TheChek News Flow

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.

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).

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

* 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%

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%

* BAD BANK Reuters and other news sources continue to report the idea that the ECB has asked Italy to provide further information on its idea of the formation of Bad Banks to manage national lenders NPL’s and its ready to work with Italy to find a solution.

* BMPS Consob announced that it has extended the short selling ban until the end of the trading session on 21 Jan. Reuters reports comments that the BMPS banking foundation confirmed its trust in the bank's management, adding the share losses the lender suffered over the past two days were without any "objective justification"

Reuters reports comments from CEO Mr Vioala that the share price performance has nothing to do with fundamentals that have actually improved also in Q4 ’15 confirming the 9 mth ’15 trend. He added that the liquidity at the bank at year end ’15 was very positive and at levels not seen for 4 years.

* UBI / BMPS / POP MILANO / BCO POP Il Corriere reports that UBI could have a look at an alliance with BMPS if it merges with Pop Milano. Sugegsted that the UBI / PMI merger would create execess capital of Euro 1.2 bn and that this could be used to facilitate an integration with BMPS.

Also reported that some analysts think that that if PMI merges with Bca Popolare a rights issue of Euro 2 bn could be required.

Dow+0.17% S&P+0.05% Nasdaq-0.25% Russell-1.28%

MAjor Index closed near their flat line,but Small Cap still underpressure...Pressure on Oil continue to weight on market. Q4 GDP In china was a positive catakyst to the market but not enough...IMF revised its global growth projection to 3.4% for 2016 and 3.6% for 2017 versus prior estimates of 3.6% and 3.8%, respectively. commodity-sensitive energy (-2.1%) and materials (-1.2%) were followed by health care (-0.1%) and technology (-0.1%) while countercyclical utilities (+1.5%), consumer staples (+1.2%), and telecom services ( +1.2%) lead. WTI closed lower by 2.5% @ $29.62..trading down 3.20% this morning @ $27.55. Financials managed to close positive after MS(+1% & BAC (-1.5%), Volume were above average with more than 1bil shares traded. US After Hours NFLX +7.2%, CREE +4.6%, AMD -6.2%, IBM -3.5% following earnings/guidance, SYN +18.4% on phase 2, CLMT +12.1%. S&P500 futures are down over 1.5% at multi-month lows below 1,845, US 10-year note yield is down 5bps below 2%, crude oil is down another 3.1%. while gold is up over $5 above 1,092. Among regional indices, Nikkei and Kospi were down some 3%, Shanghai down by nearly 1.5%, and Hang Seng is down nearly 4% amid heavy selling in HKD. In Japan, Nikkei225 officially entered "bear market", falling 20% from the high mark set in June. Earlier press reports saw speculation that BOJ is considering to once again delay the timeframe to achieve the 2% inflation target beyond H2 of FY16, comments from business federation (Keidanren) about softer wage growth, and increasing uncertainty over the govt's goal of balancing budget by FY20. Yet again however, PM Abe reiterated that he sees Japan economic fundamentals as solid.

Macro :

- Saudi Banks Face Difficult Operating Conditions Next 2 Yrs: S&P

- UBS’s Axel Weber Sees No ‘Downward Spiral’ in Global Economy

Keep an eye on :

- ASML NA : ASML 1Q Outlook Below Ests.; Plans to Buy Back EU1b Shrs

- AZN LN : AstraZeneca to Conduct Phase 2a Asthma Trial Under Dynavax Pact

- BARN SW : Barry Callebaut 1Q Sales Beat Estimates

- EDF FP : EDF Plans to Build Hinkley Point Reactors in Six Years: Echos

- ENI IM : Eni Board Approves Bond Sale of Up to EU2b

- NOVN VX : Novartis’s Arzerra Wins Expanded Indication in CLL From FDA

- SGSN VX : SGS FY Revenue In Line With Estimates, Operating Margin Stable

- GLE FP : SocGen Traders Said to Pull Back From U.S. Mortgage Securities

- TIT IM : Il Sole reports comments from ViVendi CEO Mr de Puyfontaine that he has no plans / link with Niel and / or Orange. He also commented when questioned by a parliamentary committee that TI would push ahead with Metroweb and aims to become the undisputed number one concerning investment in Ultra broadband.

Il Sole reports that Oi has chosen Barclays and Santander as advisors to help with Oi’s merger proposals with Tim Brazil

- TKA GY : ThyssenKrupp’s Hiesinger Sees Good China Business: Sueddeutsche

- UCB BB : UCB’s New Epilepsy Drug Briviact Receives EU Approval

- DG FP : Vinci in Talks to Buy Abengoa Unit Abeinsa: Expansion

- VOW3 GY : VW Says Mueller’s Position Hasn’t Been in Question

- VOW3 GY : VW to Recall 78,083 Vehicles in China, AQSIQ Says

- VOW3 GY : Europe Industry Commissioner Demands Action From VW: Reuters

- ZURN VX : Zurich Sees 2015 Losses of ~$275m From U.K. Storms, 4Q Charges

*A2A RAISED TO NEUTRAL AT MACQUARIE

*AEGON RAISED TO BUY VS HOLD AT ING, PT EU6.40 VS EU6.80

*AHOLD RAISED TO BUY VS HOLD AT JEFFERIES

*ALDERMORE RAISED TO OUTPERFORM VS NEUTRAL AT CREDIT SUISSE

*ATLANTIA RAISED TO BUY AT DEUTSCHE BANK

*BNP ADDED TON CONVICTION BUY LIST AT GOLDMAN

*CREDIT AGRICOLE RAISED TO NEUTRAL VS SELL AT GOLDMAN

>> Sector

*EUROPEAN AUTOS & AUTO PARTS SECTOR CUT TO NEUTRAL AT NOMURA

*EUROPEAN GENERAL RETAIL SECTOR RAISED TO NEUTRAL AT BARCLAYS