>>> PM: Austria will likely suspend Schengen

PM: Austria will likely suspend Schengen

The migrant situation is getting increasingly serious, Serbian Prime Minister Aleksandar Vucic said on Tuesday.

He at the same time "assured citizens that the stability of the country would be preserved," Tanjug reported.

Asked to comment on the refugee situation in Europe, Vucic said that he would meet with President of the European Commission Jean Claude Juncker by the end of the week, adding that Austria would probably suspend the Schengen regime.

“Slovenia will follow, and we stand ready to assist the Macedonian police even more, send additional troops there - we will know how to protect our state and national interests,” he said at the launch of works on a second bridge over the Sava River near Ostruznica.

>>> Casino’s Thai Big C and Vietnam assets attracting Asian strategics

Casino’s Thai Big C and Vietnam assets attracting Asian strategics 

* HSBC and BNP Paribas advising Casino
* Package deal potential played down
* Thai players aggressively looking at Big C

Asian retail players are lining up to acquire French hypermarket operator Groupe Casino’s [EPA:CO] Southeast Asian assets, buyside sources familiar with the situation said. Of particular interest is Casino’s 58.6% stake in Big C Supercenter [BKK:BIGC], Thailand’s largest hypermarket chain.

HSBC and BNP Paribas are advising Casino on the sale of its assets, it was said. BNP Paribas declined comment. HSBC could not be reached for comment.

Casino said last week that it received expressions of interest for its Thailand business in conjunction with the ongoing sale of its Vietnam operations. The French retailer is under pressure to reduce debt and has initiated a more-than-EUR 2bn deleveraging plan, including potential non-core divestments. Casino has also been targeted by the short seller Muddy Waters.

Casino has a 58.6% stake in Big C, which has a market cap of THB 185.66bn (USD5.1bn; EUR 4.7bn). According to Thailand’s takeover rules, a mandatory offer is triggered when a party acquires 25% voting rights of a target.

Casino itself has a market cap of EUR 4.2bn. The company’s Vietnam operations had close to EUR 600m in revenues in 2015, according to a company presentation.

Domestic interest

Local Thai players are aggressively looking at Big C, sources said. In particular, TCC Group, whose unit Berli Jucker [BKK:BJC] recently acquired Metro Cash and Carry’s Vietnam business, was named by two sources as a strong contender for one or both assets. Central Group, Thailand’s largest, private retail conglomerate, is looking at the Vietnam business aggressively, one source said. It could also be looking at Big C, given that it retains a small minority stake of around 3%, and that it was the previous owner before Casino acquired it, it was said.

The Chirathivat family behind Central Group is Asia’s 14th richest family with an estimated net worth of USD 11.7bn, according to Forbes’ Asia rich list 2015.

“To be honest, I struggle to see who could outbid a Thai group for this,” said one source.

A Berli Jucker spokesperson said they have not heard from management on this situation. Central Retail Corporation, Central Group’s retail arm, could not be reached for comment despite several phone calls.

Berli Jucker would likely be backed by parent TCC, the holding company for Thailand’s richest family, the Sirivadhanabhakdi family, one source said. TCC is most known for controlling SGD 17.2bn (USD 12bn) beer giant Thai Beverage.

Berli Jucker by itself cannot afford a bid for Big C, with its net debt of USD 390m and TTM EBITDA of USD 174m, according to this news service’s analytics. The company is required to maintain an interest bearing debt to equity ratio of 1.75, which means the company can only raise an additional debt of USD 481m, based on its 3Q15 report. If the company chooses to issue new shares to finance the bid, it could lead to a 79% dilution of the existing share capital.

Japanese retailer Aeon has big plans in Southeast Asia and is taking a look at Big C, two sources said. It could potentially go head to head with Thai bidders for the asset.

The Jardine Matheson Group, which owns pan-Asian food retailer Dairy Farm, could also take a look at what is on offer and afford Big C, one source said. Jardine Matheson is known as a disciplined buyer that does not enter high-profile bidding wars, the source added.

Aeon has a net debt of USD 10.2bn. The Jardine Matheson Group has a net debt of USD 7.19bn.

Bidders could come from the lesser expected Philippines, in light of recent outbound M&A activity from the country, one of the sources said. SM Prime Holdings [PSE:SMPH] and JG Summit Group’s [PSE:JGS] Robinsons Retail Holdings [PSE:RRHI] could be the most likely candidates from the Philippines in terms of ambition and financing capability, two other sources suggested.

Casino’s Vietnam assets could intrigue and make sense for Philippine buyers as it is sizeable in itself, one of the sources said. If they instead wanted to go for the much larger Thai operations, both groups could potentially have enough cash and financing relationships to line up a bid, this source added.

Based on the latest filings, SM Prime Holdings has USD 2.66bn net debt and a TTM EBITDA of USD 828.45m, which represents a net gearing ratio of 3.21x. It reported 12 month rolling EBITDA of USD 828m for the year ended 30 September 2015. A nil-premium bid for Big C that uses up every cent it has and borrows the remaining will push SM Prime’s net gearing to 9x, according to calculations by this news service.

Robinsons Retail reported net cash of USD 86m and a 12 month rolling EBITDA of USD 138m for the year ended 30 September 2015.

Package deal played down

Sellside advisors had flirted with the idea of selling the assets together, but found that not a lot of companies were interested in both, one of the sources claimed. “Once you bundle it up, the list of buyers becomes short,” another said.

For example, Aeon is not too keen on Casino’s Vietnam operations, a source familiar with Aeon said. Aeon did take a look, but decided it can grow organically in Vietnam on its own. It would only acquire the Vietnam business at a deep discount, this source added.

A spokesperson at Aeon said he had not heard of the company’s interest in Big C.

Casino Group did not reply to emails seeking comment as of press time.

(Citi) Auto Manufacturers : There's Plenty Left in the Tank

There's Plenty Left in the Tank : European Autos Have More to Give

* Backdrop for auto earnings (and stocks) remains bright: 2016 should be a
good year for European auto earnings – we see global volumes up c4% vs the 1.5%
in 2015. Input costs and FX should be supportive and there are signs European
capacity utilization is nearing a point where pricing may improve. Emerging markets
are a risk with US interest rates rising, but the precipitous falls seen in Russia and
Brazil should mean the pain will be broadly flat in 2016. To reflect the challenging
macro outlook, our stock calls are biased to names with good momentum and
scope for positive surprise (we have Buy ratings on Daimler and Renault). We are
wary of names where top-line growth is likely to be sub-par and margin expansion
limited – we have BMW (TP €72.50) and PSA (TP €12) on Sell. Controversially, we
initiate on VW as Buy/High Risk, TP €163. It will be a while before the bad news
fades, but the combination of growth potential and low valuation looks compelling.
We have a Neutral call on FCA (TP €7.00) and Ferrari (TP €37) as we think
technicals will dominate as the dust settles on the spin-off.

* Rising real incomes and employment provide support for sales growth: We
see conditions for auto sales improving in 2016. Based on our multi-regression
models for Europe and the expertise of our autos colleagues around the globe, we
forecast higher global volume growth vs ’15 (4% vs c1%). In terms of European
auto earnings, lower commodity prices and a weaker euro (our FX strategists have
it falling 5% to the dollar in ‘16) will help. In addition, a modest improvement in
capacity utilization (we have it at 79% in ‘16) also means the pricing environment
should be supportive, especially for carmakers launching new products.

* If auto earnings are going up, then so too are auto stocks: I/B/E/S consensus
for the European carmakers has earnings growing 24% in ’16 and another 15% in
’17. We’ve spent a great deal of time churning numbers to see if the well-worn
adage ‘valuation doesn’t matter for auto stocks’ is true. It is, with earnings
momentum generally being 2-3x (although at times as much as 8x) more important
than valuation (and we found EV/Sales is the best metric). We have developed an
autos investment clock that looks mainly at the interplay between market share and
changes in capacity utilization to determine when to buy. Right now we favour the
spenders or product cycle winners, so our key picks are Daimler and Renault.

* Timeline for tighter emissions control unlikely to change: In the aftermath of
the VW emissions scandal, there has been much media talk of tighter control and
higher associated costs for the carmakers. We don’t see this – model cycles in
Europe are c7 years, which means the product plans for 2021 (the deadline for the
next big jump in fuel efficiency) are already set, so changes now would be
unprecedented and draconian in terms of industry impact. It is worth remembering
the extent to which governments (US & European) have gone to protect jobs in the
auto industry. It is hard to see why they would jeopardise all those efforts now.

>>> Realia shareholder Carlos Slim discloses 30.306% holding to regulator

Realia shareholder Carlos Slim discloses 30.306% holding to regulator

Carlos Slim, via Inmobiliaria Carso, has informed the Spanish market securities regulator that it has reached a 30.306% stake in the Spanish real estate company Realia [BME:RLIA] after the capital increase, Cinco Dias said.

Slim has already asked the supervisor to make an exemption from making a compulsory full takeover bid required by law when the 30% threshold is exceeded, the Spanish language article noted.

In the request, Slim has argued that Realia has a shareholder that holds more than his share, referring to FCC [BME:FCC], which holds a 36.8% stake. In fact, Slim already owns Realia, since as well as its direct stake, he also owns an indirect stake through FCC, the Spanish construction group of which he is the largest shareholder.

Realia just closed a EUR 89m capital increase.

Cinco Dias

(GS) Ocado Group : A non-food acquirer could unlock substantial delivery savings

A non-food acquirer could unlock substantial delivery savings

Source of opportunity
On Jan. 19, 2016, there was press speculation that Amazon might be looking to buy Ocado. While we take no view on the likelihood of such a deal occurring, we highlight the following: we view Ocado as an attractive M&A candidate, ranking it “1” in our departmental M&A framework; given its development of the Smart Platform, we believe Ocado is well placed to integrate itself into another retailer; finally, we believe Ocado’s unique online grocery solution would not only allow a non-food retailer to address a global market worth c.$6 trn, but potentially drive significant cost savings through the integration of food and non-food delivery routes.

Catalyst
Given the underperformance of Ocado’s shares, c.30% over the last 12 months vs. our pan-European food retail coverage (€ adjusted), we do not believe it would take much to drive outperformance from a stock now trading on 1.1x calendar 2017E sales. Key catalysts would be M&A news, the announcement of a Smart Platform deal, positive results/guidance at FY15E prelims to be presented Feb. 2 (GSe EBITDA: £81.2 mn).

Valuation
Our unchanged, two-year price target of 700p is based on a DCF valuation of the Ocado.com business and Morrisons contract (420p/share) and a DCF of our Ocado Smart Platform rollout estimates (280p). We remain CL-Buy.

Key risks
Key risks to our investment case include: material delays before Ocado can sign a Smart Platform contract and a further worsening in the UK grocery market.

>>> Street Pre- Market

ML
* BMPS - Consob short sale ban extended until end of day tmw.................
* BG/RDSB - Trading statements on the tape, BAML restricted..............RSTR
HOCHSCHILD - FY production slight beat, costs on track, reads well........+5%
WH SMITH - Travel LFL's up5% vs 3% cons, high street better too, 8% SI..+2-3%
PETS AT HOME - LFL +2.2% v +2.1% cons, expects FY in line with ests.......u/c
HAYS - bid spec in FT and Daily Mail market reports this am, RAND/ADEN....u/c
SK FP - FY sales 1% ahead of cons and LFL growth 8% v 7% co forecast......-1%
SAGE - CEO says confident in business and confirms Dec outlook............-1%
SGS - Revs and EBITDA broadly in line, cash strong, 10% short base........-1%
DIALOG SEMI - Microchip buys Atmel for $8.15 per sh, finally ends saga....-1%
FRESNILLO - Overall in line, solid but all about broader sector move......-2%
BANCO POP - Plans to sell real estate in H2,has already received interest.-2%
CRED AG - We UPGRADE to Neutral, PO to EUR 10.5 from 11.80................-2%
OSRAM - CREE +6% a/h on an EPS beat (lower Opex),OSR already preannounced.-2%
THYSSEN - ceo sees good China business despite economic downturn risk.....-2%
DIPLOMA - Lower margins in acq business hurts, -ve impact from ccys.....-2-3%
VINCI - In talks to acquire Abengoa's Abeinsa unit, Expansion says........-3%
MAERSK - We cut estimates to 25% below consensus and reiterate the SELL...-3%
GMS/WOOD GROUP - We DOWNGRADE to UNDERPERFORM today in sector piece.......-3%
SDRL/SUBC/VALLOUREC - We DOWNGRADE to UNDERPERFORM today in sector piece..-3%
BHP - Operating performance in line with ests, 'to protect balance sheet'.-3%
ASML - Q1 rev guidance EUR 1.3bn v 1.4bn est, better div and inc buyback..-4%
GENEL - 2016 guidance 20% below cons across production and capex..........-4%
ZURICH - Warning, Q4 BOP loss of $100m, $475m restructuring charge in Q4..-5%
JD WETHERSPOON - LFL sls improving but guide for FY at lower end of exp..-10%

CS
Aldermore +1% CS upgrade to OUTPERFORM (Valuation)
Adecco M/P Adecco may offer 150p/sh, or £2.1B, for Hays, FT
ASML Holding -4% Q1 Sales EU 1.3b est EU 1.38b, gross margins weaker
Barry Call UNCH Q1 rev CHF1.81bn vs cons 1.78bn, volumes good
BHP Billiton -3-4% Production inline, guide small down, oil weaker overnight
CRH M/P ABI 50.9 in December up from 49.3 in November
Dialog Semi M/P Microchip/Atmel deal has now been confirmed
EFG -2-3% BTG Pactual is in talks to sell its Swiss bank BSI to EFG
Fresnillo -1% Positive production update, Silver and gold better
Genmab M/P Positive FDA update for Leukemia drug
Hays UNCH Adecco may offer 150p/sh, or £2.1B, for Hays, FT
Miners -3% Copper -0.40%, Brent -4.45%, Iron Ore -0.95%, China -1.21%
Oils -2-3% Brent -4.5% and WTI -5.2% vs Europe close
One Savings -2% CS initiate with UNDERPERFORM (To exposed to buy-to-let)
Pets at Home UNCH LFL +2.2%, Financial outlook for FY16 remains in line
Philips -1% Peer Cree +8% after hours on strong EPS
Shawbrook +1% CS initiate with OUTPERFORM (Well diversified)
Shell -3% 4Q adj profit $1.6B-$1.9B, est $1.8B
SGS -1% Numbers 1% light, organic growth inline
Synthomer -2% CS initiate with UNDERPERFORM (Valuation)
Virgin Money M/P CS initiate with NEUTRAL (Valuation)
Volkswagen -2-3% Negative news from European Industry Commissioner, Reuters
Wetherspoons -5% Company guiding to lower end of range
Wolseley M/P ABI 50.9 in December up from 49.3 in November
WH Smith UNCH Christmas period LFL sales +2%, travel sales +5%
Zurich -5-7% Warning, Floods charge -275m, commentary also negative

RBC PRE-MKT INDICATIONS
ANGLO AM. -5% Announces sale of Callide coal mine, no terms, +'ve
ASML -2% Q4 results miss but increase buyback by $1.1bln & dividend
B.MONTE-PASCHI -4% CEO says fall in deposits are limited, lower than '13.
BG GROUP -3% FY inline, guidance a tad ahead - irrelevant due to bid
BHP BILLITON -4% Unsurprisingly cut FY iron-ore forecasts
FRESNILLO 0% FY silver production +4.4$, Gold also ahead - positive.
GENEL -10% '15 numbers inline but cut's FY16 production guidance sharply
SGS -1% FY EBITDA light, EPS beat on lower tax, org. Growth ahead.
SHELL -3% No data just Q4 ranges, Chemicals light, div confirmed.
SWATCH/CFR -2% Vedomosti reports Russia may increase import duties on watches
TECHNIP -4% Announce launch of convertible bond, €375m, '15 sales ahead.
WHSMITH +1% Strong numbers, Travel/High Street beat and raise guidance
ZURICH -5% Q4 very weak, warning, UK storms, German life writedown
 
Shore
HAYS - +4.5% y'day on bid spec that Addeco/Randstad could target a 200p bid..+1%
BHP BILLITON - iron ore misses prior g'dance.................................-3%
JD WETHERSPOON - LfL sales +3.3%,margins decreased 1.1%,sees pfts at low end.-8%
BG - sees FY results inline,or ahead of g'dance,production ahead of g'dance.UNCH
ROYAL DUTCH - earnings look inline with est.FY impairments of £6.8-7bn.......-2%
SPRUE AEGIS - record year,strong sales see oper.pft ahead of expec,gd outlook+3%
NEWRIVER RETAIL - avg yield 8%,occupancy rates improve,encouraged by Q4.....UNCH
TISSUE REGENIX - DermaPure sales break through $1m mark.....................UNCH
COLLAGEN - FY revs hit by delays,sees revs at £2.8m vs £3.6m est.............-5%
GENEL - FY production/revs below guidance....................................-5%
DIPLOMA - ccy hit on revenues by 5%,softens margins........................-2.5%
WH SMITH - High st lfl sales flat(Est-4%).Christmas period lfl sales rise 2%UNCH
PETS AT HOME - Q3 lfl sales+2.2%(Est2.1%) FY outlook in line with views.....UNCH

MainFirst
*THYSSEN-CEO sees good China bizz,no major on their bizz-Press.......-1%
*ZURICH INS-UK storms loss $275m,plans 2 exceed $300m savings........-5%
*ASML-Rev 1.43b(1.41),Net 292m(259),GM 46%(45),B/b €1b,o/lk weak.....-3%
*SGS-Rev 5.7b(5.73),EPS 71.99(71.91),Divi 68(68),Op Margin 16.1%.....-2%
*VINCI-In talks to buy Abengoa Unit Abeinsa,sales of €4.46b..........-1%
*SEB-FY Rev 4.77b(4.73),Q4 Org Grth +7.2%(5),Sales Grth 8%(7)........+1%
*POPULAR-Markets €4b property portfolio - Expansion..................+0.5%
*BARRY CALLEBAUT-Rev 1.81b(1.78),good vol grth,cocoa bizz tough......-0.5%
*BOUYGUES-Get Bombay contract worth close to €100m...................+0.5%
*ING-Buys shares in Chinese lending platform Welab - FD..............U/C
*DSM-CEO domestic grth & pockets of opportunities still there........U/C
*AIXTRON-Cree good numbers,outlook was fine,stock +5% a/hrs..........+0.5%
*TECHNIP-2015 current OP inline with Oct est's,Sales ok,375m b/sale..+0.5%
*RENAULT-C/Call co confirm emission issues effect 15k cars...........+0.5%

>>> EI Tower looks to buy 29.9% stake in Inwit for EUR 850m

EI Tower looks to buy 29.9% stake in Inwit for EUR 850m 

EI Tower [BIT:EIT], the transmission tower group controlled by Mediaset is ready to offer EUR 850m for a 29.9% stake in Inwit [BIT:INW], the Italian transmission tower group, Italian language daily Il Sole 24 Ore reported.

The unsourced report said EI Tower does not want to buy a larger stake as it is trying to avoid a public offer.

The two other bidders, Spanish transmission tower group Cellnex [BME:CLNX] and Italian infrastructure group F2I and American Tower [NYSE:AMT] are looking to acquire the 45% of Inwit being put up for sale by Telecom Italia [BIT:TIT] (TI), the article noted.

As previously reported, TI is hoping to close a sale by mid-year, and due diligence will last until March, when the bidders will be expected to submit binding offers for a 45% stake in Inwit. The report said TI will then choose a party for exclusive negotiations.

Inwit has a market cap of EUR 2.9bn.

Il Sole 24 Ore