>>> WMF attracts strong investor interest

WMF attracts strong investor interest
WMF, the German coffee machine maker, has attracted strong investor interest since being offered for sale by investment firm KKR, Boersen-Zeitung reported.

The German-language daily said it learned from financial sources that practically every well-known private equity fund and major producer of household appliances is interested.

An insider was cited as saying the bidders will be reduced in number at Easter. It is not known whether Chinese investors like Haier or Fosun will be in the running, according to the newspaper's information.

WMF earns two-thirds of its sales from coffee machines, while kitchen necessities such as pots and pans round out its business, the report said. The price for the company is expected to be EUR 1.5bn-EUR 2bn, according to the daily's information. It added that the sale process is being managed by Citi and Deutsche Bank.

Boersen-Zeitung

(HSBC) HouseBuilders



* In our view, the sector gives exposure to an area of real undersupply, with the UK government largely pulling out the stops to help
* The changed current land/house price environment and improved land discipline/strategic land use are creating upward RoIC pressure
* This all seems very much at odds with a sector rating that our EV/ICbased valuation suggests is poised to see a near halving of RoIC; we initiate coverage of ten UK housebuilders, all rated Buy

In our view, share prices are currently discounting a near halving of sector RoIC
We have analysed EV/IC valuation sensitivities for RoIC delivery under various house
price/volume scenarios; we conclude the UK housebuilders sector is already discounting a
reduction in sector average RoIC from our 2016 estimate of 17% to just 9% within the next three
years. Outside of Central London, we do not view house purchaser affordability as stretched, or
land replacement costs as a threat. Hence we think the sector looks significantly undervalued.
The high income yield is attractive.

Uncharted waters on land reinvestment/cashflows call for different thinking

The sector currently trades at an average 1.6x EV/IC and 1.6x P/TNAV on our FY18 estimates.
Our target prices imply averages of 2.0x and 2.2x respectively. We recognise these multiples
are above the sector’s long-term average EV/IC (1.2x) and P/TNAV (1.3x) multiples. However,
given the change in the gearing relationship so far this cycle between UK house and land
prices, the greater use of higher margin strategic land than ever before, and the attractiveness
of the cash pay-outs to investors helped by real financial discipline within the sector, we argue it
should be valued higher. The high income yield is very attractive, but this is not because the
sector has gone ‘ex growth’; far from it. In our view, there are a plethora of real organic growth,
turnaround and self-help opportunities to invest in.

>>> Abengoa (ABE SM) - presented yesterday its restructuring plan. The company h

presented yesterday its restructuring plan​. The company​ has lined up international anchor investors​,​ including Elliott, KKR, Oak Hill, DW Shaw and Attestor​,​ to inject €1.5​ to €​1.8b ​into ABG​. Last week it reached an agreement with its main creditors ​for to convert 70% of its debt​ into equity but still needs creditors holding 75%​ of its​ debt ​to approve the transaction​. ​Time is running short, as ​ABG must present a ​final ​plan by March 28​ to avoid going into bankruptcy proceedings​. ABG also said its EV is €5.4b with ​a ​€2.6b ​order ​backlog​ ​in 2016. (Expansion, Bberg) // ABG will sell €420m assets in 2016, €50m in 2017​,​ and €600m in 2018. ABG's 42% stake in US yieldco Atlantica Yield is not ​o​n the short list of expected sales. (Cinco Dias)

FT : Smiths Group rules out break-up as profits rise

Smiths Group rules out break-up as profits rise

The new chief executive of Smiths Group, the 165-year-old engineering group that started out as a jewellery shop and played a part in the first test-tube baby, reversed his predecessor’s plan break up the company.
The group — one of Britain’s last remaining engineering conglomerates, with a diverse exposure to markets including medical devices and petrochemicals — has long been viewed by City analysts as a candidate for dismantling.

But Andrew Reynolds Smith, who took the helm less than six months ago, said this was not on his agenda.
“I’m not here to break up the company. I’m here to build it and take it forwards,” said Mr Reynolds Smith, who added that he had support from investors.
“We’ve had an extensive consultation with shareholders and what they want is sustainable, long-term value. An important part of that is a well-run, high-performing business which is growing.”
The comments put an end to what many people saw as the core mission of Philip Bowman, his predecessor, whose attempts to make significant disposals were thwarted by factors such as the company’s big pension deficit and the financial crisis.
The pensions deficit has since been vastly reduced — and Mr Reynolds Smith said his focus was on expanding the business organically into new geographies.
“I come in at a time with a very good platform to build on,” he said. “For a group such as Smiths, [having] less than 15 per cent [of sales] in high-growth economies and less than 4 per cent of revenue in China is too low”.
Smiths floated on the London Stock Exchange days before the outbreak of the first world war and today makes products ranging from mechanical seals for energy installations to airport security scanners.
Mr Reynolds Smith said he wanted “after-market” services, which include maintenance and replacements and are touted as more resilient than equipment sales, to contribute more than their current half share of group revenue.
Smiths revealed a 28 per cent increase in pre-tax profit to £168m for the six months ending January 31. This was down to reduced charges for items such as restructuring, asbestos litigation and writedowns on acquisitions.

However, in a reflection of the malaise surrounding the wider engineering sector, Smiths’ underlying earnings tumbled by 9 per cent to £189m on the company’s preferred measure of headline pre-tax profit. Revenue fell 3 per cent to £1.37bn.
This was largely because of difficulties at its John Crane division, which makes equipment for the oil and gas sector, and accounts for more than one-third of group operating profit.
A sustained rout in crude prices — illustrated by the benchmark Brent indicator again falling below a threshold of $40 a barrel this week — has led energy majors to scrap billions of dollars worth of investment plans. Smiths joined the growing ranks of UK-listed manufacturers, such as Weir and IMI, which have been hit by the commodities slowdown.
There was one bright spot as Smiths Detection — which makes security devices such as explosives detectors — enjoyed a 38 per cent rise in underlying operating profit on revenues up 4 per cent.
“Today’s interim results are better than we expected,” wrote Michael Blogg of Investec in a note to clients.
Shares in the company were down 3 per cent on Wednesday at £10.47. Management increased the interim dividend by 2 per cent to 13.25p per share as basic earnings per share came in at 32.8p.
In a sign of the diminishing stature of engineering groups among investors, Smiths is being relegated from the FTSE 100 index of blue-chip companies.

>>> What to look at today - 17th of March 2016

Dow+0.43% S&P+0.56% Nasdaq+0.75% Russell+0.73%
US Market closed higher after FOMC Report, Oil move was also a positive catalyst. FOMC voted 9-1 to leave its benchmark interest rates unchanged, Fed lowered its target rate projection for 2016 to 0.875% from 1.40% and cut the 2017 outlook from 2.40% to 1.90% in line with Fed Fund Future projection. Fed lowered its target rate projection for 2016 to 0.875% from 1.40% and cut the 2017 outlook from 2.40% to 1.90%. WTI crude ended its pit session higher by 5.6% at $38.52/bbl. materials (+1.7%) and energy (+1.6%) leading the move, financial (-0.2%) and health care (-0.3%) sectors ended in the red. MSFT +1.4%, AAPL+1.3%...IBB-1.3%, volume were still below average at 913mil shares. US After Hours FDX +6%, WSM -6%, GES -11% following earnings VTAE +52.1% on positive pahse 2, RSTI+44% to be acquired by COHR for $32.50/share, RDSA+1.9% on intent to divide assets of Motiva Saudi Arabian Oil Co. Asian equity markets are higher, tracking the strong close on Wall St that followed a more dovish than anticipated FOMC statement. While the Fed held off on another rate hike as widely expected. Japan February trade balance was slightly lower than expected but components were robust, with exports falling 4% vs 13% prior and imports down 14% vs 16% expected. Shipments to China were especially significant with a 5% rise, though analysts pointed out those numbers were distorted by timing of Lunar New Year. Shipments to Europe were up 9% and US were flat vs -3.6% and -5.3% respectively.

Nikkei -0.22% Hang Seng +0.90% Shanghai +0.89%

Eur$ 1.1230 CNH 6.4975 CNY 6.4993 JPY 112.11 GBP 1.4240 RUB$ 69.2389 WTI $38.95 (+1.27%)

S&P +0.14% EuroStoxx+0.72% Dax+0.62% SMI+0.53%

Macro :
FOMC Sees Longer-Run Median Fed Funds Rate at 3.30%
FOMC Upgrades Economic Assessment, Sees Global/Financial Risks
EU’s Juncker Says Turkey Isn’t Ready to Join: Handelsblatt

Keep an eye on :
- AIR FP : Air France-KLM Drops Order for 2 Airbus A380 Jets: WSJ
- ALU FP : Nokia to Issue New Shares in Exchange for Alcatel-Lucent Shares
- EN FP : SFR to Pay Almost EU4b for Bouygues Telecom Assets: Les Echos http://bit.ly/1WsiMvq
- EN FP : Bouygues, Partners Win EU675 Million Calais Port Contract
- DL NA : Delta Lloyd Shareholders Approve Rights Offer at Amsterdam EGM
- DBK GY : Deutsche Bank Compliance Chief Faruque Leaving: Handelsblatt
- DBK GY : Deutsche Bank On Track to Exit Casinos, Ports, Swaps: Cryan
- EDF FP : EDF to Build New Range of EPRs in France, Levy Tells Tribune
- EVK GY : Air Products in Exclusive Talks to Sell Unit to Evonik: WSJ http://on.wsj.com/1Z3yzT3
- FNC IM : Finmeccanica Board Proposes Name Change to Leonardo
- IIA AV : Immofinanz 9-Mo. Net Income Loss of EU146m; Affected by Russia
- LHN VX : LafargeHolcim Confirms 2018 Targets, Beats 2015 Adj. Ebitda Est.
- LXS GY : Lanxess 4Q Ebitda Ex-Items Beats, 2016 Forecast Misses Ests.
- LHA GY : Lufthansa FY Profit In Line With Estimate; Sees Weaker Yields
- P1Z GY : Patrizia 2015 Op Income More Than Tripled, Confirms 2016 Target
- NOKIA FH : Nokia to Issue New Shares in Exchange for Alcatel-Lucent Shares
- NUM FP : SFR to Pay Almost EU4b for Bouygues Telecom Assets: Les Echos http://bit.ly/1WsiMvq
- UG FP : Peugeot Citroen CEO Sees ‘No Concerns’ on China Market: Xinhua
- RIO LN : Rio Tinto Appoints Copper Chief Jacques as CEO to Succeed Walsh
- RDSA NA : Royal Dutch Shell, Saudi Aramco Plan to Break Up Motiva Partnership http://on.wsj.com/1TQ36nS
--> RDS.A +1.9% in after hours in the US
- SEM AV : Semperit FY15 After Tax Earnings Up 23% to EU46.4m
- GLE FP : SocGen Names Lecler as CEO of Private Banking in Switzerland
- STL NO : Statoil to Shut Down Volve Field in North Sea, Offshore Says
- UHR VX : Swatch’s Longines Maintained Sales Above CHF1.5b, Le Temps Says
- TTK GY : Takkt Sees 2016 Organic Sales Growth of 3%-5%
- O2D GY : Telefonica Deutschland to Accelerate Job Cuts: Rheinische Post
- VOS GY : Vossloh 2015 Ebit Rises, Confirms Margin Targets
- WCH GY : Wacker Chemie Forecasts 2016 Adjusted Ebitda to Rise ‘Slightly’
- WIN GY : Diebold CEO ‘Absolutely’ Convinced Wincor Deal Will Happen: SZ

>>> Europe : Brokers Upgrades & Downgrades - 17th of March 2016

>>> Up
*ALSTOM RAISED TO OVERWEIGHT VS NEUTRAL AT JPMORGAN
*FRAPORT RAISED TO BUY AT HSBC
*RENTOKIL INITIAL RAISED TO OUTPERFORM AT CREDIT SUISSE

>>> Down
*BHP BILLITON CUT TO NEUTRAL VS BUY AT NOMURA
*CAIRN ENERGY CUT TO SELL VS HOLD AT LIBERUM
*CIRCLE OIL CUT TO NEUTRAL VS OUTPERFORM AT MACQUARIE
*DIAGEO CUT TO HOLD VS BUY AT DEUTSCHE BANK
*FERREXPO CUT TO UNDERPERFORM AT JEFFERIES
*FORTUM CUT TO REDUCE AT KEPLER CHEUVREUX
*GAZPROM CUT TO NEUTRAL VS BUY AT CITI, PT RAISED 3.5% TO $2.06
*HYSTER-YALE CUT TO HOLD VS BUY AT BERENBERG
*NORSK HYDRO CUT TO REDUCE VS BUY AT NOMURA
*SOUTHCROSS ENERGY CUT TO UNDERWEIGHT AT JPMORGAN
*STARWOOD HOTELS & RESORTS CUT TO NEUTRAL VS BUY AT NOMURA
*VALE SA CUT TO NEUTRAL VS BUY AT NOMURA

>>> PT Change


>>> Initiation
*ASML HOLDING RATED NEW SECTOR PERFORM AT RBC, PT $100
*BARRATT DEVELOPMENTS RATED NEW BUY AT HSBC, PT 700P
*BELLWAY RATED NEW BUY AT HSBC, PT 3840P
*BERKELEY RATED NEW BUY AT HSBC, PT 4290P
*BOVIS HOMES RATED NEW BUY AT HSBC, PT 1450P
*CREST NICHOLSON RATED NEW BUY AT HSBC, PT 800P
*DEUTSCHE BANK RATED NEW HOLD AT HSBC, PT EU20
*DRILLISCH RATED NEW NEUTRAL AT CREDIT SUISSE; PT EU40
*FRESENIUS MEDICAL RATED NEW BUY AT NOMURA, PT EU99
*FRESENIUS SE RATED NEW NEUTRAL AT NOMURA, EU67
*GALLIFORD TRY RATED NEW BUY AT HSBC, PT 1800P
*GN STORE NORD RATED NEW BUY AT NOMURA
*GRIFOLS RATED NEW BUY AT NOMURA, PT EU23
*HAYS RATED NEW BUY AT LIBERUM; PT 155P
*JULIUS BAER RATED NEW HOLD AT HSBC, PT CHF43
*MEDTRONIC RATED NEW BUY AT NOMURA, PT $86
*PAGEGROUP RATED NEW BUY AT LIBERUM; PT 470P
*PERSIMMON RATED NEW BUY AT HSBC, PT 2640P
*ROBERT WALTERS RATED NEW BUY AT LIBERUM; PT 470P
*SMITH & NEPHEW RATED NEW NEUTRAL AT NOMURA
*TAYLOR WIMPEY RATED NEW BUY AT HSBC, PT 210P
*UBS RATED NEW BUY AT HSBC, PT CHF20
*WACKER NEUSON CUT TO HOLD VS BUY AT BANKHAUS LAMPE
*WILLIAM DEMANT RATED NEW BUY AT NOMURA

>>> Call

WSJ : Royal Dutch Shell, Saudi Aramco Plan to Break Up Motiva Partnership

Royal Dutch Shell, Saudi Aramco Plan to Break Up Motiva Partnership

Move comes after Saudi Arabia said it is considering selling shares in Aramco

Oil giants Royal Dutch Shell PLC and Saudi Arabian Oil Co. plan to end their long-standing fuel partnership, putting ownership of the biggest refinery in the U.S. in Saudi Arabia’s hands.

Shell and Saudi Aramco formed their Motiva joint venture nearly two decades ago and spent $10 billion to double the size of their plant in Port Arthur, Texas, in 2012. The move made the 600,000 barrel-a-day fuel factory the largest in America; a significant portion of the gasoline, diesel and jet fuel produced every day is exported to overseas markets.

Saudi officials in January floated the idea that shares of the state-owned oil company might be sold in a public offering, amid a broader push to privatize state-run companies that coincides with a protracted slump in oil prices.

At the time, many energy experts speculated that any initial public offering would focus on the refining and petrochemical arms of Saudi Arabia’s state-owned energy company, not its oil exploration and production assets.

The Motiva split could help pave the way for such an equity offering, while also giving Shell assets that it could place in its tax-advantaged master limited partnership, said Sam Margolin, an energy analyst at Cowen & Co.

On Wednesday, the companies said they had signed a nonbinding letter of intent and had preliminarily agreed to divvy up three Gulf Coast refineries between the companies. Shell would retain two plants with a combined capacity to process 465,000 barrels of oil a day in Louisiana where it also runs a chemical complex, as well as nine distribution terminals. Saudi Aramco would take the Port Arthur refinery along with 26 fuel terminals.

Under the proposal, Saudi Refining also would have an exclusive, long-term license to sell gasoline and diesel under the Shell brand in Texas, most of the Mississippi Valley, the Southeast and the mid-Atlantic markets. Shell would retain its branded markets in Florida, Louisiana and the Northeastern region.

No additional details were disclosed.

Motiva was formed in 1998 by Shell Oil Co., Texaco Inc. and Saudi Aramco, combining assets of their Eastern and Gulf Coast refining and marketing businesses. Under the terms of the initial agreement, Houston-based Shell Oil, a unit of Royal Dutch Shell, owned 35% of Motiva, while Texaco and an Aramco affiliate each held a 32.5% stake.

Texaco sold its stake in Motiva as part of its merger with Chevron Corp. Shell and Aramco have run Motiva as a joint partnership since 2002.