EUROPEAN SHORT-INTERESTS : a zoom on largest Q1 variations
* Rating cut to Underperform: The improved disclosure will allow investors to determine if and when an earnings recovery story will be ready to unfold. We adhere to the idea that the strong increase in installed base will drive
aftermarket growth in the future, but it appears too early still to determine how strong this drive will be (with many moving parts still not stabilised). In the meanwhile, it highlights the short term pressure coming from various
areas of the group (bizjet and regional jet engines, widebody OE, Marine, Defence Aerospace). We believe that the current price levels are anticipating too much of the possible improvement at the end of the decade, with an
unbalanced risk / reward. We cut our rating to Underperform (vs Neutral)
* Earnings changes: As a result of our model reconstruction to reflect the new disclosure elements, we have revised our operating income expectations by -5%, -14% and +2% for 2016-18. This results from cuts in Defence and Marine, with some adjustments up to Civil Aerospace. We are respectively 1%, 9% and 8% below company-provided consensus. We have also reduced our FCF forecasts by GBP180m on average over the period.
* Catalysts: H1 results in July 2016, AGM on May 5.
* Valuation: We revise our target price to 540p (vs 530p), indicating 21% downside potential. It is based on a 2018 SOTP. On this basis, the stock would trade on EV/EBIT of 10.6x and 7.8x 2018E and 2019E, vs a 2004- 2015 average of 9.9x. Using a 2020 SOTP (assuming that nothing new goes wrong) would yield a valuation of 750p, offering a too-limited upside of 10%, in our view.
Sika shareholder J. Stern & Co says Saint-Gobain should make same offer to all shareholders
Sika shareholder J. Stern & Co has criticized the takeover by French chemicals group Saint-Gobain, Tagesanzeiger reported. The Swiss daily cited Jérôme Stern, chief of the Geneva/London based investor, who told French language Sunday newspaper that Le Matin Dimanche Saint-Gobain will buy the best assets in favourable conditions and take them to France. Stern said the sale should not be allowed unless Saint-Gobain makes the same offer to all shareholders and not just to the founding Burkard family.
Stern noted that the Saint-Gobain's share has barely moved since 2000, while the Sika share has gained 15.7% annually, the report stated.
Stern has held shares in the Swiss chemicals group since 2005, the report noted.
Tagesanzeiger
Asian equity markets are modestly higher with limited participation, as China/Hong Kong indices are closed for holiday. Investors are digesting a fairly solid US jobs report on Friday that saw the change in non-farm payrolls beat, hourly wages recover from prior month's poor showing, and unemployment to tick up on a slight expansion in labor force. In Japan, more data from the BOJ's Tankan survey revealed corporates reducing their expectations for inflation with a 1-year time horizon to just 0.8% from 1.0%. Later in the session, PM Abe was reportedly preparing to outline the specifics of frontloading FY16 budget at a cabinet meeting tomorrow. Among notable developments in the M&A landscape, Sharp was up nearly 5% headed toward close after reports late on Friday that it reached an agreement with banks on loan terms as part of the Hon Hai bailout.
Nikkei -0.57% Hang Seng Closed Shanghai Closed
Eur$ 1.1391 CNH 6.4694 CNY 6.4818 JPY 111.40 GBP 1.4222 CHF 0.9589 RUB$ 68.2040 WTI$36.40(-1.10%)
S&P+0.12% EuroStoxx-0.25% Dax+0.20% SMI+0.15%
Macro :
Jobs Report Gives Yellen Only Half of What Fed Chair Wants
FT : IMF weighing exit from Greek bailout - http://on.ft.com/1Uzzqf7
Trump Sees U.S. Headed for ’Very Massive Recession’: Wash. Post
Copper Price Is Forecast to Weaken This Quarter, Barclays Says
Keep an eye on :
- ABI BB : S. African Regulator Seeks SAB/AB InBev Extension: Business Day
- ABG SM : Abengoa Sells Campo Palomas Wind Park in Uruguay
- ADP FP : Zurich Airport May Bid for Nice Airport: Schweiz am Sonntag
- AF FP : Servair sale sees Newrest emerge in poll - JDD
- ATLN VX : Actelion Says EMA Readopeted Positive Opinion on Uptravi in PAH
- AIR FP : Airbus Says U.K. Financing Requests Had Inaccuracies - FT : http://on.ft.com/1M89x3x
- AIR FP : Airbus Can’t Use Some U.K. Guarantees on ‘Inaccuracies’ (Friday)
- CRG IM : Apollo Targets Rescued Italian Banks With Carige Offer: Ansa
- EN FP : Orange Abandons Bid to Buy Bouygues’ Phone Unit
- EN FP : Bouygues Says Only Three Out of Four Players Wanted Deal: Figaro
- CNA LN : Centrica hires JPMorgan to advise on potential tie-up with Engie - Sunday Times
- FDSA LN : takeover target for US private equity house Advent International - FT
- DPW GY : Deutsche Post Plans 2,000 Streetscooter E-Cars in 2016: Focus
- ENGI FP : Centrica hires JPMorgan to advise on potential tie-up with Engie - Sunday Times
- ILD FP : Iliad Reiterates Targets as Orange Abandons Bouygues Bid
- KCR1V FH : Terex, Zoomlion Still in Active Talks: DealReporter
- LSE LN : Xavier Rolet: tie-up between LSE and Deutsche Boerse is best deal on the table http://bit.ly/1UB0DOL
- MS IM : Vivendi Said Near Deal to Buy Mediaset Premium Controlling Stake
- NG/ LN : National Grid accused of energy ‘panic’ over coal deals - FT
- ORA FP : French Telecom Regulator Sees Four Phone Operators for Some Time
- PHIA NA : Melrose Said to Drop Out of Bidding for Philips Lighting
- PST IM : Italy May Sell Additional Stake in Poste Italiane, Corriere Says
- RNO FP : Renault, Spanish Unions Reach Deal on Pay Rise: Economista
- SAN SM : Santander Planning to Cut Senior U.K. Staff, Sunday Times Says
- SIKA VX : Sika Shareholder Stern Says Burkard Family Has Options: Le Matin
- HOT US : Chinese Phrase Adds Mystery to Anbang’s About-Face on Starwood - NYT - http://nyti.ms/1UKLUB3
- TSLA US : Elon Musk Says 276,000 Pre-Orders for Model 3 as of Sat. Night
- TLW LN : Tullow Oil Extends Jubilee Field Shutdown to April 9
- VA US : Virgin America Sale Could Come as Early as Monday: Fox Business
- VA US : Alaska Air nears deal to buy Virgin America for over $2 billion: sources - Reuters http://reut.rs/222hSrl
- CSS FP : Vivarte could take a look at Bata - JDD
- VOW3 GY : VW’s U.S. Dealers Form Panel to Lead Negotiations: Auto News
- VOW3 GY : VW Says It Remains ‘Fully Committed’ to U.S. Market
- YHOO US : Time Inc Said to Consider PE Partner for Yahoo Bid: Reuters
>>> Up
*AMEREN UPGRADED TO OVERWEIGHT AT BARCLAYS
*BUZZI UNICEM UPGRADED TO OUTPERFORM FROM NEUTRAL AT DAVY
*COMMERZBANK RAISED TO OUTPERFORM VS NEUTRAL AT MEDIOBANCA
*ERSTE RAISED TO OUTPERFORM VS NEUTRAL AT MEDIOBANCA
*EXELIXIS RAISED TO BUY VS HOLD AT STIFEL
*IMCD RAISED TO BUY VS HOLD AT KEPLER CHEUVREUX
*IMCD GROUP RAISED TO BUY VS NEUTRAL AT GOLDMAN
*MARKS AND SPENCER RAISED TO BUY VS HOLD AT PEEL HUNT
*RWE RAISED TO BUY AT SOCIETE GENERALE
*WEIR GROUP RAISED TO BUY VS NEUTRAL AT NOMURA
>>> Down
*ABN CUT TO NEUTRAL VS OUTPERFORM AT MEDIOBANCA
*ADMIRAL CUT TO UNDERPERFORM VS NEUTRAL AT CREDIT SUISSE
*BNP CUT TO UNDERPERFORM VS NEUTRAL AT MEDIOBANCA
*BOUYGUES CUT TO SELL VS HOLD AT BERENBERG
*CAIXABANK CUT TO UNDERPERFORM VS NEUTRAL AT MEDIOBANCA
*DANAHER CUT TO MARKET PERFORM AT BERNSTEIN
*FRAPORT CUT TO SELL VS NEUTRAL AT UBS
*ILIAD CUT TO REDUCE VS HOLD AT KEPLER CHEUVREUX
*IMI CUT TO NEUTRAL VS BUY AT NOMURA
*INTESA CUT TO NEUTRAL VS OUTPERFORM AT MEDIOBANCA
*POPULAR CUT TO NEUTRAL VS OUTPERFORM AT MEDIOBANCA
*ROLLS-ROYCE CUT TO UNDERPERFORM VS NEUTRAL AT CREDIT SUISSE
*UBI CUT TO NEUTRAL VS OUTPERFORM AT MEDIOBANCA
*UNICREDIT CUT TO NEUTRAL VS OUTPERFORM AT MEDIOBANCA
>>> PT Change
>>> Initiation
*BPOST ASSUMED AT NEUTRAL AT NOMURA; PT EU24.40
>>> Call
>> Country
*CREDIT SUISSE CUTS JAPAN EQUITIES TO BENCHMARK, ADDS TO GEM
>> Sector
*EUROPEAN BANKS CUT TO NEUTRAL VS OUTPERFORM AT MEDIOBANCA
Balmain receives EUR 500m pre-emptive offer from Valentino owners; two other bidders also interested
Pierre Balmain, the French fashion house controlled by the heiresses of Alain Hivelin, is understood to have received pre-emptive offers from three potential buyers, French daily Les Echos reported.
The report, which did not reveal its source of information, said that the Qatari state-owned agency, which owns Italian fashion house Valentino, is believed to have made an offer valuing the target at EUR 500m; Two other pre-emptive offers have also been made, one by a financial investor from the USA and another by a Chinese group.
According to the report, the offer from Qatar is believed to be in pole position. The report noted that the auction for Balmain, which has yet to be launched, was expected to fetch between EUR 300m and EUR 400m originally.
Balmain generates annual revenues of EUR 120m.
Les Echos
Asian Market Update: Abe plans to front-load stimulus; Aussie drops on flat retail sales
***Economic Data***
- (AU) AUSTRALIA FEB RETAIL SALES M/M: 0.0% V 0.4%E; Y/Y: 3.7% (weakest since Sept 2013)
- (AU) AUSTRALIA FEB BUILDING APPROVALS M/M: 3.1% V 2.0%E; Y/Y: -9.0% (4th straight decline) V -9.0%E
- (AU) AUSTRALIA MAR ANZ JOB ADVERTISEMENTS M/M: 0.2% V -1.2% PRIOR
- (AU) AUSTRALIA MAR TD SECURITIES INFLATION M/M: 0.0% V -0.2% PRIOR; Y/Y: 1.7% (7-month low) V 2.1% PRIOR
- (JP) JAPAN MAR MONETARY BASE Y/Y: 28.5% v 29.0% PRIOR; MONETARY BASE END OF PERIOD: ¥375.7T v ¥358.8T PRIOR
- (KR) SOUTH KOREA Q1 FOREIGN DIRECT INVESTMENT (FDI) Y/Y: 19.3% V 82.5% PRIOR
- (NZ) NEW ZEALAND Q1 WESTPAC EMPLOYMENT CONFIDENCE INDEX: 104.8 V 101.5 PRIOR
***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 +0.2%, S&P/ASX +0.6%, Kospi +0.1%, Shanghai Composite closed, Hang Seng closed, Jun S&P500 +0.1% at 2,066
***Commodities/Fixed Income***
- Jun gold -0.4% at $1,219/oz, May crude oil -1.1% at $36.38/brl, May copper -0.2% at $2.16/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 1.2 tonnes to 818.1 tonnes; 3rd straight decline
- SLV: iShares Silver Trust ETF daily holdings rise to 10,344 tonnes from 10,276 tonnes prior; Highest since Dec 2014
- (JP) BOJ offers to buy ¥350B in 1-3year JGBs, ¥440B in 3-5yr JGBs,¥220B in 10-25year JGBs and ¥180B in JGBs with maturity over 25-year
***Market Focal Points/FX***
- Asian equity markets are modestly higher with limited participation, as China/Hong Kong indices are closed for holiday. Investors are digesting a fairly solid US jobs report on Friday that saw the change in non-farm payrolls beat, hourly wages recover from prior month's poor showing, and unemployment to tick up on a slight expansion in labor force. S&P/ASX 200 is leading the way despite the selloff in key mining/energy names while Nikkei225 is sustaining gains despite the late-session rally in JPY. Among FX majors, USD/JPY was down nearly 50pips from the highs around 113.30, EUR/USD was rangebound around 1.14, and AUD/USD sold off some 40pips to 0.7630 on weak Aussie retail sales data.
- Australia retail figures came in flat m/m and up 3.7% y/y - the weakest annual growth rate since mid-2013 - with the most pronounced gains coming in clothing/footwear segment. Other Aussie data were more benign, as building approvals sequential growth topped consensus and ANZ Jobs ads returned to positive. Going into tomorrow's RBA rate decision, market consensus is firmly in expectation of a rate hold, however futures markets still anticipate more easing later this year because of recent dovishness out of the FOMC boosting AUD currency against the greenback.
- In Japan, more data from the BOJ's Tankan survey revealed corporates reducing their expectations for inflation with a 1-year time horizon to just 0.8% from 1.0%. 3-year outlook was cut to 1.1% from 1.3% and 5-year to 1.2% from 1.4%. Govt spokesperson Suga reiterated that only a calamity on the scale of global financial crisis or a natural disaster would lead to postponing the 2nd round of consumption tax increase, even with a Yomiuri poll indicating that 65% of respondents do not support the sales hike to 10% scheduled for April of next year. Later in the session, PM Abe was reportedly preparing to outline the specifics of frontloading FY16 budget at a cabinet meeting tomorrow. Among notable developments in the M&A landscape, Sharp was up nearly 5% headed toward close after reports late on Friday that it reached an agreement with banks on loan terms as part of the Hon Hai bailout.
***Equities***
US equities / ADRs:
- VA: Follow Up: Alaska Air deal to buy Virgin America thought to be for $2.5B cash - financial press
- SPLS: Said to have offered to freeze prices for 3 years in order to secure $6.3B takeover of ODP - NY Post
- PBR: Announces new voluntary layoff program as part of overall cost-cutting initiative; Expects 12K workers to leave (about 21% of workforce) - financial press
Notable movers by sector:
- Sharp 6753.JP: Reaches agreement with banks on loan terms as part of Hon Hai bailout; Plans to reduce borrowing costs by ¥7.4B in FY16/17; +4.8%
- Posco 005490.KR: Said to consider building a wire-rod processing plant in the US - Korean press; +2.1%
- MQG.AU: Reaffirms FY16 to be higher y/y; As expected H2 to be lower than H1; FY16 H2 lower y/y - slides; +1.3%
- Eisai; 4523.JP: Halaven(Eribulin) Receives Positive CHMP Opinion in Advanced Liposarcoma Following Significant Phase III Data; +0.9%
- Investa IOF.AU: Mirvac said to be less interested in Investa Office bid - Australian press; +0.5%
- 005380.KR: Hyundai/Kia group reports Mar US sales -0.2% y/y to 133.6K units v 130.6Ke; -3.0%
National Grid accused of energy ‘panic’ over coal deals
National Grid’s decision to grant lucrative contracts to two large British coal-fired power plants, helping keep them open, shows it is in a “blind panic” about electricity supplies next winter, according to industry insiders.
At the end of last week, National Grid, which runs the UK electricity network, granted two services contracts — one to Fiddlers Ferry in Cheshire the other to Drax in North Yorkshire.
The deals will ensure in an emergency the power stations are able to start up again without electricity from the grid, which would be essential in a national power outage.
But industry insiders believe that with electricity supplies looking tighter than ever, the contracts are designed to make sure the plants stay open over next winter. National Grid denies this, saying the companies won a competitive bidding process.
Fiddlers Ferry owner SSE said last week that the deal had been an important factor in its decision to keep the plant open, having previously said it could close.
As ageing coal plants shut, hit by low electricity prices and tough new emissions rules, government ministers have struggled to incentivise companies to replace them. Amber Rudd, energy secretary, has said she wants all coal-fired power to close by 2025.
Energy experts say it is unusual for such “black start” contracts to be given to coal-fired generators. Coal plants are generally the largest power stations but it takes longer to get them running — four hours, according to one industry executive, compared with just minutes for a hydroelectric pump storage plant.
An executive from one of the “big six” energy suppliers said: “We would not normally expect these contracts to be given to coal stations, and for enough money to make sure an entire power plant stays open. This looks like blind panic from National Grid.”
Another called the move “suspicious”, saying he believed the grid had simply run out of capacity to get the country through next winter. National Grid denied this and said it will update the market later this year with what it expects supply margins to be.
National Grid did not say how much the contracts were worth, but analysts said they expected Drax’s revenues to be £10m higher as a result.
Deepa Venkateswaran, an analyst at Bernstein, said: “National Grid would have awarded these contracts anyway. But the timing of them [just before Fiddlers Ferry was due to close], and their recipients, suggest they did not want any further plant closures.”
Others have complained that the bidding process was conducted in secret, meaning that companies trading wholesale electricity were blindsided by SSE’s decision to keep Fiddlers Ferry open.
Sara Bell, chief executive of Tempus Energy, which provides electricity through the wholesale markets, has asked the competition watchdog and Ofgem, the energy regulator, to investigate.
“This is a bilateral, behind closed doors transaction, in support of a coal plant that only a few weeks ago stated it could not continue to operate,” she said.
“Worse still, the sudden nature of the deal announcement has moved the market, to the detriment of other market participants.” She said Tempus was also considering a legal challenge.
National Grid denies the allegations. It said the contracts were not unusual and the two companies had won a fair bidding process. “A competitive process was launched for these services in February with the relevant information sent to all industry participants,” it said.
“Contractual terms are commercially confidential, but we can confirm that the contracts are structured in such a way as to minimise any potential market distortion.”
Martin Bouygues : «Pourquoi je n'ai pas vendu Bouygues Telecom à Orange»
Martin Bouygues, PDG du groupe Bouygues.
EXCLUSIF - Le projet de mariage de Bouygues Telecom avec Orange a été enterré vendredi soir. Dans un entretien au Figaro, Martin Bouygues explique l'échec du projet.
«Certains ont cru que je bluffais et que je négociais dos au mur. C'était stupide et même puéril de le penser». Comme à son habitude, Martin Bouygues ne mâche pas ses mots. Dans un entretien au Figaro, le PDG du groupe Bouygues s'explique sur les raisons de l'échec des négociations qui avaient été entamées trois mois plus tôt avec Orange, et qui auraient abouti à un partage des actifs de Bouygues Telecom entre Orange, SFR , et Free.
» À LIRE - Martin Bouygues: «Nous étions quatre à la table des négociations, mais seulement trois à vouloir aboutir»
«Ma première préoccupation, essentielle, était le maintien des emplois et du statut des salariés de Bouygues Telecom. La deuxième, c'était que je crois dans l'avenir du secteur des télécoms et que je souhaitais que le groupe Bouygues demeure un acteur dans ce secteur, et donc qu'il trouve sa place d'actionnaire chez Orange. Ensuite, je demandais que le montant de l'opération soit proche de l'offre que nous avait faite Patrick Drahi il y a un an. Enfin, Bouygues ne devait pas assumer seul le risque d'exécution. Toutes ces conditions, je les ai exposées, très clairement, dès le départ. Il n'y avait aucun malentendu possible», explique Martin Bouygues. «Si nous étions quatre à la table des négociations, nous n'étions que trois à vouloir aboutir. Manifestement, l'un des protagonistes nourrissait l'ambition d'avoir le maximum en payant le minimum, tout en gardant la possibilité de se retirer». Martin Bouygues refuse d'en dire plus. Cependant, l'histoire de la négociation (dans Le Figaro du 2 avril) atteste du fait que Free, détenu par Xavier Niel, aurait cherché à obtenir un maximum de garanties en cas de réalisation de l'opération.
Les exigences «très étranges» de Bercy
Pour Martin Bouygues, en tout cas, l'absence d'accord entre les quatre opérateurs a pesé plus lourd dans la balance que les exigences de l'État. «Si nous étions parvenus à un accord entre les quatre opérateurs, ce sujet-là aurait fini, je l'imagine, par trouver sa solution», dit-il, tout en convenant avoir «trouvé très étranges» les exigences de Bercy.
Pour l'avenir, le PDG du groupe Bouygues s'affiche serein. «La consolidation du marché français avait du sens. Mais puisqu'elle n'a pas lieu, nous allons continuer d'évoluer dans un marché à quatre opérateurs. (...) S'agissant de Bouygues Telecom, je ne suis pas inquiet. L'entreprise est parfaitement viable dans un marché à quatre. Elle est la première à avoir fait des efforts de rationalisation, considérables. Sa structure de coûts est une des plus basses du marché, et elle a l'un des meilleurs réseaux mobiles. Le premier trimestre témoignera de notre croissance à la fois dans le fixe et dans le mobile. Nous avons, avec les cash-flows et la puissance du groupe Bouygues, les moyens nécessaires pour investir et continuer de développer Bouygues Telecom.»y