After Altice and Enel, who is going to take the next structure simplification initiative? Why not Vincent BOLLORE?
Why revisiting these cases now?
* The fresh move from Altice for SFR demonstrate a rising appetite of corporate leaders for structure simplification initiatives
Altice for SFR following Enel for EGP ,TUI for TUI Travel ,Sky for Sky Deutschland ,….
* The delivery of additional voting rights ,as a result of the applicability of the Florange Law ,may open up new opportunities in France (Florange Law is outlined in the appendix)
French Takeover Code entitles controlling shareholders to activate squeeze-outs as soon as they exceed 95% of voting rights (VRs)
Bollore/Havas/Vivendi : Vincent Bolloré seems willing to act ; BOL will receive double voting rights soon
Combination would leave BOL just below 30% ; HAV holders would deserve a premium
Fonciere Odet/ Bollore : Odet ,which owns 78% of voting rights …like currently Altice ,should be the surviving entity
BOshare depression imposes a reassuring reaction
Orange & Orange Belgium : the market cap of the float represents 1.6% of Orange's one ; has switched to ORANGE name
ACS * Hotchief : sounds to primarily be a question of price
Unipol & Unipol SAI : they just need to find the right banking partner first
Founder & Fimalac : The Possible activation of the Fitch Put would probably revive anticipations of delisting
Lactalis & Parmalat : French parent has again reloaded 21.4m shares this year
Renault & TP Renault : an obsolete and costly mechanism indeed
AIR has good long-term prospects but in 2016 it is struggling with shorterterm
execution problems. News flow over the weekend suggests that some of
these problems are continuing and we worry they will spill into 2017. Our
EPS estimates have long assumed that AIR undertakes a €2bn share buyback
in 2017 (given the significant disposal proceeds received in 2016) but we now
think it is prudent to remove that assumption from our forecasts. We thus
reduce our 2016-19E EPS by -1%/-1%/-4%/-4%. Whilst we expect AIR's EPS
to grow nicely in 2018E, our 2018E EPS is 17% below the BBG median
consensus. If we are right the shares will be caught in a tug-of-war between
“an EPS growth story” and a “downward EPS revisions story”. Until
consensus is reset and news flow (on execution; from airlines) improves, we
remain Underweight with an unchanged Dec-16 PT of €47.
New delays on A320neo engine: On Friday 16 September, at 4pm UK
time, the head of UTX (parent of P&W) said P&W would only deliver c150
GTFs in 2016, down from a plan of c200. The GTF is one of two engines on
the A320neo (new engine option). AIR says it can still deliver >650 planes
in 2016, delivering more A320ceo (current engine option). However, we
have two concerns. (1) If AIR is left with c20 undelivered A320neos at year
end this could add c€1bn to its inventory. (2) The new delays add a lot of
risk to the A320neo delivery schedule in 2017 in our view.
A new restructuring plan at Airbus: According to the FT (Sunday 18
September) Airbus is about to launch a “new” restructuring plan. CEO
Enders alluded to this in the H1 2016 results so it is unclear whether the
“new” plan is simply “blocking and tackling” or something more substantial
that will require upfront charges. We think AIR bulls will emphasise the
potential payback on any restructuring. However we have several concerns.
(1) Why is a restructuring plan needed when Airbus is so confident on its
earnings outlook? (2) Will there be any cash cost of a restructuring plan? (3)
The FT also suggested more charges are expected on the A400M. We
already assume a further c€400m on top of the c€1bn booked in H1 2016,
but it is unclear what the market expects and/or if our estimate is prudent
enough.
2017 earnings bridge indicates some downside to consensus, relative valuation still supportive
We turned more cautious on Siemens vs other large cap Electricals post the Q3
results this summer with the stock close to our TP and given the longer term
headwinds we discussed in our Power Generation report. In this note, we review
the drivers as the focus moves to 2017. Similar to ABB, Philips and Schneider, we
still see some relative valuation support given the substantial discount to high
quality defensive stocks and some of the Mechanical Engineers. However, Philips
has more upside and a better story for 2017, Schneider has more valuation upside
while we will assess ABB post the October 4 CMD (see separate note today).
Reviewing 2017 drivers: We believe that the relative investment story slows
vs 2016 when delivery on cost savings and FX resulted in superior relative
earnings development. Without specific earnings drivers for 2017, the focus
shifts more to top-line growth and portfolio, generally more difficult to bank on.
In the near term, 2017 consensus may drift vs stability at peers.
2017 earning bridge indicates downside to Bloomberg consensus: Siemens
is on track to increase underlying industrial profit by €700mn-800mn in 2016
on 3% organic sales growth, helped by €1bn contribution from overhead cost
savings, FX and M&A, which will not repeat in 2017 (at current perimeter and
FX rates). We expect similar 3% organic sales growth for 2017. To get to
consensus EPS of €7.3, assuming consensus uses similar “below the line” items
and charges/gains as we do, Siemens would have to increase underlying profits
by >€800mn compared to a moderate decline (implied) on similar sales growth
in 2016, excluding the specific drivers.
Earnings - no material changes: Our estimates remain largely unchanged. For
2016, we look for GAAP EPS of €6.8, slightly above the €6.5-6.7 guidance and
€6.7 consensus. For 2017, we look for flat reported EPS at €6.8 which
compares to consensus €7.3 (range of €6.8-8.1). Our model assumes no gains,
though some may materialize.
Valuation – still at a discount: The stock should remain supported by a
reasonable relative valuation. On our below consensus earnings, it still trades at
a 5% discount to the sector (MSCI Europe) and has not re-rated relative to its
European or global peers despite the better execution, indicating that investors
retain some skepticism regarding longer-term earnings and capital allocation.
Our Dec 2017 target price remains at €105.
Conforama and Casino Groups to create a joint central purchasing agency
The Conforama and Casino Groups announced to create a joint central purchasing agency for non-food products with operations set to launch for the 2017 purchasing negotiations.
Named “Mano”, the agency will aim to optimise for both groups purchasing in France from the main international suppliers of household appliances (both white and brown goods).
It will thus be positioned as the leader or co-leader in its areas of activity and enhance the competitiveness of the Conforama, Cdiscount, Géant, Monoprix and Casino Supermarket banners.
The Conforama and Casino Groups will each continue to independently operate their sales outlets and e-commerce sites in line with their banners’ identities and their respective sales strategies.
This development was also reported in daily Le Figaro, which said that the JV will be purchasing goods for about EUR 1.3bn in 2017. The report noted that under the last legislation, any alliance has to be notified with the Competition Authority if the purchasing figure amounts to EUR 3bn annually at least.
Abertis targets Goldman Sachs' EUR 2bn Mexican motorway business; interest in OHL Mexico sidelined
Abertis is looking to acquire Red de Carreteras de Occidente's (RCO), the Mexican motorway concessions company that Goldman Sachs has recently put up for sale, El Confidencial reported. The company is valued at about EUR 2bn, the Spanish-language item said, citing official sources.
According to the report, Abertis is considered one of the most likely candidates to acquire the concessions business.
Abertis is keen to enter the Mexico market and has previously participated in talks to acquire Obrascon Huarte Lain’s (OHL) 56% stake in its Mexican concessions division OHL Mexico, the report said.
According to the report, a bid for RCO would signal Abertis has moved away from its former partner OHL:
Dow-0.02% S&P+0.00% Nasdaq -0.18% Russell +0.63%
US Market start a major week on flat note. Oil has been a catalyst and rebound today helped equities to outperform in the morning. Four sectors ended in the green with industrials (+0.3%), financials (+0.5%), and utilities (+1.0%) leading. Conversely, technology (-0.2%), health care (-0.4%), and telecom services (-0.7%) underperformed. The implied probability of a rate hike at the September meeting sits at 12.0% while the odds of a rate hike at the December meeting registers at 55.0%. On the M&A front, (ERI 13.84,- 0.41) agreed to acquire the name for $23.00 per share or approximately $1.7 billion. Volume were below average wih 760mil shares. US After Hours NAII +23% following earnings, WINT +31% on FDA Fast Track Designation news.... ASNA -23.8%, HNI -7.8% on earnings/guidance. Asian Stocks Near One-Week High Before BOJ, PM Abe: Govt to leave monetary policy to BOJ; important for policy to fight deflation, Nikkei speculates BOJ will likely adjust the policy framework at its meeting this week; may be forced to abandon its 2-year target timeframe and switch to a longer view; Negative rates are expected to be the centerpiece of BOJ future policy expansion, but because of their negative impact on financial sector, the BOJ will need to communicate consideration of side effects. One option is communicating it will prevent downturns in superlong interest rates. Hong Kong Interbank offered Rate is trading back on lower level after trading above 20 levels yest ({HICNHON Index }). Eldorado Resorts (ISLE 22.04, +5.11) rallied 30.2% after Isle of Capri (BLOX 26.35, +3.52) spiked 15.4% after announcing that Vista Equity Partners will acquire the company for $26.50 per share or approximately $1.6 billion. Separately, Infoblox
Nikkei -0.34% Hang Seng -0.14% CSI -0.19% Shanghai -0.13%
Eur$ 1.1173 CNH 6.6725 CNY 6.6694 JPY 101.84 GBP 1.3038 CHF 0.9804 RUB 64.6818 WTI$43.62 (-0.55%)
S&P +0.23% EuroStoxx -0.17% Dax -0.07% SMI -0.16$ FTSE -0.02%
Macro :
- Gundlach Says Fed Won’t Raise Interest Rates This Week: Reuters
- Yuan Interbank Rate Surges in Hong Kong in Sign of Intervention
Keep an eye on :
- ABBN VX : ABB Upcoming CMD More of a Progress Report, Not Conclusion: Citi
- AIR FP : Iran to Cut Airbus Plane Order to 112 From 118, Reuters Says
- AIR FP : Airbus Plans Restructuring to Strengthen HQ vs Divisions: Echos
- ALO FP : Alstom to Supply Hydrogen-Powered Trains From 2017, Welt Says
- AMZN US : Amazon German Sales Rise to EU7.8b in 2015 From EU6.6b: HB
- ATL IM : Atlantia Buys 21.3% of Save; Total Consideration About EU174m
- BO DC : Bang & Olufsen Chairman Rules Out Sale of Company, Borsen Says
- BAYN GY : Bayer Raises Forecast for Recently Launched Pharma Products
- BAYN GY : Bayer Mulls Dropping Monsanto Name as Cure for Brand Headache
- BAYN GY : Bayer Sees Higher Crop Science Margins After Monsanto Deal
- CHK US : Icahn Cuts Stake in Chesapeake Energy, No Longer Top Holder
- EDF FP : France’s EDF to Invest $2b in India Renewable Projects: E. Times
- PRS SM : Prisa Said to Seek Buyer for 75% Santillana Stake: Confidencial
- SIE GY : Siemens Takes ‘Very Cautious Approach to 2017,’ Kaeser Says: WSJ
- GLE FP : Societe Generale Names Sadia Ricke as U.K. Country Head
- UBSG VX : Banque Leonardo in JV Talks With UBS France, Echos Says
- UNA NA : Unilever to Buy Seventh Generation, No Terms
- VIRP FP : Virbac Returns to Profit in 1H, Revises FY Outlook
- VOW3 GY : Renschler Says VW Expects Savings From Navistar Purchase: HB
- MF FP : Wendel Agrees to Buy Tsebo for Enterprise Value of About EU331m
>>> Up
*ADVANCED MICRO DEVICES RAISED TO MARKET PERFORM AT BERNSTEIN
*ANGLO AMERICAN RAISED TO NEUTRAL VS UNDERPERFORM AT MACQUARIE
*BHP RAISED TO OUTPERFORM FROM NEUTRAL AT MACQUARIE
*COFACE RAISED TO BUY AT KEPLER CHEUVREUX
*KIRBY RAISED TO OUTPERFORM AT RBC
*LEG IMMOBILIEN RAISED TO BUY VS HOLD AT SOCIETE GENERALE
*NESTLE RAISED TO OUTPERFORM AT MAINFIRST
*NYRSTAR RAISED TO NEUTRAL VS UNDERPERFORM AT MACQUARIE
*SEGRO RAISED TO BUY VS NEUTRAL AT UBS
*SOUTH32 RAISED TO OUTPERFORM VS UNDERPERFORM AT MACQUARIE
*STOREBRAND RAISED TO BUY FROM HOLD AT SEB
*UNICREDIT RAISED TO OUTPERFORM VS NEUTRAL AT MEDIOBANCA
*VAT RAISED TO BUY VS NEUTRAL AT UBS
*VOESTALPINE RAISED TO OVERWEIGHT VS EQUALWEIGHT AT BARCLAYS
*VIDRALA RAISED TO BUY AT SANTANDER
>>> Dow
*ALFA LAVAL CUT TO UNDERPERFORM AT CREDIT SUISSE
*BARRATT DEVELOPMENTS CUT TO NEUTRAL VS BUY AT UBS
*BOVIS HOMES CUT TO NEUTRAL VS BUY AT UBS
*HEIDELBERGCEMENT CUT TO HOLD VS BUY AT DEUTSCHE BANK
*METSO CUT TO NEUTRAL AT CREDIT SUISSE
*PETRA DIAMONDS CUT TO NEUTRAL VS BUY AT CITI
*SANDVIK CUT TO UNDERPERFORM AT CREDIT SUISSE
*SUEDZUCKER CUT TO HOLD VS BUY AT BANKHAUS LAMPE
*UNILEVER CUT TO NEUTRAL VS OUTPERFORM AT MAINFIRST
*ZURICH INSURANCE CUT TO SELL VS HOLD AT BANKHAUS LAMPE
>>> PT Change
>>> Initiation
*ABERTIS RATED NEW BUY AT CITI, PT EU17.2
*ASOS RATED NEW OUTPERFORM AT MACQUARIE; PT 5,700P
*CRODA RATED NEW OUTPERFORM AT BERNSTEIN
*DSM RATED NEW UNDERPERFORM AT BERNSTEIN, PT EU51
*IMI RATED NEW NEUTRAL AT CREDIT SUISSE
*NOVARTIS RATED NEW BUY AT CHARDAN CAPITAL MARKETS
*PLY GEM HOLDINGS RATED NEW OUTPERFORM AT RBC
*ROTORK RATED NEW OUTPERFORM AT CREDIT SUISSE
*WEIR RATED NEW OUTPERFORM AT CREDIT SUISSE
*ZALANDO RATED NEW OUTPERFORM AT MACQUARIE; PT EU50
>>> Call
After Hours Summary: NAII +23% following earnings, WINT +31% on FDA Fast Track Designation news.... ASNA -23.8%, HNI -7.8% on earnings/guidanceAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: NAII +23% (thinly traded)
Companies trading higher in after hours in reaction to news: WINT +30.9% (announces FDA Fast Track Designation for AEROSURF), PIR +6.8% (Alden Global discloses 9.5% active stake, details talks with management), HDP +5.3% (Hortonworks & IBM (IBM) announce the planned availability of Hortonworks Data Platform for IBM Power Systems enabling POWER8 clients), AMPH +5% (to join S&P SmallCap 600), TXMD +4.9% (announces that the FDA has accepted the NDA for Yuvvexy; PDUFA of May 7, 2017 established), SRPT +3.2% (following 75% surge higher on FDA accelerated approval of EXONDYS 51 (eteplirsen) injection; plans to file MAA in Europe for eteplirsen by the end of the year), CRUS +0.9% (to join the S&P MidCap 400), RCL +0.7% (increases quarterly dividend), ABX +0.4% (Royal Gold to acquire 3.75% Net Value Royalty covering 'significant area' of Barrick Gold Cortez gold mine, including Crossroads deposit from a private party seller for $70 mln)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: ASNA -23.8%, HNI -7.8% (sees Q3 and FY EPS/revs below previous outlook)
Companies trading lower in after hours in reaction to news: SEAS -8.7% (SeaWorld Entertainment cuts dividend by more than 50% to $0.10/share, suspends dividends thereafter; will opportunistically repurchase shares in the open market during the remainder of 2016), ECA -5.4% (commences 107 mln common stock offering), OCLR -4.9% (announces a 13 mln share underwritten public offering of common stock), AQXP -4.5% (announces an underwritten public offering of common stock for an undisclosed amount), CHK -3.4% (Carl Icahn lowers active stake), TSE -0.9% (Trinseo announces secondary offering of 10,669,567 ordinary shares by selling shareholder)