(GS) L'Oreal & Beiersdorf - Oreal CL -Buy / Bei upgrade to Neutral

L'Oreal - The beauty of premium growth at sector-relative lows; onto CL-Buy

L’Oreal has underperformed the sector by 6% over three months and trades at a 10-year sector-relative low (NTM P/E), ahead of a year in which we see: (1) top-line growth acceleration (driven by the US/China); (2) better margin expansion as FX headwinds unwind, A&P falls and SG&A stabilises; and (3) EPS accretion from use of cash (as per French law, the second anniversary of the share buyback from Nestle allows for further transactions). We do not believe L’Oreal’s sector EPS growth premium is adequately valued by the market, and show its sector-relative LFL growth is within its historical range, contrary to common belief that its growth premium has eroded sharply.



Beiersdorf - Removed from Pan-Europe Sell List

We upgrade Beiersdorf to Neutral (from Sell) following a recent pullback in shares (down 8% over the past month). Beiersdorf’s sector relative premium has come back within its historical range (to 30%) and below its 10-year average (45%). Like the consumer staples sector, Beiersdorf outperformed the market in 2015 as investors sought stability. Since being added to the Sell list on Dec. 2, 2014, the shares are up 11.2% vs. the FTSE World Europe -1.7% (+19% and +3% over the past 12 months). However, Beiersdorf has lagged the consume staples sector (by 2% over the past 12 months and 3% since Dec. 2), on disappointing 1H15 topline growth.

(MS) European Banks & Strategy

Greater capital clarity gives Green, Amber and Red lights for bank divis and coupons

Growing clarity of capital requirements for many Eurozone banks in the last few weeks should start to reduce perceived risks for many banks securities and increase visibility on capacity for bank divis or coupons. In this cross-asset note, we explore the implications and investment opportunities.

* Adding Danske Bank to Bank Equity Most Preferred List
* Cutting BBVA PT (to €8.5 from €9.6) and SAN PT (to €5.3 from €5.9) on lower divi assumptions

Bank Equity: The Good, the Bad and the Challenged. 
The wave of new SREP disclosures released in recent weeks re-inforces some of our key calls for 2016 – and should help reduce the perceived risk of some banks securities. We think asset quality is the largest driver behind the wide divergence (175bp to 325bp) of Pillar II requirements, consistent with ECB efforts to incentivise sharper non-core rundown, and informs our estimates for banks yet to disclose. We think Natixis, ABN, KBC, Bankia and UBS – with the highest management buffers – could positively surprise on payouts. We continue to believe full cash dividends will be constrained for some of the GSIFI banks (UCG, HSBC, SAN, BBVA, BNP, DB) and reinforces the need for non-core run down or stake sales. We also think BARC could negatively surprise on divis.

(BofA-ML) Leisure & Transport : Carnival, Whitebread, Compass, AirFrance,..

>>> Leisure sector best ideas
* Carnival (Buy, PO raised to 5400p / US$80 from 4530p / US$68). We think Carnival is still in the early stages of a multi-year change story which is set to improve operational performance, consumer opinion and financial returns. We forecast ROIC and margins returning to the 2005 peak by 2020E, EPS doubling by 2019E and, surplus cash building.
* Whitbread (Buy from Neutral, PO 5080p). With the shares well off their highs, consensus expectations looking more conservative, the fundamental low beta growth story intact (EPS CAGR 11%) and with a less frothy valuation (16x Feb17 PE), we raise WTB to Buy.
* Compass (Buy, PO raised to 1350p from 1250p). We remain bullish on the low beta, high quality, cash generative, long duration double-digit TSR thesis. With c.7% share of a large but fragmented market (c.£200bn) we see many more years of market share gains.

>>> Transport sector best ideas
* Air France-KLM (Buy, PO EUR10). Our EBIT forecasts are 90% and 66% above consensus in 2016 and 2017 due to lower fuel and lighter capex expectations. It trades at 3x PE in 2016 with a FCF yield of 17%. 
* Deutsche Post (Underperform, PO EUR 23). Amazon recently confirmed that it’s considering expanding its in-house delivery operations in Germany. This combined with Asian FX risks and mail volume risks (regulated price rises) underpin our underperform. 
* Royal Mail (Buy, PO 600p). The key upside risk is the potential to stem market share losses and benefit from rapid growth in parcels (c.10%pa) and eCommerce in the UK. Operational gearing to volume improvements is high (1% volume = c.10% EPS).

(BofA-ML) Vinci, St Gobain, HeidelbergCement, Travis Perkins Upgraded

2016: Europe a cosy place to be, upgrading SGO, DG and TPK to Buy

We are more optimistic on Europe, contrarian on Emerging markets and avoid US
exposure for 2016. We see a mixed outlook with slightly higher European volumes, a
slower pace in US growth and mixed incremental trends in EMs (improving in India,
Mexico, worsening in Brazil, China). European construction, housing in particular, appear
as attractive, even if the pace of the recovery is likely to be measured. We continue to
see some downside risks for US construction growth, relative to very optimistic market
expectations. We see sector valuation already fairly full (2016 EV/EBITDA of c9x and P/E
of c17x), leaving more space for a potential de-rating than a significant incremental rerating.
We favour Saint-Gobain (upgraded to Buy from Neutral), Travis Perkins
(upgraded to Buy from Neutral), LafargeHolcim (Buy) and Kingspan (Buy). We are more
cautious on CRH (Underperform). We stay Neutral on Wolseley and upgrade
HeidelbergCement to Neutral from Underperform.

>>> What to look at today - 11th of January 2016

Selling pressure has returned to the Asian equity markets after Friday's bounce, even though the PBoC has set Yuan firmer for the 2nd straight day. Instead, investors appear to be unimpressed by the latest inflation data from China released over the weekend and also the neglect by the authorities to inject any additional liquidity. December CPI met expectations, but it was mainly the food component - 2.7% v 2.3% prior - that saw some growth, while the non-food CPI remained at 1.1%. Rising threat of China deflation has translated into record lows for some key commodity currencies. MXN and ZAR were particularly hard-hit above 18 and 17.80 respectively. USD/CAD added 30pips close to 1.4190, and AUD/USD traded down nearly 50pips from opening levels below 0.6930. US equity futures were down as much as 0.75% but bounced back in afternoon trade. Likewise, USD/JPY initially cratered 60pips toward 116.60 before a mid-session recovery. In notable Chinese press reports, CASS researcher said expectations of yuan's depreciation and capital outflows have been behind the drop in China's foreign exchange reserves. Recall the latest data for December showed reserves post their biggest decline on record of over $100B to $3.33T. NDRC official also offered downbeat forecasts, noting it would be difficult for China to maintain GDP average of above 6.5% in 2016-20 period, which is required for China to meet its objective of doubling GDP in 2020 relative to 2010 levels. over the Week end : BONT: Sycamore Partners said to have approached company to combine with Belk, KSS: Said to consider break-up of the company and taking itself private

Nikkei closed Hang Seng -2.37% Shanghai -5%

Eur$1.0917 CNY (Onshore) 6.5838 CNH (Offshore) 6.6622 JPY 117.22 GBP 1.4533 CHF 0.9936 RUB$ 75.60 WTI 32.50 (- 2%)

S&P -0.43% EuroStoxx -1.3% Dax-1.5% SMI -1.10% FTSE -0.69%

Macro :
- Fed Open to Modest Increase in Risk Threshold, Alvarez Says
- Renzi Says Italian Projects by Global Investors to Be Announced
- French Business Leaders Ask for Relaxing of Work Rules, JDD Says
- London Hedge Fund Omni Sees 15% Yuan Drop, and More in a Crisis
- Europe May Be ‘Ground Zero’ of 2016 Politics, Roubini Says: AFR
- Kohl’s Said to Consider Taking Itself Private: WSJ
- Legendary Artist David Bowie Dies at 69 http://bit.ly/1ncK5yr

Keep an eye on :
- AAL LN : Anglo to Sell Brazil Mine for $1B This Week, Times Reports
- ABG SM : Abengoa Said to Present Viability Plan by End of January
- AF FP : Air France to Announce New Growth Plan Friday, Les Echos Says http://bit.ly/1RF4xmI
- ALV GY : Allianz Considers Insurance Business in S. Korea: MoneyToday
- ATLN VX : Actelion Confirms 2015 Core Earnings Growth >20%
- BGN IM : Banca Generali Sees 2016 Inflows Close to 2015 Level: Repubblica
- BG/ LN : Glass Lewis to Support Shell/BG Group Deal, Mail Reports
- BG/ LN : Standard Life Investments to Vote Against Shell’s Bid for BG
- BG/ LN : ISS Recommends Shell/BG Deal, Has Compelling Strategic Rationale
- CGG FP : Reports Q4 Vessel production rate 89% v 92% y/y; Vessel availability rate 92% v 87% y/y, Guides FY15 net debt $2.50B v $2.54B q/q
- CNHI IM : Deere Still Sees FY16 Equip. Ops Net ~$1.4b, Sales Down ~7 y/y
- CRH LN : CRH confirms EUR 1bn disposals in 2015, including 25% stake in Mashav
- DBK GY : Deutsche Bank Said to Sell London Bullion Vault to ICBC: Reuters
- DLG GY : Reports Prelim Q4 Rev $397M (prior guidance $390-400M) v $435M y/y, Guides FY16 Rev up single digit
- FCA IM : Fiat Chrysler’s Goal for Alfa Romeo Slipping - WSJ
- GSK LN : GSK break-up urged by star fund manager Neil Woodford
- HLE GR : Hella 2Q Sales Rise 10%; EPS Down 5%; Confirms FY16 Outlook
- HOME LN : Home Retail Group shareholders want at least GBP 1.6bn from Sainsbury 
- ITALGAS : Italgas and 2i Rete Gas may merge and list Il Corriere della Sera
- KER FP : Pressure Builds on Gucci Designer to Translate Buzz Into Sales
- LRD LN : Amphenol Is Assessing Laird for Possible Takeover: Telegraph
- LHA GY : Lufthansa Sees 2016 Earnings Growth as Fuel Costs Decline
- ML FP : Michelin Plans EU150m Buyback Between Jan. 11-June 15
- PRS SM : El País owner faces activist pressure for board shake-up, An activist hedge fund (Amber Capital) is pressing for a corporate governance upheaval at the owner of Spain’s El País newspaper ahead of the company’s board being put up for renewal.
- PSM GY : ProSiebenSat.1 Pulls International OTT Service: BroadbandTVNews
- QIA GY : Qiagen 2015 Adj. Net Sales Rise 3%; Sees 6% Growth in 2016
- RNO FP : France Won’t Sell Renault Shares in Coming Weeks, Echos Says
- SAN FP : Sanofi, Warp Drive Bio to Collaborate in Oncology
- SAN FP : Sanofi Teams With Innate Pharm in Deal to Develop Cancer Drugs
- SHP LN : Baxalta agrees to terms of GBP 22bn sale to Shire, $48 per share and include a cash component of up to 40%, or GBP 8.8bn
- GLE FP : SocGen CEO Says France Needs Fast Reforms on Employment: Europe1
- SPD LN : Sports Direct Holder Crispin Odey Cuts Its Stake: Telegraph
- STL NO : Two Norway Conservative MP’s Argue for Lower Statoil Div: DN
- SYNN VX : ChemChina to Acquire Machinery Maker Kraussmaffei From Onex
- TSCO LN : Asda CEO Says Supermarket Is Slashing Prices Further: Telegraph
- TFI FP : BFMTV Files Appeal Over LCI Free-To-Air Decision: AFP
- HO FP : Thales Alenia Space Had ‘Extraordinary’ Year in 2015: Tribune
- TNTE NA : FedEx, TNT Express Extend Acceptance Period
- FP FP : Total Reports Steam Loss at Texas Petrochemical Refinery Unit
- UNICAJA IPO : Spain’s Unicaja to Hold EU800M IPO in May: El Confidencial
- VONN SW : Vontobel Plans to Stay Independent, Board President Tells NZZ- VOW3 GY : Volkswagen to Unveil 3 New Models at Delhi Auto Expo Next Month

>>> Europe : Brokers Upgrades & Downgrades - 11th of January 2016

>>> Up
*BAE SYSTEMS RAISED TO OVERWEIGHT VS NEUTRAL AT JPMORGAN
*BEIERSDORF RAISED TO NEUTRAL FROM SELL AT GOLDMAN
*EFG INTERNATIONAL RAISED TO OUTPERFORM AT CREDIT SUISSE
*FIRST HORIZON RAISED TO BUY VS HOLD AT EVERCORE ISI
*GIVAUDAN RAISED TO OUTPERFORM VS NEUTRAL AT EXANE
*LVMH RAISED TO NEUTRAL VS UNDERPERFORM AT CREDIT SUISSE
*MAERSK RAISED TO BUY VS NEUTRAL AT UBS
*SAGE GROUP RAISED TO BUY VS UNDERPERFORM AT BOFA
*STANDARD LIFE RAISED TO BUY VS HOLD AT JEFFERIES
*TDC RAISED TO BUY VS NEUTRAL AT UBS
*VALMET RAISED TO BUY VS HOLD AT BERENBERG
*ZURICH INSURANCE RAISED TO OVERWEIGHT AT BARCLAYS

>>> Down
*COCA-COLA FEMSA CUT TO REDUCE VS NEUTRAL AT NOMURA
*OMV CUT TO UNDERWEIGHT VS EQUAL WEIGHT AT MORGAN STANLEY
*QINETIQ CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
*SAFRAN CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN

>>> PT Change


>>> Initiation
*DRILLISCH RATED NEW BUY AT HSBC, PT EU50
*EDAG ENGINEERING RATED NEW OVERWEIGHT AT MORGAN STANLEY PT EU25
*ELIOR RATED NEW BUY AT UBS, PT EU22
*SSP GROUP RATED NEW SELL AT UBS, PT 280P
*TLG IMMOBILIEN RATED NEW BUY AT BERENBERG, PT EU21

>>> Call
>> Stock
*BAVARIAN NORDIC EXIT KEY BUYS LIST AT CITI
*GRAND CITY EXIT KEY BUYS LIST AT CITI
*TF1 EXIT KEY BUYS LIST AT CITI

>>> Legendary Artist David Bowie Dies at 69


http://www.hollywoodreporter.com/news/david-bowie-dead-legendary-artist-854364

David Bowie has died after a battle with cancer, his rep confirmed to The Hollywood Reporter.
"David Bowie died peacefully today surrounded by his family after a courageous 18 month battle with cancer. While many of you will share in this loss, we ask that you respect the family’s privacy during their time of grief," read a statement posted on the artist's official social media accounts.
The influential singer-songwriter and producer, who dabbled in glam rock, art rock, soul, hard rock, dance pop, punk and electronica during his eclectic 40-plus-year career, died after a battle with cancer.
Bowie’s artistic breakthrough came with 1972’s The Rise and Fall of Ziggy Stardust and the Spiders From Mars, an album that fostered the notion of rock star as space alien. Fusing British mod with Japanese kabuki styles and rock with theater, Bowie created the flamboyant, androgynous alter ego Ziggy Stardust.
Three years later, Bowie achieved his first major American crossover success with the No. 1 single “Fame” off the Top 10 album Young Americans, then followed with the 1976 avant-garde art-rock LP Station to Station, which made it to No. 3 on the charts and featured Top 10 hit “Golden Years.”
Other memorable songs included 1983’s “Let’s Dance” — his only other No. 1 U.S. hit — “Space Oddity,” “Heroes,” “Changes,” “Under Pressure,” “China Girl,” “Modern Love,” “Rebel, Rebel,” “All the Young Dudes,” “Panic in Detroit,” “Fashion,” “Life on Mars” “Suffragette City” and a 1977 Christmas medley with Bing Crosby.
With his different-colored eyes (the result of a schoolyard fight) and needlelike frame, Bowie was a natural to segue from music into curious movie roles, and he starred as an alien seeking help for his dying planet in Nicolas Roeg’s surreal The Man Who Fell to Earth (1976). Critics later applauded his three-month Broadway stint as the misshapen lead in 1980’s The Elephant Man.

>>> CGG - Reports Q4 Vessel production rate 89% v 92% y/y; Vessel availability r

CGG - Reports Q4 Vessel production rate 89% v 92% y/y; Vessel availability rate 92% v 87% y/y 
- Guides FY15 net debt $2.50B v $2.54B q/q
- The Group's Liquidity, corresponding to the sum of the cash balance and the undrawn portion of the revolving credit facilities, is expected to amount to $420 million by December-end, to be compared to $440m by end of September 2015. 
- Over the fourth quarter, the cash performance was notably sustained by strong multi-client revenue at $242 million, by Sercel sales at $102 million, and by a tight cost and working capital management.