(UBS) Zodiac - Main market debate moves to a potential takeover

Main market debate moves to a potential takeover

* Taking down FY2016 EBIT by 19%, FY2017 by 13%
Following H1 sales trading statement we downgrade our FY16 EBIT by 19% to reflect
the: 1) excess costs persist in Seating especially on the seat shell activity; 2) cost
overruns related to the ramp up of several programs. We also downgrade our FY17e
EBIT by 13% to reflect Zodiac targets to get back to operational performance in 18
months. Uncertainty regarding the timeline of a potential turnaround remains high. Our
mid-term sales numbers remain unchanged (circa 3%) and reflect small market share
losses and a tougher pricing environment going forward. We believe capacity restraints
and the oligopolistic structure of the industry protect Zodiac from steeper market share
losses.

* Main market debate moves to a potential takeover
According to recent press, Zodiac could be a possible acquisition target for Safran (Buy,
PT €67). We believe it is likely that Zodiac's share price could be driven by newsflow
around a potential takeover. We believe the probability of a tak-over has recently
increased, but remains dependent on the willingness of Zodiac's main shareholders –
the families - to consider a potential deal. We discuss in more details the context of a
potential deal in our accompanying note on Safran and we published an interactive
model to better assess the financial implications of a potential takeover.

* Balanced risk reward: downside case €12 valuation, upside case €26 valuation
The risk reward remains balanced, with our downside case (10% margin, 0% revenue
growth) yielding a fair value of €12, while our upside case (14.5% margin, 5% growth)
yielding a fair value of €26.

* Valuation: trades on 17.1x calendar 2016e, 22.2x calendar 2016e
Our €17.5 (prior €18) price target is based on 9% WACC, 5 year profit growth of 18%
CAGR from FY15/16E and cash conversion of 82%, which implies a fair value multiple
of 18.8x FY15/16E EV/EBITA.

>>> Street Pre-Market Indications

RBC
ADIDAS 0% Warning from BELLE INT., Q4 LFL -16.5% v -10.4% in Q3
AIRBUS -1% Expect weakness on EURUSD move overnight.
ASSA AB. +1% CEO interview in D.I. positive on aftermarket.
DANONE +1% Read from CHINA MENGNIU (+7.9%) in HK.
DT BANK +1% Achleitner supported by Sheikh Hamad
GFS +1% S&P maintain BBB- rating but downgrade outlook to negative.
NOSTRUM -2% Reserves 100mmbbls lower than expected and cuts FY16 production
PREM.F. +10% MCCORMICK revise proposal to 65p/shares, NISSIN purchase looks ok
SWED/SHB 0% Fin. minister wants to abolish interest tax deductions on subord
UNICREDIT -2% In talks with Rome on €2bln capital raise according to FT

Numis:
* ARM / LAIRD +1%; Samsung Q1 to beat expectations according to Korea Economic Daily – driven by strong Galaxy S7 sales and weak KRW
* BONMARCHE mkt; New CEO, Helen Connolly is currently Senior Buying Director for George at Asda (formerly Next and Dorothy Perkins) where she’s responsible for all womens clothing, non-clothing and male and female essentials.
* CENTAMIN mkt; We move from HOLD to ADD, note available on request
* CERILLION mkt (+c.11% yday on contract win); Buy - Float success gives it top billing in new UK tech names: Times
* CIRCLE +5%; FY numbers small beat. Upbeat statement. Announces parternership with major Euro rehab provider
* DE LA RUE mkt; Hold - Restructuring work has yet to pay off, but should do in time. Expanding in polymer, identity and security products is key to investment case: Times
* DIURNAL +2%; Maiden results. Small beat. No surprises
* EBIQUITY mkt; Solid performance, marginal beat on our forecasts
* HORNBY +1%; Engaged in 'constructive dialogue' with Barclays Bank re covenants
* LEARNING TECH +2%; +VE finals, been very strong recently
* MANX TELECOM +1%; FY to end Dec '15 revs +0.4% £79.6m, Mobile +9.3% boosted by 4G and Fixed, Broadband, Data +2.2% on high speed Broadband take up. Data +15.3% in line.
* MCKAY SECURITIES mkt; Property Director Steven Mew has resigned from MCKS. Having joined in 2001 he will remain in his role until September 2016, when he will join Great Portland as Portfolio Director on its Executive Committee.
* MONITISE -1%; Sell - No sign yet that it can turn the tide: Times
* MORGAN ADVANCED +2%; Peter Turner is to join as CFO, effective 11th April 2016.
* NEXT +1%; OVERSOLD - We move from HOLD to ADD, note available on request
* NOSTRUM O&G +3%; FY results in line with expectations. Not entering into loan with VTB to avoid unnecessary costs. GTU3 capex plans unch. Very low opex for 2015.
* OILS +1%; Brent $39.31 vs LDN close $38.94, WTI $38.54 vs $38.09, US names strong post Yellen's comments helped by a weaker $. API reported a build of 2.6mmbbls in US inventories. Sector been v weak past few trading sessions.
* PLEXUS -5%; Suspension of dividend due to tough market conditions. Revs for H2 £6.76m vs £13.51m for 2014 and loss after tax of £3.5m.
* PREMIER FOODS +10/15%; MCCORMICK revised bid proposal @ 65p
* SAGA +1%; Enters Quota Share Arrangement with NewRe
* VECTURA mkt; Skyepharma announce positive update on flutiform. Not material

CS:
Assa Abloy +1% CEO Johan Molin reiterating 2016 organic growth forecasts
Autoliv +3% Takata said to put worst-case airbag recall costs at $24bn
Elringklinger +1% Numbers inline with market expectations
Evolva -1% FY results inline but outlook slightly light
Hamburger Haf M/P Net income 18% beat, Raises divi EU0.59 est 0.55
Manz Auto +2% Revs €222m vs cons €206m, guidance better
Miners +1% Copper -0.10%, Brent +1.50%, Iron Ore -0.15%, China +1.53%
Morgan Ad M/P Appoints Peter Turner as new CFO
Neopost -2% FY EPS 3.5% miss, revenues inline, EBITDA 1% beat
Oils +1% US API 2.642m barrels, oil +1.5% vs Europe close
Orpea M/P FY15 sales/organic growth already announced, Confirms FY16
Qiagen M/P Has offered Dk18/shr for Exiqon
SMA Solar +1-2% EBIT 8% beat, net 28% miss, outlook confirmed
Scout24 +2-3% 2015 numbers small ahead, confident on meeting 2016
SEB UNCH Says will take a goodwill impairment of SEK5.3Bln
TLG Immo +1-2% Reports FY FFO at EU64m cons 63m, dividend inline
Volkswagen -1% Lawsuit being pursued by the FTC could run to $15b, FT

Mainfirst:
*AIRBUS-Boeing to cut 4k jobs(2.5%) of w/force,blames Airbus.......+1%
*NOVARTIS-Investigating bribery in Turkey,sells 14 RX Brands.......+0.5%
*SEB-Takes SK5.3b impairment,lowering CET1 ratio marginally........U/C
*ASSA ABLOY-Organic Growth to exceed 5% once mkts normalize-DI.....+1%
*PORSCHE-Recalls 6,101 vehicles in Japan to fix brake pedals.......-0.5%
*QIAGEN-To submit DK18 a share for Exiqon,confirms FY guidance.....+0.5%
*ORPEA-FY Sales 2.39b(2.394),Div 90c,NI 153m(154.85),o/l inline....+1%
*HELVETIA-Aims 2 expand bizz vol Oragically & via Acq's - F&W......+0.5%
*NEOPOST-FY Sales 1.19b(1.198),EPS 3.57,OP Margin inline...........+1%
*ALSTOM-Sees Org Rev Grth of 5% by 2020,Ebit Margin 7% in 2020.....+1%
*SMA SOLAR-FY Sales 999.6m(973),Ebit 34.3m(31.78),confirms o/lk....+2%
*ELRINGKLINGER-Net 91.6m(85.5),Div 55c(50),Mid Term o/l inline.....+0.5%
*ALSTRIA OFFICE-FY Rev 115.3m,FFO 60m(inline),2016 Rev 200m(186)...+0.5%
*SCOUT24-FY Rev 393.6m(389),Ebitda 189.6m(188),outlook ok..........+0.5%
*GRAMMER-Rev 1.43b,Net 23.8m(23.7),Div 75c(66),outlook +ve.........+0.5%
*HAMBURGER HAFEN-NI 66.7m(58.2),Rev o/l unch,Ebit 115-145m(144.5)..-0.5%
*MANZ-FY Ebit 222m(205),Ebit -58.2m(-58.17),outlook +ve............+1%
*TLG IMMOB-FY FFO 64m(66),Sees 2016 FFO 72-74m(70.7),Buys Leipzig..+0.5%

ShoreCap:
PREMIER FOODS - McCormick revised proposal of 65p/share cash...............+10%
XL MEDIA - Fy revs +76%.Ptp +84% to $28.4m.Confident of further growth......+5%
SKYEPHARMA - Breath actuated version of Flutiform accepted for Euro review..+1%
SAGA - enters quota share agreement with NewRe,covers 75% risk in policies..+1%
PERSONAL GRP - revs +27% £59.6m,PBT +14%,divi +7%,confident outlook for '16 +1%
JAMES LATHAM - sees FY revs inline but PBT higher than expected.............+3%
HORNBY - lenders waive March convenant tests,grp trading remains inline.....+2%
MANX TELECOM - revs robust,u'lying PBT +27.9%,maintains divi,good outlook..UNCH
CIRCLE HLDGS - grp revs +15% £127.8m,EBITDA losses more then halve..........+2%
SINCLAIR PHARMA - revs look lower but inline confident on US launch........UNCH

Europe 1 : Free va reprendre les 550 boutiques de Bouygues Telecom

A la veille de la date buttoir fixée par Stéphane Richard et Martin Bouygues pour le rachat de Bouygues Telecom par Orange les négociations se terminent... avec une surprise de Free.


"Maintenant ça passe ou ça casse", disait mardi l'une des partis prenantes. Martin Bouygues et Stéphane Richard n'ont en effet plus que deux jours pour trouver un accord pour la cession de Bouygues Telecom s'ils veulent respecter leur date butoir fixée au 31 mars. Et les choses vont s'accélérer mercredi avec la convocation, selon nos informations, d'un conseil d'administration chez Orange à 19 heures. Il devra se prononcer sur ce rapprochement. Du côté de Bouygues aussi un conseil d'administration est prévu, mais pas encore convoqué officiellement nous explique-t-on. Il devrait toutefois avoir lieu mercredi soir.

Free multipliera par 12 son nombre de boutiques.Après trois mois de discussions, les deux opérateurs touchent au but. Les discussions avec Free et SFR, qui doivent reprendre une partie des actifs de Bouygues Telecom pour éviter que le dossier ne soit bloqué par l'Autorité de la concurrence sont également proche de la fin. Pour autant, le mariage n'est pas encore certain et "aucun accord n'est signé", annonçait un proche du dossier mardi soir. Un point-clé des négociations semble toutefois réglé, celui des boutiques de Bouygues Télécom. Alors que personne ne voulait des 550 boutiques que compte Bouygues, elle devrait, selon nos informations, être finalement reprises par Free. En cas, bien sûr, d'accord final entre Orange et Bouygues.

Une véritable surprise. Le modèle-même de Free est en effet de se passer de magasins et de privilégier le service client sur internet, une solution pour faire baisser les coûts. Aujourd’hui, Free n’a que 51 boutiques en France, et cela ne fait que 5 ans qu'il a commencé à en ouvrir. Si l’opération avec Orange allait jusqu’au bout, Free passerait donc d’un coup à 600 boutiques, soit une multiplication par douze de son nombre de magasins.

Un enjeu social. L’enjeu de cette reprise est aussi social : avec les boutiques, il y a des salariés. Selon nos informations, Free en reprendrait environ 2.000, ce qui le ferait changer de taille. Free emploie aujourd’hui 6.000 personnes en France et passerait donc à 8.000. Un gros effort de la part de l'opérateur, mais un effort nécessaire, c’est tout simplement le prix à payer pour que le secteur des télécoms en France repasse à trois opérateurs, ce dont Free, Orange et SFR ont très envie. Il y a quelques semaines, Stéphane Richard avait répété qu'il s'agirait d'"une opération socialement irréprochable".

Problème de valorisation. Parmi les sujets qui posent encore problème, celui des valorisations de Bouygues Telecom et d'Orange. L'opérateur souhaiterait en effet se vendre pour 10 milliards - le montant de l'offre fait par SFR en juin 2015 - quand il ne vaut, selon les comptes de Bouygues, que 6 milliards. Le problème est le même avec Orange, dont Bouygues devrait prendre 12%, et dont la valorisation des 12% reste un sujet sensible. "Faut-il valoriser au cours actuel de l'action ? Au cours de l'action moyen sur une période donné ?", s'interrogeait hier encore un connaisseur du dossier. Après des négociations toute la nuit, les discussions vont se poursuivre encore mercredi

FT : Volkswagen faces $15bn hit over US green ad campaign

Volkswagen faces $15bn hit over US green ad campaign

Volkswagen faces billions of dollars in potential new penalties after the top US consumer watchdog hit the carmaker with a lawsuit over its emissions cheating scandal.
The Federal Trade Commission is pursuing compensation for consumers that could rise beyond $15bn, according to a lawsuit filed on Tuesday seeking the repayment of “ill-gotten monies”.
The FTC alleges that VW systemically deceived customers over seven years with an advertising campaign promoting “clean diesel” vehicles that were in reality much dirtier than government rules permitted.
VW has admitted to equipping up to 11m diesel-powered cars around the world with software that tricked regulators by reducing nitrogen oxide emissions only when pollution tests were under way.
Six months since the scandal broke VW finds itself surrounded by hostile forces itching to punish it, ranging from the FTC and the US Department of Justice to the French government and German prosecutors.
Even before the FTC lawsuit UBS analysts were predicting the scandal would end up costing the carmaker €38bn, including €10bn in civil penalties and €9bn in criminal fines.
“It seems there is no light at the end of the tunnel so far,” said Ingo Speich, portfolio manager of Union Investment, a VW shareholder.
Edith Ramirez, FTC chairwoman, told the Financial Times: “From what we know the conduct here appears to be quite egregious.”
It relates to 550,000 vehicles sold since late 2008. If the FTC secured compensation equal to an average sale price of $28,000 for the vehicles — which would be consistent with past cases — it would add up to more than $15bn.
The case is due to be decided in a district court in San Francisco, but it could also be settled at a lower cost to VW if the FTC joins settlement talks already under way between the carmaker and other groups challenging it.
“We don’t know yet how this will resolve,” said Ms Ramirez. “There’s a possibility that we’re able to reach a resolution with VW that we believe will be enough to provide redress to consumers that were affected by this.”
“We’re going to want to make sure that however VW is able to address this — whether it’s through some kind of a buyback programme or through essential repairs to the affected vehicles — we want to make sure that consumers in fact get full compensation. That could extend beyond any buyback or repair.”

The FTC lawsuit lays out in excruciating detail how VW touted the greenness of vehicles that it said emitted 90 per cent less than traditional diesel cars, even though they had been rigged by engineers to be secret polluters.
Seeking to woo eco-conscious consumers, VW compared the environmental impact of driving the cars to riding a bike, arranged for the actress Gwyneth Paltrow to arrive in one at a Hollywood premiere, and peddled the slogan “Green has never felt so good”.
The lawsuit reveals that VW continued marketing 3 litre diesel engine cars as “clean diesel” while it was in discussions with the Environmental Protection Agency, which exposed the scandal, about cheating in its 2 litre models.
The lawsuit quotes one VW engineer saying the company had “not been caught” on its 3 litre models.
VW said in a statement: “Volkswagen has received the complaint and continues to co-operate with all relevant US regulators, including the [FTC]. Our most important priority is to find a solution to the diesel emissions matter and earn back the trust of our customers and dealers as we build a better company.”
The FTC’s move adds to a long list of legal challenges VW faces over the emissions scandal.
In January the Department of Justice filed a complaint over VW’s alleged violation of anti-pollution laws and in February a California court consolidated more than half a million cases from VW car owners alleging fraud.
In Europe the French authorities and German prosecutors are pursuing separate investigations into the scandal and the European Commission is pushing for compensation.
Institutional investors, who say the carmaker took too long to tell shareholders about its discussions with US regulators, are seeking damages in a Dutch court.
Rebecca Lindland, senior analyst for Kelley Blue Book, a car data service, said: “Every government agency that is even remotely impacted by this situation will sue to recoup what they consider damages to the agency’s constituents. There’s really no end in sight to this situation.”

>>> What to look at today - 30th of March 2016

Dow+0.56% S&P+0.88% Nasdaq+1.67% Russell+2.67%
US Market closed on higher as FED Chair Janet Yellen boosted equities by striking a decidedly dovish tone. Chair Yellen channeled the dovish undertones from her March 16 press conference as she cited growing risks to the global economy to justify a gradual path in raising rates. Particularly, the Fed Chair mentioned uncertainty over China, low oil prices, and tightening in financial conditions. Furthermore, Fed Chair Yellen pointed to possible shortcomings in monetary policy if another disturbance were to manifest itself. Ms. Yellen noted the "asymmetric" response of monetary policy if economic conditions worsened, given the fed funds rate this close to zero.Tech & Healthcare outperformed. WTI ended its day lower by 2.7% at $38.32/bbl. All ten sectors ended the day in the green with heavily-weighted technology (+1.6%), utilities (+1.4%), and health care (+1.2%) leading the upside. Meanwhile, the economically-sensitive financial sector (+0.2%) and commodity-sensitive energy (+0.4%) and materials (+0.4%) showed the slimmest gains.volume were slightly above average at 945mil shares. US After Hours ACAD +22% in reaction to news; LNDC -13% & VRNT -12% in reaction to earnings, ACAD +22.2% on +ve review on drug, SPKE-14.9% & CTRV-7.2% on secondary offer. Asian Mkts have reacted +vely to Yellen dovish comments. Risk aversion in Japan was exacerbated by particularly disappointing February industrial production which fell m/m by the biggest margin since the massive 2011 earthquake. Alibaba+2.3%, Sharp+5.4% Sinopec+5.3%.

Nikkei -1.16% Hang Seng +1.28% Shamghai +1.60%

Eur$1.1298 CNH 6.4911 CNY 6.4844 JPY 112.29 GBP 1.4378 CHF 0.9667 RUB$ 68.4266 WTI$ 38.65(+0.97%)

SPX +0.05% EuroStoxx+0.65% Dax+0.69% SMI +0.50%

Macro :
Yellen Says Caution in Raising Rates ‘Especially Warranted’
Kaplan Says Fed Will Hike Gradually to Avoid Risk of Reversal
Lew Says It Would Be Hard for New President to Undo Iran Accord
Goldman Raises $1.5b in Infrastructure Fund First Close: Reuters - http://reut.rs/1qh2xao
ECB’s Coeure Says Helicopter Money Not Being Discussed: Politico

Keep an eye on :
- MMM US : 3M CFO: $24b-$29b on Hand for M&A, Buybacks Through 2020
- ABG SM : Spain Union Says Abengoa to Pay March Wages Using Credit Line
- AIR FP : Airbus Sees Demand for 32,600 New Planes Worldwide Next 20 Yrs
- AIR FP : Triumph Group Unit, Airbus S.A.S. Set ~$500m Landing Gear Pact
- AIR FP : Boeing Confirms Eliminating 4,000 Jobs From Airplanes Unit
- ALO FP : Alstom CEO Says Co. to Invest EU300m in Intl Markets: Les Echos
- ASSAB SS : Assa Abloy Sees Higher Organic Growth Once Markets Normalize: DI
- ASSAB SS : Assa Abloy eyeing over 100 possible takeover targets
- GBB FP : Jaccar Chairman Repeats Delisting Bourbon Not on His Agenda
- BRBY LN : LVMH not interested in Burberrys - Challenges
- DBK GY : Deutsche Bank’s Achleitner Gets Support of Investor Sheikh Hamad - FT
- EGPW IM : Awarded public tender in Mexico to supply energy and clean certificates - financial press - Mexico contracts include $1B investments
- EXQ DC : Qiagen to Submit DKK18/Shr Takeover Offer for Exiqon
- RACE IM : Ferrari looks to buy luxury brands outside car sector; MV Agusta possible target - Carlo Festa Blog http://bit.ly/1Rq4oUz
- OGZD LI : VED may sell 2.7% Gazprom Stake in ADRS
- KPN NA : Discovery Capital Management Holds Fewer KPN Voting Rights: AFM
- LHN VX : LafargeHolcim engages Citi and JPMorgan to sell Australian and New Zealand operations - The Australian
- MBWS FP : Marie Brizard Repays Creditors Early, Le Figaro Says
- MDVN US : Medivation Share Pullback Seen as Buy Opportunity: Credit Suisse
- NEO FP : Neopost FY EPS EU3.57 Vs EU3.71 Y/y
- NESN VX : GIS +1.7% on Bif rumor from PE & NESN - heavy volume
- ORP FP : Orpea Targets Sales of EU2.72b in 2016
- UG FP : Peugeot R&D Head Sees EU1.8B in R&D Expenses in 2016
- PFD LN : Premier Foods Boss Told Nissin of McCormick Interest: Telegraph
- QIA GY : Qiagen to Submit DKK18/Shr Takeover Offer for Exiqon
- SUBC NO : Seaway Heavy Lifting up for sale; Boskalis, Saipem, Heerema and Technip rumoured to be interested -de Telegraaf
- UCG IM : UniCredit Said to Be in Talks Over EU2b Capital Raising: FT
- VIV FP : 21st Century Fox Said to Eye Paramount Pictures Stake: NYP