TheChek News Flow

Latest datapoints suggest a deceleration in oil demand, driven by now tough year-on-year comps and weakening macro in emerging markets. With inventories of both crude and products continuing to rise, storage options are becoming limited, particularly in the European diesel market. Breaching diesel storage would force refineries to lower runs/shut down, temporarily reducing crude oil demand, and potentially forcing crude to be stored offshore, requiring a further steepening in the forward curve. Whilst not there yet, we are approaching levels that are likely to force production temporarily offline, in our view, bringing us closer to a bottom in oil prices.

Unless production is forced offline for operational (running out of storage) or financial reasons (cash costs), risks to supply remain skewed towards continued resiliency. Our Top 420 analysis suggests a strong year of largely derisked production growth from the industry’s giant fields, shale continues to become more productive, OPEC supply should continue to rise and, whilst we expect declines to accelerate in mature regions, FX and lower costs continue to support production. We remain constructive on demand, seeing 1.3mbpd of growth in 2016, although we see downside risk from milder weather in the OECD and weaker trends from commodity producing regions such as Africa & the Middle East.

FX devaluation and positive surprises in productivity gains and service cost deflation are not only keeping production more robust than expected, but also flattening and lowering our Top Projects cost curve, suggesting

downside risk to our $65/bl brent forecasts in 2017/18 and potentially putting a cap on any oil price recovery.

Although the back end of the curve will likely have to rise, generally a positive signal for oily equities, near-term risks remain skewed to the downside. European integrateds, already pricing in $55-60/bl brent and in the near term exposed to low oil prices, low LNG/European gas prices and weak European refining margins, appear particularly negatively impacted. We highlight Statoil (Conviction List) and OMV as key Sell ideas.

Moving to an Overweight rating and €42 PT on supportive geographic exposure

and a Jan-17 price target of €42 (14% potential upside) from Not Rated

(Neutral rating and Oct-15 €37 price target prior to restriction). We think

SGO’s geographic exposure underpins our earnings forecasts in 2016,

following a wave of downgrades until recently, while we believe the group’s

strong balance sheet (1.2x 2016E net debt/EBITDA) and attractive 5/6%

2016/17E FCF yield justify re-rating to a share price currently trading on an

unwarranted 11% historically high discount to the sector on 6.9x/6.4x

2016/2017E EV/EBITDA.

* Geographic exposure supportive. We believe SGO’s geographic exposure

will support earnings growth in 2016 with c. 80% of revenues generated

from developed markets, and just 20% from emerging markets. We see an

uplift potential from the French market (25% of revenues) in 2016, but

conservatively forecast stable trends. We also believe growth in the US

(North America is the second largest market for SGO with 14% of 9m 2015

revenues) will remain attractive, supported by continued good momentum

in construction, while we note that comps for SGO’s exposure to the

industrials segment are undemanding given the strong decline in the

proppant market observed in 2015 (down c. 70%). The other key markets

for SGO are Scandinavia (12%), the UK (12%) and Germany (9%), all of

which we think should grow in 2016.

* Strong Balance Sheet and attractive FCF. Leverage has fallen from 1.9x

ND/EBITDA in 2012 to 1.7x in 2014. Taking account of the disposal of

Verallia, we expect ND/EBITDA to decrease to 1.2x in 2015E and 0.8x in

2017E (excl. Sika). We project FCF generation of c. €1.2bn p.a. in 2015-

2017 (c. 6% FCF yield), which should boost DPS and buybacks further.

* Sika negatives already discounted. We think the market has already

negatively discounted for this transaction while a positive decision from the

Zug court would mean SGO gets control of Sika, a good outcome in our

view. It also leaves little room for further surprises on the M&A front given

the group has already spent most of its acquisition target of €4bn.

ML

* ELIOR - Charterhouse selling 12m shares, Citi running the books............

* FERROVIAL - Siemprelara selling 25.3m shs, EUR 19.07, UBS sole.............

ALSTOM - Quarterly Orders Rise 46%, Led by Belgian Contract..............RSTR

HOME - Argos LFL Sales Drop 2.2%, Sees FY Pretax at Low End..............RSTR

LUNDIN PET - Statoil buys 11.93% stake, 30% premium, no plans to inc...+5-10%

BURBERRY - Q3 SSSG flat vs cons at -3%, huge concerns into event........+5-6%

B&M - LFL sales growth -0.7% v -1% est, implies strong Xmas trading.....+3-5%

TESCO - Christmas sales +1.4% v -1.6% MLe, momentum building............+3-4%

ASOS - Retail sales growth of 22%, in line, EU and US regions beat........+3%

CASINO - Q4 sales in line, France a slight beat, reiterates guidance......+3%

SMITHS GP - President of John Crane leaves, trading in line w views.....+2-3%

SUPERGROUP - Q3 LFL +1.2% v unch MLe, FY guidance reiterated..............+2%

JUPITER - net inflows of £0.5bn v 0.3bn MLe, AuM a 2% beat, solid.........+1%

PARTNERS GP - FY AuM 46bn v 44bn cons, net new money strong, solid........+1%

BEIERSDORF - In line. Consumer +5.0% vs Cons +4.9%, strong share gains....+1%

CAP GEMINI - +ve read from strong set of Infosys #s, INFO +6%.............+1%

BILFINGER - Receives unsolicited bids for building unit, EUR 2.4bn revs...u/c

ASML - TSMC guiding for capex +25% YoY vs 8bn in 2015.....................u/c

RICHEMONT - Quarterly LFL -4%, Asia & jewellery weak, low expectations....u/c

LUFTHANSA - Handelsblatt reports internal opposition to Eurowings growing.-1%

STATOIL - Buys 11.93% stake in LUPE SS for SEK 4.6bn,no plans to increase.-1%

AB FOODS - Group revs +3%, Primark LFL in line w cons, margin guide +ve...-1%

WILLIAM HILL - Says FY 15 op profit to be in line, head of online leaves-1-2%

BUNZL - CEO retiring after 13yrs, expected, CFO continues in role.......-1-2%

GAS NAT - Repsol says would sell GasNat stake to maintain div, Expansion..-2%

LINDT - Organic growth at 7.1% v 8.2% cons will disappoint................-2%

K+S - Mulling partial IPO of Morton Salt, potential poison pill (FAZ).....-2%

ASHMORE - Dec AUM -3% QoQ,net outflows of $1.7bn or 13% ann. outflow rate.-2%

CS

AB Foods -2% Primark sales +3% est +7%
Alstom -5% 3Q sales EU1.61b vs EU1.50b, 9-month orders fell 22%
Ashmore M/P AuM of $49.4bn (CSe 51.8b), maintaining a cautious stance
Asos M/P 4-mth retail sales +22%, inline, UK retail sales inline
B&M +3% LFL -0.7% for the quarter vs 2nd quarter +1.3%
Beiersdorf +0.5% 2015 organic rev up 3% estimates 3%, outlook positive
Booker -2-3% LFL -3.1% but Q3 sales +10.5%, outlook inline
Burberry +4-5% Numbers better. Recovery in US, Asia solid
Cap Gem +0.5% Indian peer INFOSYS +5% after it raised its annual sales
Casino +1-2% Q4 Sales EU 11.8bln est EU 11.6bln, outlook positive
Chr Hansen +1-2% Acquisition and numbers good.
Electrocomp M/P Vague bid spec in the Daily Mail
Home M/P No's slightly light, spec Homebase could be sold
Inficon -3-5% Cutting guidance, exp FY15 sales of $278-280m vs $280-290m
Jupiter M/P Numbers inline with expectations, AuM of 35.7 (CSe 35.9)
K&S M/P Spec mulling partial IPO of Morton Salt
Lindt -2% Sales Chf3.65bn (cons 3.75bn), Weaker H2 expected
Miners -1% Copper +0.20%, Brent -1.35%, Iron Ore +1.15%, China +1.70%
Partners Grp +1% AUM Eu46bn (CSe 45.1bn and cons Eu44bn), guidance inline
Richemont -2% Q3 LFL sales -4% cons -3/4%, jewellery sales poor
SIG -1% Numbers inline, outlook ok, France strong
Statoil -3-4% Bought a stake in LUNDIN for SK4.6B, also closed on DoE's
Supergroup M/P 11-week revs increased by +1.2% on LFL basis
Tesco +5% 6weeks to 9th Jan LFL in the UK +1.3% after the q3 -1.5%
Will Hill -2% Numbers inline, MD of online leaving

MainFirst Pre Mkt Indications

*RICHEMONT-Sales 2.93b(3),Sales -4%(-3%),trading tough in Q4........-2%

*ALSTOM-Sales 1.61b,Orders 2.36b,o/look unch 4 sales/margin grth....-3%

*BILFINGER-Gets unsolicited offers for Building Management Unit.....+1%

*EDF-Said to offer €2.5b for Areva Reactors,board meeting 27/1......U/C

*K&S-Mulls initial share sale of part of Morton Salt Unit(IPO)......U/C

*REPSOL-TO make more adjustments on fall in oil price-Expansion.....-1%

*CASINO-FY Sales 46.1b(46.5),Q4 Sales 11.8b(11.6),saw H2 pickup.....+2%

*BANKIA-Rejects Ceberus offer for Home Portfolio-Confidencial.......-1%

*LINDT-FY sales 3.65b(3.75),Organic Grth 7.1%(8.2),Op marg ok.......-2%

*PARTNERS-FY AuM 46b(44),NNM 8.4b(7.2),FY16 outlook fine............+1%

*FERROVIAL-ABB via UBS,placing 4.15% stake at €19.07 vs €20.07......-4%

*ASML-Read across from TSMC NI 72.8b(68.5),GM 48.6%(48.3)...........+0.5%

*LANXESS-Plans acq's using Aramco €1b windfall says FAZ.............-0.5%

*BEIERSDORF-Rev 6.69b(6.68),Org Rev Consumer 3.6%(3.6)..............+1%

*BURBERRY-Retail Rev 603m(606),Comp Sales unch(-2%),FY PT inline....+3%

*SWATCH-Read across from Richemont no's this morning................-2%

Most sub-sectors saw positive share price momentum in 2015. Although the market is one year further along the current cycle UBS economists see accelerating GDP in 2016 with Eurozone PMIs seem supportive for share prices. We see a number of companies which still offer upside partly due to companies trading at valuation discounts to the

past and partly due to earnings momentum. In our view 2016 is likely to be very much a stock pickers year given the cycle development.

While there is potential for non-base case views to happen in 2016 (we highlight scenarios in the note) based on our base case expectations we suggest the following share as Most favoured: IAG (Buy, £8), Vopak (Buy, €50), Bpost (Buy, €26), Elior (Buy, £22), Sodexo, (Buy £96.25 ), DCC (Buy, £63), Teleperformance (Buy, €86). We recommend the following as Least favoured: IHG (Sell, £21.75), SSP (Sell, £2.80), Air France-KLM (Sell, €7.1), DPost (Neutral, €26), Securitas (Sell, Skr 105), Aggreko (Neutral, £10.5).

We see 2016e earnings growth across the BLT space with an aggregate 15% growth (a year ago we forecast 20% for 2015). However, there is large range for earnings momentum of 5% to over 40% (in the case of aviation). Earnings momentum is predicated upon both top line and margin enhancement (through restructuring benefits and operational gearing delivery in 2016).

Slightly over half of the sub-sectors are at a discount to past mid-cycle PE averages (only 25% are above previous mid-cycle average) which might suggest further multiple expansion. From the Sell-side perspective ratings have stayed broadly consistent on a year ago with 47% of ratings Buy (14: 46%) and 15% of shares rated Sell (14: 13%).

Furthermore, since 2012 80% of the sub-sectors have de-geared their balance sheets and further de-gearing should help underpin shareholder value accretion. Nevertheless, we see scope for further M&A in 2016 given the low rate environment.

Le gendarme boursier juge « préoccupante » l'intervention de l'investisseur américain.

« L'hypocrisie est un hommage que le vice rend à la vertu. » Gérard Rameix, président de l'AMF (Autorité des marchés financiers), n'a pas fait montre d'une grande sympathie à l'égard de Muddy Waters, ce fonds qui « ne rechigne pas à pêcher en eaux troubles ».

Il y a un mois, l'investisseur américain avait publié une note sur Casino, entraînant le 17 décembre une chute du titre de 20 %. Il avait jugé l'action surévaluée et s'inquiétait de sa capacité à faire face à sa dette. « Cette note a fait plus qu'attirer notre attention. Nous avons eu des réunions sur ce sujet », a confirmé Gérard Rameix. Pour autant, il semble que « ce soient des professionnels. Ils ont distillé à la fois des informations négatives sur Casino, en les détaillant même et en les nuançant pour ne pas être taxés de diffusion de fausses informations », a-t-il ajouté.

Alors qu'il annonçait prévoir une évolution à la baisse du cours, Muddy Waters a aussi indiqué au marché qu'il avait pris des positions en ce sens sur les actions Casino. « D'une certaine façon, le marché aurait pu dire "je ne le crois pas, car ils ne font que tirer le cours vers le bas" », a conclu le président de l'AMF.

Hasard du calendrier ou pas, ce mercredi, Muddy Waters a publié sur son site une nouvelle note adressée à Casino avant de s'entretenir ce jeudi avec lui. Le cabinet d'analyse financière s'interroge sur les cessions réalisées par Mercialys, la filiale immobilière, et met aussi en cause la notation délivrée par S&P sur la dette du groupe, qu'il juge trop clémente. Le cours de l'action Casino, qui était en nette hausse, a réduit ses gains suite à cette nouvelle offensive.

Nombreuses inquiétudes

Muddy Waters n'était que l'un des sujets évoqués dans la matinée par Gérard Rameix, qui présentait ses voeux. Le patron du gendarme boursier français a aussi dévoilé ses priorités pour l'année : continuer à maîtriser les risques pour restaurer la confiance des investisseurs, travailler à un système européen convergent, transparent, et neutre avec une égalité de concurrence quel que soit le pays. Le régulateur a également tenu à alerter les acteurs des marchés. « Cela fait longtemps que je n'avais pas vu autant d'inquiétudes », a-t-il précisé.

Première crainte : « Les risques géopolitiques très importants, au Moyen-Orient, en Ukraine ou en Libye. » Les marchés ont été encore peu affectés par le terrorisme, mais d'autres événements pourraient changer la donne.

Le deuxième risque vient du « shadow banking », la finance de l'ombre. Après la crise de 2008, le monde a basculé d'un financement surtout bancaire vers un système où l'appel au marché s'est développé, avec des procédures de contrôle moins précises et moins fiables. Troisième crainte, la liquidité pourrait s'assécher. Enfin, dernier risque : la difficulté à préserver un actionnariat français de long terme. Plus de la moitié du capital des groupes du CAC 40 est entre les mains d'investisseurs étrangers. « On peut se plaindre des politiques de dividendes ou de relocalisation, mais dès lors que nous ne sommes plus propriétaires » de ces groupes, « nous n'avons à nous en prendre qu'à nous-mêmes ».

Dow-2.21% S&P-2.50% Nasdaq-3.41% Russell-3.30% VIX 25.22 (+12.24%)

Nikkei -2.68% Hang Seng -0.71% Shanghai +1.25%

Eur$ 1.0870 CNH 6.5973 CNY 6.5880 JPY 117.85 GBP 1.4412 CHF 1.0081 RUB$77.0020 WTI$30.84

S&P +0.58% EuroStoxx-1.31% Dax-1.13% SMI-1.21%

Macro :

- Dec. Chicago Fed Survey of Business Conditions Fell to -17

- Brent Oil Falls Below $30 for First Time Since April 2004

- U.S. Dec. Budget Deficit at $14.4b; Est. $10b

- High-Yield Bond Funds Said to Face U.S. SEC Scrutiny: Reuters

Keep an eye on :

- ABI BB : LAUNCH: AB InBev $46b Debt Offering in 7 Parts

- ALO FP : Alstom 3Q Orders Rise 46% to EU2.36b

- AREVA FP : EDF Said to Offer EU2.5b for Areva Reactors, Reports Say http://bit.ly/1mXwbzz

- AREVA FP : EDF Said to Offer EU2.5b for Areva Reactors, Reports Say http://bit.ly/1mXwbzz

- ATO FP : SAP, Atos, Cap Gemini Shares May Move as Infosys Raises Outlook

- BARC LN : Barclays Has Work to Do to Reduce Balance Sheet, Rake Says

- BKIA SM : Bankia Rejects Ceberus Offer for Home Portfolio: Confidencial

- GBF GY : Bilfinger Gets Offers for Divisions, Retains Advisers to Mull

- CAP FP : SAP, Atos, Cap Gemini Shares May Move as Infosys Raises Outlook

- CO FP : Casino 2015 Rev. In Line; Has Good Visibility for French Profits

- CO FP : French AMF Regulator Has Discussed Muddy Waters-Casino: Echos http://bit.ly/1KeGxAC

- CHR DC : Chr. Hansen Agrees to Buy Nutrition Physiology Co. For $185 Mln

- BN FP : Danone Explores New Distribution Channels, Le Figaro Says

- DBHN GYB : Germany Puts Brakes on Deutsche Bahn Unit IPOs: Handelsblatt

- EDF FP : EDF Said to Offer EU2.5b for Areva Reactors, Reports Say

- ERICB SS : Ericsson, Huawei Extend Global Patent Cross-License Agreement

- FER SM : UBS Says Placement of Ferrovial Shrs Rises to 4.15%, Ferrovial Shares Priced at EU19.07

- GLEN LN : Glencore Bought Atlas Iron Debt From Fortress, AFR Says

- SDF GY : K+S Mulls Initial Share Sale of Part of Morton Salt Unit: FAZ

- LHN VX : LafargeHolcim Cut at JPMorgan, Prefers European Exposure Over EM

- LIN GY : Lindt 2015 Sales Rise 8%; Sees Margin at Least at Last Yr Level

- LXS GY : Lanxess Plans Acquisitions Using Aramco EU1b Windfall: FAZ

- RNO FP : Russia’s 2015 Car Sales Fell 36% to 1.6m Vehicles: Kommersant

- CFR VX : Richemont 3Q Jewelry, Watch Sales Constant FX Decline, Richemont Says Challenging Trading Environment to Continue in 4Q

- SAP GY : SAP, Atos, Cap Gemini Shares May Move as Infosys Raises Outlook

- SPD LN : Crispin Odey Said to Raise Sports Direct Stake to 5%: Telegraph

- UBER IPO : Uber Shares Offered to Merrill Clients at $49, CNBC Says

- VOW3 GY : VW Says It Will Continue to ‘Fully Cooperate’ with EPA