point to implement. BOJ Gov Kuroda: Reiterates CPI to meet 2% target around FY18; Too early to discuss exit strategy or ways to shrink BOJ balance sheet; No sharp decline in liquidity of bond markets; New policy stance (yield control) is more sustainable.

Nikkei +0.31% Hang Seng +1.34% CSI +0.62% Shanghai +0.79%

Eur$ 1.0617 CNH 6.9146 CNY 6.8909 JPY 111.02 GBP 1.2485 CHF 1.0102 RUB 63.6389 WTI 48.72 +1.02%

S&P +0.36% EuroStoxx +0.92% FTSE +0.71% DAX +0.76% SMI +0.36%

Macro :
Asian Stocks Rise for Second Day as Commodities Rally With Won
Fed Hike Is Certainty for Bond Traders as Market Odds Reach 100%
Chinese-Made $100 Billion City Near Singapore 'Scares Everybody'

Keep an eye on :
- AIR FP : Iran Says Can’t Afford Cash Payment for Airbus Planes: ILNA
- BAYN GY : Bayer CEO Tells Bild Monsanto Takeover Going According to Plan
- CSGN VX : Credit Suisse Said to Face Tax Probe Over Undeclared Accounts
- DIS US : Disney Falls Amid WSJ Report of Amazon Mulling Sports Package
- EDF FP : Ibereolica, EDF Closed Chile Wind Farm Financing: Reuters
- ENEL IM : Enel Plans to Dispose of EU3b of Assets, Streamline Structure
- ENGI FP : Engie to Offer Gas, Electricity to UK Households: Les Echos
- EI FP : Essilor Cuts 2016 Targets, Citing Slowdown in U.S. Market
- LUPE SS : Lundin Petroleum Raised to Overweight at Barclays
- AM FP : Natixis AM Always Looking at Acquisition Opportunities: Echos
- NOVOb DC : Novo Nordisk Gets FDA Approval for Xultophy in Type 2 Diabetes
- RDSA NA : Shell May Looks to Expand Quest CCS Project in Alberta
- SAN FP : Sanofi/Zealand Diabetes Combo Treatment Wins FDA Approval
- TEF SM : Telefonica Deutschland CEO Thorsten Dirks to Leave in 2017
- VONN SW : Vontobel Family Revamps, Extends Shareholder Pool; Holds 50.7%
- VOW3 GY : Audi’s China Dealers Said to Seek to Block SAIC Motor Deal: WSJ
- ZC FP : Zodiac Full-Year Net Misses Estimates, Hurt by Cost Overruns

>>> Europe : Brokers Upgrades & Downgrades - 22nd of November 2016

>>> Up
*Alpha Bank Raised to Buy at Citi
*Bouygues Raised to Neutral at Goldman, PT EU35.50
*Bouygues Raised to Outperform at Credit Suisse
*Eurocommercial Properties Raised to Buy at HSBC
*Informa Raised to Neutral at Citi
*Klepierre Raised to Buy at HSBC
*Randgold Raised to Neutral at Citi
*UBM Raised to Buy at Citi
*Wolters Kluwer Raised to Outperform at Credit Suisse

>>> Down
*Pearson Cut to Underperform at Credit Suisse
*Tenaris Cut to Underperform at Macquarie
*UBM Cut to Neutral at Credit Suisse
*Vallourec Cut to Underperform at Macquarie

>>> PT Change


>>> Initiation
*Bollore Rated New Buy at HSBC, PT EU4.10
*Ferrari Rated New Buy at Berenberg, PT EU65
*Fiat Rated New Hold at Berenberg, PT EU7.70
*Iliad Reinstated Neutral at Goldman, PT EU210
*Informa Rated New Neutral at Credit Suisse, PT 700p
*Michelin Rated New Sell at Berenberg, PT EU80
*Nokian Renkaat Rated New Buy at Berenberg, PT EU39
*Peugeot Re-initiated Sell at Berenberg, PT EU11.50
*Publicis Rated New Underperform at Credit Suisse, PT EU63
*Renault Re-initiated Hold at Berenberg, PT EU75
*Sky Rated New Outperform at Credit Suisse, PT 980p
*Valeo Rated New Hold at Berenberg, PT EU50
*WPP Rated New Outperform at Credit Suisse, PT 2000p

>>> Call

>>> Asian Update

Asia Mid-Session Market Update: 7.3 earthquakes in Japan inflicts minimal damage; Fitch warns about China credit bubble; USD rally pauses


***US Session Highlights***
- (US) Fed Vice Chair Fischer: seen some appreciation of USD currency; higher USD won't stop Fed from doing what needs to be done for US economy
- (US) Oct Chicago Fed National Activity Index: -0.08 V 0.00e; prior revised lower
- OPEC experts are said to be making 'some progress' in ongoing technical meeting talks in Vienna - press

***US markets on close: Dow +0.5%, S&P500 +0.8%, Nasdaq +0.9%***
- Best Sector in S&P500: Basic Materials
- Worst Sector in S&P500: Healthcare
- Biggest gainers: MRO +8.9%, CHK +7.0%, RRC +7.0%, SWN +6.2%, FCX +5.6%
- Biggest losers: TSN -14.5%, HSIC -5.4%, EXR -2.6%, GPS -2.4%, TGNA -2.3%
- At the close: VIX 12.4 (-0.4pts); Treasuries: 2-yr 1.09% (flat), 10-yr 2.34% (flat), 30-yr 3.01% (flat)

***US movers afterhours***
- SBLK: Reports Q3 -$0.44 v -$0.65e, R$59.9M v $42.8M +10.9% afterhours; +4.1% afterhours
- SINA: Reports Q3 $0.56 v $0.40e, R$274.9M v $255Me; +1.7% afterhours
- VIPS: Reports Q3 $0.15 v $0.15e, R$1.80B v $1.84Be; -4.9% afterhours
- BECN: Reports Q4 $0.88 v $0.91e, R$1.17B v $1.27Be; -6.7% afterhours
- PNNT: Reports Q4 $0.21 v $0.25e; -10.3% afterhours
- DY: Reports Q1 $1.67 v $1.65e, R$799.2M v $801Me; -11.8% afterhours
- PANW: Reports Q1 $0.55 v $0.53e, R$398M v $400Me; Guides Q2 $0.61-0.63 v $0.63e, R$426-432M v $438Me; -12.8% afterhours

***Politics***
- (US) President-elect Trump releases video of planned measures on day one; To withdraw from TPP and negotiate bilateral trade deals; Canceling restrictions on production of shale energy and clean coal.

***Asia Session Notable Observations, Speakers and Press***
- S&P500, Dow Industrials, Nasdaq, and Russell indices all close at record highs for the first time since 1999.
- USD breaks a string of gaining sessions as US treasuries selloff subsides.
- Yuan fix set firmer for the first time in 13 days.
- Oil prices extend gains on OPEC optimism; US energy sector outperforms.

Japan
- Magnitude 7.3 earthquake reported in Japan; Initial warnings called for 3m tsunami; Subsequently, tsunami waves were much smaller and damage to property was minimal. USD/JPY initially fell 50pips below 110.50 before recovering later in the session.
- Fin Min Aso: No major damage showing from the earthquake
- PM Abe: Global economy faced with large downside risks; TPP is meaningless without participation of US, no point to implement
- BOJ Gov Kuroda: Reiterates CPI to meet 2% target around FY18; Too early to discuss exit strategy or ways to shrink BOJ balance sheet; No sharp decline in liquidity of bond markets; New policy stance (yield control) is more sustainable.
- BOJ Exec Dir Amamiya: Last week's fixed rate operations was effective, intended to stabilize the market; To continue use of this policy tool as needed - press

China
- Fitch: Affirms China A+ rating; Outlook stable; build-up of imbalances pose risks to its basic economic and financial stability; vulnerabilities will rise over our 2016-18 forecast horizon; Current policy measures do not adequately address the inherent risks of an economic model that has grown dependent on credit growth rising well in excess of nominal GDP to achieve official growth targets.
- S&P: Sales of China property developers to fall 5-10% in 2017 due to govt cooling measures vs expected increase of 20% in 2016
- Researchers call for PBoC to accelerate depreciation of CNY; Should abandon intervention in FX market - Chinese press

***Asia Key economic data:***
- (CN) China Oct Conference Board Leading Economic Index: 0.8% v 1.2% prior (3-month low)
- (TW) Taiwan Oct Unemployment Rate: 3.9% v 3.9%e
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 115.5 v 118.2 prior

***Asian Equity Markets (23:30ET)***
- Nikkei +0.2%, Hang Seng +1.3%, Shanghai Composite +0.7%, ASX200 +1.3%, Kospi +0.8%

***FX ranges/Commodities/Futures/Fixed Income (23:30ET):***
- EUR 1.0625-1.0650; JPY 110.25-110.90; AUD 0.7365-0.7400; NZD 0.7060-0.7085
- Dec Gold +0.6% at 1,217/oz; Jan Crude Oil +1.0% at $48.72/brl; Dec Copper +1.6% at $2.56/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 6.5 tonnes to 908.8 tonnes; 8th straight decline; lowest since June 20th
- Equity Futures: S&P e-mini +0.4%, Dax +0.3%, FTSE100 +0.4%
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.8779 V 6.8985 PRIOR; First stronger Yuan setting in 13 sessions
- (AU) Australia Finance Ministry (AOFM) sells A$150M in 1.25% 2040 Indexed bonds; avg yield 1.0974%; bid-to-cover 2.75x

Notable movers by sector:
- Consumer discretionary: Billabong BBG.AU +8.0% (guidance); Nine Entertainment Co Holdings NEC.AU +2.4% (Macquarie raises stake)
- Consumer staples: A2 Milk ATM.NZ +6.1% (Q2 result)
- Financials: Abacus Property Group ABP.AU +5.8% (JPMorgan raised to overweight); Charter Hall Group CHC.AU +2.4% (NAB raises stake)
- Industrials: Calsonic Kansei Corp 7248.JP +8.3% (KKR tender offer speculation); DIC Corp 4631.JP +3.0% (speculation about op outflows); Downer DOW.AU +1.6% (A$2B contract)
- Technology: Technology One TNE.AU +12.3% (FY16 result); Konica Minolta Holdings 4902.JP +2.6% (Deutsche Bank raised to buy); Omron Corp 6645.JP +1.4% (Nomura raised to buy)
- Energy: Beach Energy BPT.AU +2.5% (oil rises); Oil Search OSH.AU +2.3% (guidance); JX Holdings 5020.JP +1.3% (Japan quake)
- Utilities: J-Power 9513.JP +1.8% (acquisition); Tokyo Electric Power Co 9501.JP -1.4% (Japan earthquake)

>>> US After Hours Summary: PANW, DY highlight after-hours earnings de


After Hours Summary: PANW, DY highlight after-hours earnings decliners

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: SBLK +8.1%, ENTA +3.1%, SINA +1.5%.

Companies trading higher in after hours in reaction to news: RIGP +6.8% (Transocean (RIG) agrees to increase the consideration for its pending acquisition of each outstanding common unit of Transocean Partners), CTIC +3.7% (To present data from the randomized Phase 3 PERSIST-2 clinical trial at ASH), TLLP +3.2% (Announces $1.1 bln in acquisitions, sees immediate accretion to unitholders), BGNE +3.1% (Baker Bros increases stake), HRL +2.9% (Sells Farmer John, Saag's Specialty Meats, and three farm operations for $145 mln; increases dividend), WLL +2.7% (To sell its 50% interest in its Robinson Lake natural gas processing plant and associated natural gas gathering system and its 50% interest in its Belfield natural gas processing plant and associated natural gas, crude oil and water gathering systems for approximately $375 million).

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance:  PANW -12.5%, DY -11%, PNNT -10.3%, BECN -7.7%, VIPS -7%, GLBS -4.4%, JACK -3.4%, WB -1.8%.

Companies trading lower in after hours in reaction to news: ASM -11.6% (Announces $10 mln bought deal offering), GTE -5.4% (Announces $130 mln bought-deal financing), PLUG -3.4% (Files for $200 mln mixed securities shelf offering ), CCJ -3.1% (Following Japan earthquake), FTNT -2.8% (In sympathy following Palo Alto (PANW) earnings), BFAM -1.9% (Announced secondary offering of 2 mln shares of common stock by selling stockholders), BDGE -1.9% (Commenced an underwritten public offering of approximately $50 mln of its common stock), FEYE -1.9% (In sympathy following Palo Alto (PANW) earnings), CYBR -1.1% (In sympathy following Palo Alto (PANW) earnings).

>>> US Close Dow +0.47% S&P +0.75% Nasdaq +0.89% Russell +0.50%

Closing Market Summary: Averages Begin Week with Closing Records

The stock market began an abbreviated week on a higher note as the three major averages notched new all-time closing highs. The Nasdaq Composite (+0.9%) finished ahead of the S&P 500 (+0.8%) and the Dow Jones Industrial Average (+0.5%). The Russell 2000 (+0.4%) also carved out a new all-time high, extending its November gain to 10.8%.

The major averages jumped at the start of the session as crude oil extended its recent winning streak. The energy component rallied 4.1% ($48.27/bbl; +$1.89) after several oil producers made upbeat comments regarding the elusive OPEC supply cap agreement. Iranian Oil Minister Bijan Namdar Zanganeh stated that the oil cartel will likely reach a consensus regarding cuts at its official meeting on November 30. Separately, Iraqi Oil Minister Jabbar al-Luaibi indicated that three new proposals will be brought to the group during technical meetings taking place today and tomorrow.

Softening in the US Dollar Index (100.85, -0.36, -0.36%) boosted dollar-denominated commodities. The currency index moved off a fresh 14-year high overnight as the euro and the pound gained ground against the greenback. The single currency ticked up 0.2% (1.0629) against the buck while the pound/dollar pair finished higher by 1.2% (1.2494). The euro remains down 3.2% against the dollar in November.

A pullback in market rates helped keep a lid on recent rate angst while a positive bias in global markets also underpinned today's advance. 

The major averages carved out all-time highs in the final hour of action with ten sectors finishing with gains. The energy (+2.2%), utilities (+1.1%), and technology (+1.1%) sectors ended in the lead while real estate (-0.2%), financials (+0.3%) and health care (+0.3%) rounded out the board. 

The influential technology sector (+1.1%) paced today's advance as large cap names continued their recent rebound. Facebook (FB 121.77, +4.75) finished higher by 4.1% after the company reported a $6.0 billion share buyback. Top-weighted Apple (AAPL 111.75, +1.69) ended higher by 1.5%. The broader sector has gained 0.5% so far in November, which compares to an advance of 3.4% in the benchmark index. 

In the consumer staples space (+0.7%), Tyson Foods (TSN 57.60, -9.76) tumbled 14.5% in reaction to weaker-than-expected quarterly results and disappointing full-year 2017 earnings guidance. However, the company did increase its quarterly dividend to $0.225 per share from $0.15 per share. Peer Hormel Foods (HRL 34.94, -0.64, -1.8%) moved lower in sympathy with the name. Hormel will release its quarterly results tomorrow morning. 

Retailers continued to have a mixed showing as Gap (GPS 24.99, -0.62, -2.4%) extended its post-earnings losing streak. Meanwhile, Best Buy (BBY 45.65, +0.86, +1.9%) continued to outperform after reporting upbeat results and guidance last Friday. Separately, influential Amazon (AMZN 780.00, +19.84) and Netflix (NFLX 117.96, +2.75) finished higher by 2.5% apiece. 

The financial sector (+0.3%) finished on a flat note as flattening in the yield curve weighed on banking names. The yield on the 2-yr note finished down one basis point to 1.06% while the yield on the benchmark 10-yr note slipped five basis points to 2.30%. The yield spread between the 2-yr and 10-yr note narrowed to 124 basis points from 128 basis points last Friday.

Today's trading volume was below the recent average of one billion as fewer than 842 million shares changed hands at the NYSE floor.

There was no economic data of note released today.

Tomorrow's economic data will be limited to the Existing Home Sales Report for October (consensus 5.40 million), which will be released at 10:00 ET.