(Exane) Reckitt Benckiser Upg from UP to OP TP 6,600p (+16% upside)

Right: Absence of material near-term M&A options
Our Underperform rating on Reckitt has been centred upon a belief that Reckitt will struggle to
execute material near-term M&A given a dearth of suitable available opportunities. With it now over
two years since the last meaningful acquisition (BMS Latam), we claim (a hollow) victory.

But very wrong: Health much stronger than we anticipated and likely to continue
On the other side, we have to confess that we materially under-estimated the strength of organic
growth in the Health business. Alongside SCA, Reckitt is now the fastest growing EU HPC major,
something that looks likely to continue near-term (imagine growth rates when EM starts to properly
fire again). The growth of Health has important valuation implications (now a majority of the equity).

Consumer Health: ‘In Vogue’ as opposed to ‘Not in Vogue’
We have written extensively on the changes impacting both the HPC industry (see Not in Vogue
Part I and Part II) and Food industry (see 3G or not 3G). Our equivalent analysis of Consumer
Health (see within), shows that it is not without threat (US private label in particular), but it is
nonetheless relatively insulated from ‘Not in Vogue’ disruption.

Mid-term M&A options looming on the horizon, more specifically Pfizer
We see increasing scope for mid-term M&A, more specifically Pfizer. Something will happen here.
We view it likely that the post-split Innovative business will seek to undertake an inversion with
either pharma (Consumer Health likely then being acquirable) or even (less likely) Reckitt itself (the
maths work well in the context of tightened inversion rules).

For the good of our Health
So will we continue to bet against Consumer Health (and the associated mix-based valuation
ratchet), very shareholder friendly management and the increasing possibility of mid-term M&A?
For the good of our health, we won’t. We revise our rating to Outperform (from Underperform) and
target price to GBP66 (from GBP58).

(GS) Utilities : What to own with lower-for-longer commodities. Acciona CL

Estimates/PT down on lower commodity prices and stronger EUR
We revise down forecasts to reflect mark-to-market gas/coal prices and
stronger EUR vs. USD and Latam currencies. With less upside from the
commodity-exposed names, we highlight value we see from others
sources of growth: wind developers and manufacturers, European GDP
growth, consolidation and distressed value in German power.

Acciona to CL Buy, Elia to Buy, both from Neutral
We upgrade Acciona to Buy, from Neutral, and add it to the Conviction List,
as the shares trade on a significant sector-relative discount in terms of
2016/17/18E P/E and EV/EBITDA. We believe Acciona combines growth
(27% EPS CAGR 2015-17E) from wind development and Spanish GDP with
deleveraging, and expect this to trigger a doubling of the DPS in 2016
(leading to >6% dividend yield). We see average upside to I/B/E/S
consensus EPS of 26% in 2015-18E and our 12m PT implies 32% upside.
We also upgrade regulated utility Elia to Buy, from Neutral, on higher
earnings forecasts reflecting a better regulatory environment.

CEZ to Sell from Neutral; Fortum to Neutral from Buy
We downgrade commodity-levered generator CEZ to Sell as we view the
sector-relative premium as unjustified by the poor outlook for EPS and DPS
through 2017E. We view the shares as fairly valued on our revised 12m
price target, which is unattractive relative to the average sector upside of
c.23%. We reduce our Fortum rating to Neutral after recent outperformance
and to reflect a more cautious outlook for Nordic power prices.

Reiterate CL Buy on E.ON, Vestas and Hera
E.ON’s shares are trading at a significant discount (c.30%) vs. just the value
of the regulated/renewable assets. We see the planned demerger as a
significant catalyst for the stock as it should crystalize upside to the SOTP
(which we value at €19/sh) and highlight the DPS upside (we forecast a
doubling to 2017 implying a 13% yield). The next catalyst we see is clarity
on balance sheet/provisions which, unlike the market, we believe is robust.
We see Vestas as the least expensive company levered to growth from
wind manufacturing. Our Vestas forecasts are 16% above I/B/E/S
consensus in 2015-17 on average. We see Hera as providing exposure to
strong growth from consolidation of the Italian local utility sector and see
14%-25% upside to Reuters consensus in 2016-17.


>>> Continental may make non-automotive acquisition worth EUR 2bn to EUR 3bn in

Continental may make non-automotive acquisition worth EUR 2bn to EUR 3bn in coming two years
Continental, the listed German components maker, may carry out a non-automotive acquisition worth EUR 2bn to EUR 3bn in the coming two years, according to a newswire report.

The 15 September Reuters article cited Chief Executive Elmar Degenhart as saying a significant buy in that order of magnitude is possible, should a suitable non-automotive target show up.

He said Continental could afford such a deal. Having acquired more than 100 companies in the last 15 years, Continental intends to remain acquisitive, he said.

Degenhart said the company has no imminent plans to make large buys in the vehicle parts sector, as it wants to become less exposed to volatility in that business.

With regards to the recent purchase by German carmakers BMW, Audi and Mercedes of Finnish technology company Nokia's map unit, Degenhart said it is not ruled out that Continental may obtain a stake in the business. An earlier report named that business unit as HERE.

>>> SABMiller takeover chatter refuelled by schedule changes

SABMiller takeover chatter refuelled by schedule changes

Speculation that SABMiller (LON: SAB) may receive a takeover bid from rival brewing giant Anheuser-Busch InBev (ABI) (NYSE: BUD) increased anew as news emerged of unexpected conference no-shows, a newswire report said. SABMiller’s biggest shareholder, Altria (NYSE: MO), has cancelled an appearance at a conference organised by Bank of America Merrill Lynch, Bloomberg reported, citing the Betaville blog.

Virginia-based Altria, with an approximately 27% stake in London-based SABMiller, is considered key to any potential merger of the company with ABI, the report said.

Felipe Dutra, ABI’s chief financial officer, failed to attend a Barclays conference at which he was expected to deliver a presentation last week, and was replaced by an investor-relations representative, which also caused tongues to wag, the item reported.

SABMiller’s share price jumped up to 4.1% yesterday, the report noted. Adam Fleck, an analyst with Morningstar, was quoted speculating that the schedule changes may have been caused by an upcoming deal being under way.

Neither ABI nor SAB wished to comment, the report said; an Altria spokesperson said an unspecified conflict caused its cancellation.

(Les Echos) Telecom Italia : Vivendi proche d’une montée à environ 20 % du capit

Telecom Italia : Vivendi proche d’une montée à environ 20 % du capital http://bit.ly/1OvalOb


Vivendi a identifié un bon placement et un moyen de se développer en Europe du Sud.

Vivendi continue de pousser ses pions en Europe du Sud et en particulier en Italie. Selon nos informations, le groupe est en train de rechercher des blocs d’actions Telecom Italia pour se renforcer au capital et de discuter avec le gouvernement italien pour que cela se passe sans heurts avec lui.
Alors que Vivendi est déjà le premier actionnaire de l’opérateur italien avec environ 15,5 % des actions, une montée au capital autour de 20 % paraît « vraisemblable », selon un proche du dossier. Cela pourrait être un peu plus ou un peu moins, sachant qu'il n’y aurait pas de volonté de lancer une OPA, sur une cible jugée trop difficile à digérer.
Une montée au capital de l’opérateur - une opération à environ 1 milliard d’euros que le groupe français a peut-être même déjà réalisée et qu’il devra déclarer s’il franchit certains seuils importants pour la Bourse italienne - a un double intérêt.
D’abord, Telecom Italia peut être un bon placement financier. Le groupe est en effet identifié dans son secteur comme une des proies de taille - il pèse 20 milliards d’euros en Bourse - les plus attractives en Europe. Une cible d’autant plus attrayante que si les autorités de la concurrence venaient à accepter la fusion des activités mobiles du russe Vimpelcom et du hong-kongais Hutchison en Italie, il n’y aurait plus que 3 acteurs sur ce marché, ce qui donnerait à chacun un peu d’oxygène sur ses prix.

Ensuite, Vivendi estime que se rapprocher d’opérateurs télécoms pourrait se révéler très utile. Telecom Italia dispose d’une base de clients dans le monde de 150 millions de personnes. C’est autant d’abonnés sur lesquels rentabiliser des contenus chers fabriqués par ses filiales Canal+ et Universal Music.
Etre actionnaire de référence permettrait à Vivendi de travailler en bonne intelligence. Et de diffuser à plus vaste échelle des évènements sportifs, des séries comme « Borgia » ou même les films du catalogue de StudioCanal. Sur ce point, les analystes ne sont pas convaincus que des prises de participation dans les opérateurs soient nécessaires. Mais ils reconnaissent que cela vaut le coup d’être tenté.
De source proche du dossier, on raconte que Vincent Bolloré aurait souhaité - pour ces mêmes raisons - que Vivendi conserve l’opérateur SFR en France, mais qu’il était trop tard pour en récupérer le contrôle quand il a pris les rênes de Vivendi. Toujours est-il que le groupe effectue les mêmes travaux d’approche avec l’espagnol Telefonica, un mastodonte de 300 millions de clients en Espagne, mais aussi en Amérique du Sud. Il en détient aujourd’hui environ 1 %.
Selon Jérôme Bodin, analyste chez Natixis, Vivendi pourrait chercher « à en devenir un actionnaire de référence, notamment via une fusion avec Telecom Italia ». Vincent Bolloré, parce que les acteurs anglo-saxons sont déjà très puissants, veut selon cet analyste faire grandir Vivendi dans le monde d’abord via son versant « Sud » : « la France, l’Afrique, l’Europe du Sud et l’Amérique du Sud », c’est-à-dire les zones de langues française, italienne et espagnole.

>>> Vivendi seeking to raise stake in telecom Italia to 20% for EUR 1bn

Vivendi seeking to raise stake in telecom Italia to 20% for EUR 1bn 

Vivendi, the listed French media group, is understood to be seeking to increase its shareholding in listed Italian group Telecom Italia from 15.5% to about 20%, French daily Les Echos reported. The report cited a person familiar with the matter as saying that the hike was “likely” to take place soon, adding that the French group was not planning to take over the Italian Telco.

According to the report, Vivendi has engaged talks with the Italian government in order facilitate the deal, which could amount to about EUR 1bn. A deal that could already have been signed but has yet to be declared to Italian market authority Consob, the report claimed.

The report cited an analyst at Natixis as claiming that Vivendi, via its Chairman Vincent Bollore, could also be keen to become a reference shareholder in listed Spanish telco Telefonica, and could go as far as supporting a merger between Telecom Italia and Telefonica; Vivendi currently owns about 1% of Telefonica, the report noted.

Les Echos

>>> What to look at today - 15th of September 2015

Dow +1.40% S&P +1.28% Nasdaq +1.14% Russell +1.08% VIX 22.54
US Market closed higher after better retail sales data, but volume remained weak ahead of th FED (756mil shares), 10yr retreat to 2.28% in the US. All ten sectors posted gains with eight groups adding 1.1% or more. energy sector (+1.1%) grabbed the lead early on with strength in crude oil futures (+1.2% to $44.65/bbl) supporting the move. The commodity-sensitive sector held a solid gain into the close, but was leapfrogged by several groups in afternoon action. health care (+1.4%), technology (+1.3%), and financials (+1.4%) spent the bulk of the session ahead of the S&P 500...US After Hours UNFI +1.0%, HPQ -1.2% following earnings/guidance, JST +10.1% (received a 'going private' offer for $4.50/share from group including Chairman and CEO, STRZA +7.0% (Bloomberg reporting that co is in talks to be acquired by AMC Networks...Asia stocks are tracking the advance in US indices with a moderate rally. Goldman chief economist Hatzius still defended his position of no liftoff until December however, adding there was a good chance of an adverse market reaction to the hike. Wednesday will see the release of US CPI data that could solidify expectations for the Thursday announcement. In China, local press report citing MSCI head noted the A-shares could be included into the benchmark sooner than anticipated, suggesting that the current volatility in China market is temporary and will not sway the decision. Chinese press report reiterated that policymakers are prepared to consider more measures if Q3 GDP continues to slow.

Nikkei +0.52% Hang Seng +1.01% Shanghai -0.23%

Eur$ 1.1283 CNY 6.3699 JPY 120.17 GBP 1.5338 ERUCHF 1.0974 RUB $66.6355 WTI $44.90(+0.705)

S&P -0.18% EuroStoxx +0.28% Dax +0.26% SMI +0.43%


Macro :
- Draghi Matters More Than Yellen in Last Haven From Fed Risk
- China Scraps Overseas Debt Quotas After Capital Outflows Worsen
- Takeover Fears Make TDC Credit Default Risk Jump Most in Europe
- Inside These Hedge Funds, Quiet Family Affairs for the Boss

Keep an eye on :
- ABE SM : 2.36% of share to be sold by GS & Soc. Gen.
- ATC NA : Altice to Sell Cabovisao, Oni in Portugal to Apax France
- BBVA SM : BBVA, Fubon Said to Consider Bids for ANZ’s $614m Panin Stake
- BMW GY : BMW’s Rolls Royce CEO Says 2015 Sales Will Be Lower on China
- DEZ GY : Deutz Cuts 2015 Forecast on Sluggish Quarter, Low Order Intake
- EOAN GY : EON CFO Says Co.’s Nuclear Cleanup Provisions are ‘Correct’
- FCA IM : Fiat’s Marchionne Says UAW Deal Will Eliminate Tiers Over Time
- GLEN LN : Glencore to Sell 1.3 Billion New Shares to Curb Debt Load, --> price @ 125p/Share
- GLEN LN : Glencore Seen by UBS Getting More Than $2b From Divestments
- IIA AV : Immofinanz Completes Sale of 8.5m Buwog Shrs at EU17.625/Shr
- ITX SM : Inditex 2Q Net In Line, Current Sales Encouraging, Exane Says
- SDF GY : K+S May Get Hostile Potash Corp. Bid Shortly: Bankhaus Lampe
- NOVN VX : Court Reserves Order on Novartis-Cipla Patent Dispute, ET Says
- OHL SM : OHL Says Mexico Unit Boosted Shares Pledged to Back Loan
- CFR VX : Richemont 5-Month Sales Growth at Constant FX Beats Ests.
- ROG VX : Roche CEO Says ‘Unlikely’ to Seek Mid-Size Purchases Soon: WSJ
- RYA LN : Ryanair CEO Doesn’t Rule Out Partnership With AF-KLM: Telegraaf
- SGO FP : Saint-Gobain: Swiss Weko OKs Acquisition of Control over Sika
- SYNN VX : Syngenta Sees Peak Rev of >$6b From 15 New, Pipeline Products
- TCH FP : Technicolor Buys The Mill for EU259m, Plans EU225m Cap. Increase
- TIT IM : Vivendi reportedly aiming to increase stake
- VK FP : Vallourec CEO Says Drop in Oil Prices Has Hurt Company
- ZC FP : Zodiac Aero Sees 40% Drop in FY Op Income

>>> Europe : Brokers Upgrades & Downgrades - 15th of September 2015

>>> Up
*ACCIONA RAISED TO CONVICTION BUY VS NEUTRAL AT GOLDMAN
*BALOISE RAISED TO NEUTRAL VS UNDERPERFORM AT CREDIT SUISSE
*ELIA RAISED TO BUY VS NEUTRAL AT GOLDMAN
*GLAXO RAISED TO NEUTRAL FROM UNDERPERFORM AT EXANE
*LONMIN RAISED TO NEUTRAL VS SELL AT UBS
*SAP RAISED TO OVERWEIGHT AT JPMORGAN
*UBM RAISED TO OVERWEIGHT VS NEUTRAL AT JPMORGAN

>>> Down
*DAILY MAIL CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
*FORTUM CUT TO NEUTRAL VS BUY AT GOLDMAN
*HENDERSON CUT TO NEUTRAL VS BUY AT GOLDMAN; PT A$6.25
*INMARSAT CUT TO SELL VS HOLD AT BERENBERG
*MONDI CUT TO SELL VS NEUTRAL AT GOLDMAN
*PZU CUT TO HOLD VS BUY AT SOCGEN
*RIGHTMOVE CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
*SMA SOLAR TECHNOLOGY CUT TO NEUTRAL VS BUY AT CITI
*SOPRA STERIA GROUP CUT TO HOLD AT HSBC
*ZODIAC AEROSPACE CUT TO UNDERPERFORM VS BUY AT BOFA
*ZODIAC AEROSPACE CUT TO UNDERWEIGHT VS NEUTRAL AT JPMORGAN

>>> PT Change


>>> Initiation
*ENDESA RATED NEW OUTPERFORM AT CREDIT SUISSE; PT EU21.3
*DASSAULT AVIATION RATED NEW BUY AT CITI
*PEARSON RATED OVERWEIGHT VS NOT RATED AT JPMORGAN
*TELE COLUMBUS RATED NEW BUY AT CITI
*ZALANDO RATED NEW BUY AT BERENBERG; PT EU35

>>> Call

>>> Asian Update

Asian Mid-session Update: Asia rallies even as FOMC liftoff expectations grow


***Economic Data***
- (CN) China Aug outbound investment $13.5B, +7.0% y/y
- (AU) AUSTRALIA AUG WESTPAC LEADING INDEX M/M: -0.3% V 0.0% PRIOR; 5-month low
- (NZ) NEW ZEALAND Q2 CURRENT ACCOUNT BALANCE (NZ$): -1.2B V -1.5BE; Widest deficit since Q3 of 2013
- (CL) CHILE CENTRAL BANK (BCCH) LEAVES OVERNIGHT RATE TARGET UNCHANGED AT 3.00%; AS EXPECTED; Introduces a tightening bias

***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 +1.0%, S&P/ASX +1.3%, Kospi +1.7%, Shanghai Composite +0.3%, Hang Seng +1.2%, Dec S&P500 -0.3% at 1,964

***Commodities/Fixed Income***
- Dec gold +0.1% at $1,104/oz, Oct crude oil +0.6% at $44.88/brl, Dec copper -0.4% at $2.41/lb
- (US) API Petroleum Inventories: Crude: -3.1M v +1Me (first draw in 3 weeks)
- JGB: (JP) Japan's MoF sells ¥1.09T in 1.2% (1.3% prior) 20-year JGBs; Avg yield: 1.164% v 1.144% prior; bid-to-cover: 2.56x v 2.99x prior
- (CN) China MoF sells 7-year bonds at 3.286%
- (AU) Australia MoF (AOFM) sells A$900M in 3.25% 2025 Bonds; avg yield: 2.8027%; bid-to-cover: 2.32x

***Market Focal Points/FX***
- The countdown to the FOMC policy decision has produced some fireworks in the US hours, as investors were more inclined to bet on September liftoff after better than expected retail sales. Treasuries - notably on the short side of the curve - were sold hard to the benefit of US equities. Asia stocks are tracking the advance in US indices with a moderate rally. Goldman chief economist Hatzius still defended his position of no liftoff until December however, adding there was a good chance of an adverse market reaction to the hike. Wednesday will see the release of US CPI data that could solidify expectations for the Thursday announcement.

- In China, local press report citing MSCI head noted the A-shares could be included into the benchmark sooner than anticipated, suggesting that the current volatility in China market is temporary and will not sway the decision. Recall in early June, China stocks rose sharply on speculated inclusion into emerging market index before MSCI announced it was postponing that decision. Also of note, China Pres Xi's visit with Pres Obama has been confirmed for Sept 25th. Ahead of their talks, MOFCOM's Shen said the recent CNY devaluation is not intended to boost exports, and that US-China talks will seek to deepen their trade relationship. Separately, a Chinese press report reiterated that policymakers are prepared to consider more measures if Q3 GDP continues to slow.

- RBA assistant Gov Debelle spoke, noting Australian growth may have slowed by about 0.25% amid some slowdown in population growth. On the topic of China devaluation, he said it made sense while also estimating Beijing has used up about $0.5T of its FX reserves to support currency in recent months. In New Zealand, Q2 current account deficit was narrower than expected but still the widest since 2013. New Zealand will put out its Q2 GDP data tomorrow.

- In FX, EUR/USD rose about 30pips toward $1.13, AUD/USD was little changed below $0.7150, and NZD/USD in a 20pip range below 0.6370. USD/JPY slid about 40pips toward ¥120 handle late in the session.

***Equities***
US equities / ADRs:
- JST: Receives prelim non binding "Going Private" Proposal at $4.50 Per Share; +10.1% afterhours
- STRZA: AMC reportedly in talks to acquire Starz - press; +7.0% afterhours
- FIT: Target to offer Fitbit activity zip bands to its 335K workers - financial press; +2.6% afterhours
- UNFI: Reports Q4 $0.72 v $0.72e, R$2.06B v $2.06Be; +1.3% afterhours
- MSFT: Increases dividend 16% to $0.36 from $0.31; +0.5% afterhours
- CTRP: Priceline raises stake to 11.6% (up from 10.5% in May) - 13D/A filing; +0.2% afterhours
- HPQ: HP guides FY16 EPS outlook for Hewlett Packard Enterprise (HPE) at $1.85-1.95; Sees 25-30K job cuts as part of $2.7B restructuring plan; -0.2% afterhours
- SIRO: Enters merger of equals with DENTSPLY; intends to conduct $500M buyback as soon as possible post close; -1.3% afterhours
- HZNP Discloses settlement agreement with Taro - filing; TARO -1.4% afterhours

Notable movers by sector:
- Consumer discretionary: Prada 1913.HK +7.1% (H1 result); FamilyMart 8028.JP -2.3% (update on merger with Uny)
- Financials: CITIC Securities 600030.CN -1.6% (senior execs under probe)
Hopson Development Holdings 754.HK +1.4% (Aug result); China Life Insurance 2628.HK +2.4% (Aug result); ORIX Corp 8591.JP +2.5% (acquisition)
- Industrials: China Railway Construction Corp 1186.HK +1.4% (awarded project)
- Technology: Brambles BXB.AU -2.3% (Reaffirms guidance)
- Materials: Regis Resources RRL.AU +1.6% (FY15 result)
- Energy: China Shenhua Energy Co 601088.CN -1.9% (Aug result); China Coal Energy 601898.CN +1.5% (Aug result); Santos STO.AU +3.0% (parties interests in assets)
- Healthcare: CSL Limited CSL.AU % (FDA advisory)

>>> US After Hours Summary: UNFI +1.0%, HPQ -1.2% following earn

After Hours Summary: UNFI +1.0%, HPQ -1.2% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings: UNFI +1.0%

Companies trading higher in after hours in reaction to news: JST +10.1% (received a 'going private' offer for $4.50/share from group including Chairman and CEO), SAEX +8.5% (announced three new project awards for onshore logistical support and seismic data acquisition services in North and South America, collectively valued at ~$90 mln), STRZA +7.0% (Bloomberg reporting that co is in talks to be acquired by AMC Networks), TRIV +3.7% (announced that the first European patients have been treated successfully with the Ovation iX Abdominal Stent Graft System in Germany and England), IMNP +3.4% (announced its CEO Dr. Daniel Teper has established a stock trading plan with respect to the purchases of up to an aggregate of $250k of shares of common stock), NVAX +3.2% (announced that its RSV F Vaccine was shown to be highly immunogenic in a guinea pig model of maternal immunization, as published in the journal Vaccine), 

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: HPQ -1.2%

Companies trading lower in after hours in reaction to news: PCYG -7.6% (lower following filing of amended 8-K containing letter from auditors to Board raising 'substantial doubt' about ReposiTrak's ability to continue as a going concern; ReposiTrak was acquired by Park City in May 2015), PAYC -6.2% (announced a 4.5 mln share secondary offering by mgmt and selling stockholders associated with Welsh, Carson, Anderson & Stowe X and WCAS Capital Partners IV), XRAY -5.7% (co and Sirona Dental (SIRO) to combine in an all-stock merger of equals in an ~$13.3 bln deal; SIRO shares -1.3%), RAI -1.1% (announced disagreement with FDA ruling on four of its cigarette brands; 'We're examining all of our options at this time')