>>> Vallourec ??? Tubos Reunidos studies acquisitions of tube factories

Merger Market

Tubos Reunidos studies acquisitions of tube factories - exec 

Tubos Reunidos [BME: TRG], the Spanish maker of seamless steel tubes, is interested in buying companies that specialize in finished tubular products, general manager Enrique Arriola said.

The company could study acquisitions in the US, particularly in Texas or Oklahoma, or in Asia, particularly in South Korea, India or Indonesia, Arriola said. Its main aim is to be close to its final clients, he said, adding that deals could come in the short or medium term.

Tubos Reunidos hit EUR 19.77m in EBITDA and EUR 352.4m in net revenues last year. It has a net financial debt of EUR 179.4m and EUR 22.5m in cash and cash equivalents at the end of the first quarter. It has a market capitalization of EUR 111.8m.

Many of the company’s clients are in the oil and gas industry. Although low oil prices have hurt investment levels in the sector, the price of potential targets has also fallen, the executive said.

Tubos Reunidos’ last deal was a joint venture (JV) with Marubeni-Itochu Tubulars Europe (MITE), the UK subsidiary of Marubeni-Itochu Steel, to build a new factory to manufacture, market and supply premium oil country tubular goods (OCTG) in 2014. The JV is 51% owned by Tubos Reunidos and 49% owned by MITE.

>>> Micron - Delays closing of Inotera acquisition by ~ six months (MU 33% holde

Micron (MU) - Delays closing of Inotera acquisition by ~ six months (MU 33% holder) 
- MU announced an update regarding its effort to acquire the remaining interest in Inotera.
- While the acquisition was initially expected to close in mid-July 2016, the parties have concluded that closing the transaction on this timeframe is not possible. Micron expects to provide an update toward the latter part of calendar 2016.

>>> Street Pre-MArket Indications

ML
WORKSPACE - Strong. NAV 923p with trading profits +65% on rental growth.+1-2%
EDP - Small positive. Agreed to sale of EUR73mn tariff deficit of 2015....+1%
TOKMANNI - We INITIATE with Buy rating and PO EUR 8, c.20% upside.........+1%

UK MINERS - Copper/Gold +0.5%, IO fut +1% & RIO OZ -1.85%, FMG -3.5%......u/c
DOMINOS - Investing £24m in Viking territory. Trading remains inline......u/c
ILIAD - Spec may bid for Vimpelcom assets. Xavier Niel at BAML conf 2day..u/c
AIRBUS - May sell its remaining 24% Dassault stake; Platow Brief reports..u/c
WH SMITH - Group sales +2% with LfL sales flat. High st poor as exp.......u/c
SWISSCOM - Swisscom's Fastweb said to bid for Italian mobile assets.......u/c
IMPERIAL BRANDS - Investor Day. Headlines reit 10% absolute div increase..u/c

HAYS - UK staffing, weak report on jobs data. UK exposure c.33% of EBIT...-1%
MICHAEL PAGE - UK staffing under pressure on weak report on jobs data.....-1%
FENNER - CEO stepping down for health reasons. Search starts for new CEO..-1%
AO WORLD - Inline with EBITDA -£3.9m but FY rev looks like 7% topline d/g.-2%
AIR FR - Mixed May traffic stats with passengers +3.8%, load factor -80bps-2%
CLAS OHLSON - Poor. Q4 op loss of -126m v -117m & May sales -3% v +0.9%.-3-4%
INGENICO - Negative read from VeriFone warning and Q2 miss (-28% aft hr)-5-7%

CS
Air France -1-2% Traffic stats inline but comments around pricing weaker
Ao World +1% FY revs small ahead, EBITDA loss of 3.9mln vs cons -4.1mln
BAE Systems M/P Engines unable to operate continuously in the warm waters
Boohoo M/P Q1 Revs slightly ahead, guidance better
Dominos Pizza UNCH Trading inline, invests in Scandinavia
Erste Bank -5% Uniqa foundation sells 17.4m shares at 22.5 Euros
Fagron +0.5% Board Member Balcaen Buys Additional EU0.56m shares
Heidel Druck +2% FY results already known, sales growth guidance better
IMB M/P Investor day inline, reaffirms mid-term dividend growth
Ingenico -5% US peer VERIFONE traded -25% after hours on poor guidance
Lufthansa -1% Peer Air France talking negatively around pricing
Miners UNCH Copper +0.50%, Brent +0.70%, Iron Ore +1.25%, China -0.52%
Rolls Royce -1% Engines unable to operate continuously in the warm waters
Sainsbury +1-2% LFL -0.8% vs consensus -1.7%
Siemens R To supply 50 megawatts of turbines for Japan wind farm
WH Smith M/P No's inline, confident in FY outcome

MainFirst Pre Mkt Indications
*ROCHE-Gets EU Approval of Avastin in combo with Tarceva............+0.5%
*AIR FRANCE-May passengers 8.3m,Load Factor -1.8%...................U/C
*ORANGE-Not planning French Consolidation in short term.............U/C
*SWISSCOM-Fastweb & Iliad said to bid for Italian mobile assets.....-0.5%
*ERSTE BK-Uniqa Foundation to sell about 17.4m shares at €22.5......-5%
*CONTI-Plans to acquire a 42.1% stake in Kumho Tire-Korea Daily.....U/C
*INGENICO-Read across from Verifone cites EM & China p/pressure.....-4%
*LHA-DOJ poss investigation into comments over surcharges from CEO..U/C
*WACKER CHEMIE-CFO says polysilicon prices past inflection point....+1%
*H/DRUCK-FY known,med term sales 3b(2.84),Ebitda margin 7-10%(7.8)..+1%
*SAINSBURY-Sales Ex-Fuel -0.8%(-0.5),Mkt conditions remain tough....+2%
*OCADO-Read across from Amazon Fresh Delevery Service(not new)......-1%

(CS) EU Semi. : Another month of robust unit sales, content thesis intact

EU SEMICONDUCTORS: Outside of mobile phones and PCs, Autos has emerged as a key growth area for semis, and now accounts for ~10% of global semis market. Also Auto semis has grown at 7% CAGR over 2010–2015 vs. overall semis market growing at 2% CAGR, and we expect it to continue given increasing focus around advanced safety, lower CO2 emissions and improved connectivity. With Infineon and STM having a material auto exposure, we look at monthly trends in the auto sector. So far, we have had car sales data from a number of key markets for the month of May, which shows auto volumes likely to be up 4% yoy for May-16 indicating another robust month.

(CS) Airbus - H1 charges to clear the way for H2 rebound (pdf att.)

H1 charges to clear the way for H2 rebound

* H1 issues soon to be over: Programme issues on A320neo, A350 and A400M (largely supplier-driven) have troubled Airbus in H1. We expect the situation to improve from June-July onwards, which would make H2 a much better period for the stock. We do not expect these issues to reflect an underlying deterioration of the industrial performance of the group and to materially impact the 2018-2020 FCF story supporting our investment case.

* Programme issues largely priced in: We believe that the prospect of oneoff charges on A400M and A350 has been holding back the stock. We have now provided for EUR1.5bn of such exceptionals (of which EUR500m already in our model). These charges may be announced with H1 results, removing an overhang which has impacted H1 stock performance. They are not yet fully in consensus data but we estimate that they are largely priced in, after a 9% underperformance of the stock YTD against the STOXX600.

* Cycle worries appear overblown: A moderation of the order intake is normal in our view. This should not derail the expected delivery increase, given the backlog levels and good financial health of the airlines industry. Worries on short term order inflow may even be alleviated by the book-to-bill in April and May of respectively 1.6x and 1.5x

* Catalysts: H1 results on 27 July; Farnborough airshow on 11-15 July; restart of PW1000G-powered A320neos deliveries and ramp-up of A350 production in June; start of LEAP-powered A320neo this summer.

* Valuation: As a result of the additional one-offs on A350 and A400M, we trim our target price from EUR80 to EUR79 per share (with EUR/USD rates based on a spot of 1.10, unchanged). The stock currently trades on EV/EBIT multiples of 8.6x 2017E and 6.2x 2018E (vs an historical average of 10.0x). The expected 2018-2020 FCF accumulation should generate excess cash of up to EUR15bn, possibly distributed to shareholders via share buybacks

(CS) Airbus - H1 charges to clear the way for H2 rebound

H1 charges to clear the way for H2 rebound

* H1 issues soon to be over: Programme issues on A320neo, A350 and A400M (largely supplier-driven) have troubled Airbus in H1. We expect the situation to improve from June-July onwards, which would make H2 a much better period for the stock. We do not expect these issues to reflect an underlying deterioration of the industrial performance of the group and to materially impact the 2018-2020 FCF story supporting our investment case.

* Programme issues largely priced in: We believe that the prospect of oneoff charges on A400M and A350 has been holding back the stock. We have now provided for EUR1.5bn of such exceptionals (of which EUR500m already in our model). These charges may be announced with H1 results, removing an overhang which has impacted H1 stock performance. They are not yet fully in consensus data but we estimate that they are largely priced in, after a 9% underperformance of the stock YTD against the STOXX600.

* Cycle worries appear overblown: A moderation of the order intake is normal in our view. This should not derail the expected delivery increase, given the backlog levels and good financial health of the airlines industry. Worries on short term order inflow may even be alleviated by the book-to-bill in April and May of respectively 1.6x and 1.5x

* Catalysts: H1 results on 27 July; Farnborough airshow on 11-15 July; restart of PW1000G-powered A320neos deliveries and ramp-up of A350 production in June; start of LEAP-powered A320neo this summer.

* Valuation: As a result of the additional one-offs on A350 and A400M, we trim our target price from EUR80 to EUR79 per share (with EUR/USD rates based on a spot of 1.10, unchanged). The stock currently trades on EV/EBIT multiples of 8.6x 2017E and 6.2x 2018E (vs an historical average of 10.0x). The expected 2018-2020 FCF accumulation should generate excess cash of up to EUR15bn, possibly distributed to shareholders via share buybacks

>>> What to look at today - 8th of June 2016

Dow +0.10% S&P +0.13% Nasdaq -0.14% Russell +0.26%
US Market closed near the flat line as a a rally in crude oil and a positive economic outlook from Fed Chair Yellen could not keep equities near their highs. Six sectors ended in the green with energy (+2.1%) leading telecom services (+1.5%) and industrials (+0.4%). Conversely, health care (-0.7%), financials (-0.3%), and utilities (-0.3%) ended with the largest losses. The energy sector (+2.1%) traded lockstep with crude oil as the energy component extended its 2016 advance. WTI crude ended its day higher by 1.3% ($50.38/bbl; +$0.65). Volume were in line with average @ 844m shares. US After Hours PLAY +5%, HQY +5%, PAY -28% following earnings/guidance. Asian equity markets are mixed, echoing a pause in the rally for US indices, as investors look for fresh catalysts beyond the dovish Fed speak and the rebound in oil prices. Today's assessment from World Bank demonstrates the conundrum - global GDP forecast for 2016 was revised down to 3.5% from 4.1%, US target cut to 1.9% from 2.7%, Japan cut to 0.5% from 1.3%, and China maintained at 6.7%. In its accompanying Global Economic Prospects report, World Bank notes "weakness in the global economy has persisted and risks have become more pronounced (as) divergence in economic conditions between commodity exporters and importers has widened." China trade figures were similarly mixed. While the trade surplus was slightly below expectations, market reaction overall was somewhat positive on more constructive components. In Japan, Q1 final GDP report confirmed the economy has averted a technical recession, though concerns remain that the impact of Kumamoto earthquake will plunge the country back into contraction.

Nikkei +0.61% Hang Seng-0.30% CSI -0.39% Shanghai -0.30%

Eur$1.1365 CNH 6.5749 CNY 6.5707 JPY +0.31% GBP 1.4555 CHF 0.9651 RUB 64.6730

S&P+0.02% EuroStoxx -0.33% Dax +0.22% SMI -0.18%

Macro :
- China May Retail Auto Sales Rise 11.4% on Year: PCA
- U.S. April Consumer Credit Rose $13.4b, Est. Up $18b
- Uber’s Kalanick Says North America Business Profitable: Bild

Keep an eye on :
- AF FP : Air France-KLM May Passengers Rise 3.8%; Load Factors Fall
- CS FP : French Floods Insured Damage Estimate EU900m-EU1.4b: AFA
- BCP PL : Banco Comercial Has No Plans To Raise Capital, Reuters Says
- DB1 GY : Deutsche Boerse to Automate Share Index Composition
- EBS AV : Erste Group Holder Uniqa Foundation to Sell About 17.4m Shares for €22.50/share
- EKT SM : UBS Placing About 4.7% of Euskaltel on Behalf of Franklin Mutual, Stake Sold at EU8.70/Shr
- ENGI FP : Engie Job Cuts Announced So Far Total 950, Unions Say: AFP
- FDPA FP : Eurosic Bid Deadline for Fonciere de Paris Extended: Regulator
- HDD GY : Heidelberger Druck Targets Med-Term Annual Sales Growth Up to 4%
- K US : Kellogg Calls Active; Previously Cited as Takeover Target
- NOVN VX : Novartis: New Cosentyx Data in Ankylosing Spondylitis at EULAR
- ORA FP : Orange Not Excluding Partnerships to Create Pan-European Actor
- ROG VX : Roche Gets EU Approval of Avastin Tarceva Combo for NSCLC
- SAN FP : Sanofi R&D Chief Says Disappointment on Praluent Is ‘Artificial’
- TOM2 NA : TomTom Selected by Volvo Cars as Maps, Navigation Provider
- VOD LN : Sky Network in Talks With Vodafone NZ on Potential Combination
- VOLVB SS : Industrivarden Sells Shares in Volvo, Buys in Handelsbanken
- WDH DC : William Demant Looking for More Retail Acquisitions: Rtrs

>>> Europe : Brokers Upgrades & Downgrades - 8th of June 2016

>>> Up
*ALFA LAVAL RAISED TO HOLD AT NORDEA
*GENERALI RAISED TO BUY VS NEUTRAL AT UBS
*GREENCORE GROUP RAISED TO BUY AT SOCIETE GENERALE
*WARTSILA RAISED TO NEUTRAL VS SELL AT GOLDMAN

>>> Down
*AIXTRON CUT TO SELL FROM HOLD AT HEALVEA - BAADER
*DNB CUT TO REDUCE VS ADD AT ALPHAVALUE
*HOCHSCHILD MINING CUT TO NEUTRAL VS BUY AT UBS
*K&S CUT TO MARKET PERFORM AT BERNSTEIN
*REXEL CUT TO NEUTRAL VS BUY AT CITI
*SECHE ENVIRONNEMENT CUT TO HOLD AT SOCIETE GENERALE
*VERIFONE SYSTEMS CUT TO EQUALWEIGHT AT BARCLAYS

>>> PT Change


>>> Initiation
*DIALOG SEMI RESUMED EQUALWEIGHT AT MORGAN STANLEY, PT EU31
*ERICSSON RATED NEW BUY AT DNB, PT SEK71
*TECHNOGYM RATED NEW NEUTRAL AT GOLDMAN, PT EU4.24
*TECHNOGYM RATED NEW NEUTRAL AT JPMORGAN
*VEDANTA RESOURCES RESUMED NEUTRAL AT CITI, PT 440P

>>> Call

>>> Asian Update

Asian Mid-session Market Update: China trade surplus shy of surplus despite smaller decline in imports; World Bank cuts global GDP target

***Economic Data***
- (CN) CHINA MAY TRADE BALANCE (USD terms): $50.0B v $55.6Be
- (CN) China Passenger Car Association (PCA): China May vehicle sales +11.4% y/y; YTD +7.7% y/y
- (JP) JAPAN Q1 FINAL GDP Q/Q: 0.5% V 0.5%E; ANNUALIZED GDP: 1.9% V 1.9%E
- (JP) JAPAN APR CURRENT ACCOUNT BALANCE: ¥1.88T V ¥2.30TE; ADJUSTED CURRENT ACCOUNT: ¥1.63T V ¥2.01TE; TRADE BALANCE: ¥697B V ¥919BE
- (JP) JAPAN MAY BANK LENDING (INCL TRUSTS) Y/Y: 2.2% V 2.2% PRIOR; BANK LENDING (EX- TRUSTS) Y/Y: 2.2% V 2.3%E
- (AU) AUSTRALIA APR HOME LOANS M/M: 1.7% V 2.5%E
- (NZ) NEW ZEALAND Q1 MANUFACTURING ACTIVITY Q/Q: -2.6% V -2.3% PRIOR; VOLUME Q/Q: -1.2% V 0.8% PRIOR
- (KR) South Korea May Bank Lending to Households (KRW): 660.9T v 654.2T prior

***Index Snapshot (as of 05:00 GMT)***
- Nikkei225 +0.4%, S&P/ASX -0.1%, Kospi +0.1%, Shanghai Composite -0.4%, Hang Seng -0.3%, Jun S&P500 -0.1% at 2,109

***Commodities/Fixed Income***
- Aug gold +0.3% at $1,250/oz, Jul crude oil +0.4% at $50.54/brl, Jul copper +0.5% at $2.06/lb
- SLV: iShares Silver Trust ETF daily holdings rise to 10,535 tonnes from 10,491 tonnes prior; highest since May 5th
- (US) Weekly API Oil Inventories: Crude: -3.6M v +2.3M prior
- (CN) Platts China Oil Analytics: China Oil Demand in Apr fell 1.3% y/y
- (CN) China MoF sells 2-yr bonds at 2.563%, bid-to-cover 1.95x; 5-yr bonds at 2.774%, bid-to-cover 2.63x
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.5593 V 6.5618 PRIOR
- (CN) PBOC to inject CNY55B in 7-day reverse repos
- (JP) BOJ offers to buy ¥450B in 5-10yr JGBs, ¥220B in 10-25yr JGBs, and ¥140B in JGBs with maturity over 25-yr, and ¥25B in inflation-indexed JGBs
- JGB: (JP) China said to have bought a record amount of Japan short term debt in April - financial press
- (AU) Australia MoF (AOFM) sells A$1.1B in 5.75% 2021 Bonds; avg yield: 1.753%; bid-to-cover: 2.66x

***Market Focal Points/FX***
- Asian equity markets are mixed, echoing a pause in the rally for US indices, as investors look for fresh catalysts beyond the dovish Fed speak and the rebound in oil prices. While key US markets are near all-time highs, the recovery in labor has come under question and growth overseas has slowed. Today's assessment from World Bank demonstrates the conundrum - global GDP forecast for 2016 was revised down to 3.5% from 4.1%, US target cut to 1.9% from 2.7%, Japan cut to 0.5% from 1.3%, and China maintained at 6.7%. In its accompanying Global Economic Prospects report, World Bank notes "weakness in the global economy has persisted and risks have become more pronounced (as) divergence in economic conditions between commodity exporters and importers has widened." Among FX majors, USD was under modest pressure - USD/JPY fell as much as 60pips below 106.80, AUD/USD reversed initial drop to 0.7430, and NZD/USD rose about 50pips from the lows toward $0.70 level.

- China trade figures were similarly mixed. While the trade surplus was slightly below expectations, market reaction overall was somewhat positive on more constructive components. Exports decline of -4.1% was slightly less than expected -4.2% and the closely monitored Imports saw a much smaller decline of -0.4% v -6.8%e, indicative of recovering internal demand for materials. Recall that similar trends have been observed in exports data out of Australia. Also of note in China, a PBoC research paper maintained 2016 GDP target, raised CPI forecast from 1.7% to 2.4%, and warned about Export growth to forecast a decline of -1% vs +3% prior.

- In Japan, Q1 final GDP report confirmed the economy has averted a technical recession, though concerns remain that the impact of Kumamoto earthquake will plunge the country back into contraction. Japan's Q1 GDP components saw Private consumption rise 0.6% - up from 0.5%e and 0.5% prelim - while the CAPEX decline of -0.7% was worse than -0.4%e but up from -1.4% prelim. More skeptical analysts are quick to note that the data includes an extra Leap Year day, and growth would have been slower adjusted for that impact.

***Equities***
US equities / ADRs:
- PLAY: Reports Q1 $0.72 v $0.59e, R$262M v $251Me; Authorizes $100M share repurchase through FY18 (5.7% of market cap); Raises FY16 guidance; +4.8% afterhours
- PAY: Reports Q2 $0.47 v $0.53e, R$532M v $528Me; Cuts FY16 $1.85 v $2.23e, R$2.1B v $2.15Be (prior $2.21-2.24, R$2.15-2.17B); -27.6% afterhours

Notable movers by sector:
- Consumer discretionary: Skyworth Digital 751.HK -1.5% (May result); Xiao Nan Guo Restaurants Holdings 3666.HK -15.0% (acquisition); Chow Tai Fook Jewellery Group 1929.HK -2.4% (annual result)
- Financials: Central China Real Estate 832.HK +0.8% (May result)
- Technology: Beijing Baofeng Technology Co 300431.CN +1.0% (being rejected for asset acquisition plan); Screen Holdings Co 7735.JP +4.5% (Samsung said to consider bendable-screen phones); Fujitsu 6702.JP +1.4% (signs MOU with Box)
- Materials: Hanwha Chemical 009830.KR +6.2% (Q2 result speculation)
- Telecom: Spark New Zealand SPK.NZ -3.0% (in talks with Vodafone NZ for potential combination)