(note attached)
BUZZ-Morgan Stanley cuts Twitter to "underweight", slashes PT by a third
21-Oct-2015 10:45:09
** Twitter TWTR.K cut to "underweight" at Morgan Stanley
** Broker takes knife to PT on stock, slashes it by a third to $24 making it the lowest on the Street, according to StarMine
** MS continues to see limited growth and declining user engagement
** Broker says Twitter could be hitting a ceiling for ad load -- advertising as a pct of total content a user may see. MS estimates that adjusted for time spent Twitter's ad load is already 10x higher than Facebook FB.O
** Still too early to say if co's latest offering -- "Moments" -- will fix user engagement issues, MS says
** Twitter shares off 4.4 pct in light US premarket trading
** As of Tuesday's close, shares had risen more than 25 pct from the post-IPO closing low on Oct 1
(Released Yesterday) - full article attached
Vallourec [EPA:VK], the French tubing services company, is understood to have become 'very vulnerable' to a potential takeover as its market capitalisation fell to EUR 1.3bn today (October 21), compared with EUR 11bn in previous years, French newsletter WanSquare reported.
The unsourced report said the French government and 'private' parties are monitoring the situation. Several investment banks are working on numerous scenarios, including a recapitalisation from existing shareholders Nippon Steel [TYO:5401], the Japan-based steel company, and Bpifrance, the French sovereign fund, which control 1.3% and 5.3% of Vallourec, respectively, the report added.
The report claimed that a potential takeover could become urgent given the situation of the market that Vallourec is operating in and potential interest from foreign buyers.
The report noted, however, that a reserve capital increase would require a large round of share issuance, which would dilute existing shareholders' stakes and be at a lower price than the current share price, which is currently down 57% compared with the beginning of 2015.
Vallourec employees hold 7.61% of the company and paid much more than current market prices for their shareholdings, the report went on to say.
WanSquare
Saudi Arabia may run out of financial assets in 5 years, IMF says
IHG not among bidders for Fairmont Raffles; could return up to GBP 1.5bn to shareholders next year
It is believed that InterContinental Hotels Group (IHG) is not a potential buyer for the Canadian hotel chain Fairmont Raffles Hotels International, The Times reported. IHG, an FTSE-250 hotels operator, has apparently declined to participate in an auction of Fairmont Raffles, the newspaper said, without citing a source for the information.
Fairmont Raffles, which has been put up for sale by owners including the government of Qatar, could sell for GBP 2bn (EUR 2.71bn), the item estimated. Deutsche Bank is advising on the auction, the report said.
IHG declined to comment, the newspaper said.
Separately, the article said IHG seems likely to return up to GBP 1.5bn to shareholders early next year.
IHG yesterday, 20 October published its 3Q15 results.
IHG has indicated that it will make a decision on how to deploy the proceeds from the sales of its primary owned assets in February when the company releases its FY15 results, according to the report.
The Times
UBS Screens for 26 Safe Cyclical Yield Stocks as Europe Improves
UBS screens for cyclical companies in Europe that have healthy balance sheet and offer relatively safe dividends.
- Says Cyclicals have had “a pretty tough time both of late and since 2007”
- Highlights relative dividend yield for cyclicals vs defensives is at a decade high, commodities not the core driver
- Says overall net debt for corporates supportive, well below where it sat in 2009
- Highlights div. payout ratio below the 1990s and 2003 recessions (this includes all sectors, even Energy)
- Says list sports avg dividend yield of 4.6% for 2015, 4.9% for 2016
- Names include: BHP Billiton, Zurich Insurance, HSBC, Swedbank, Rio Tinto, Bpost, Edenred, SEB, BBVA, Allianz, Skanska, BAE Systems, Hydro, IMI, Siemens, M&S, SKF B, Schneider Electric, BMW, Generali, G4S, Volvo B, Rolls-Royce, Adecco, Randstad, Nokia
*TECHNICOLOR SEEKS TO RAISE EU227M SELLING NEW SHARES
*TECHNICOLOR OFFERS HOLDERS 1 NEW SHARE FOR EVERY 7 HELD
*TECHNICOLOR TO SELL NEW SHARES FOR EU4.70 EACH
*TECHNICOLOR SHARE SALE TO RUN OCT. 22-NOV. 4
Addressing the key market debates
We address investors' key concerns on LafargeHolcim, which continue to be emerging market performance, integration challenges and high multiples. We believe these concerns are overdone and the stock remains our top pick. OW.
In this report we try to address 3 key investor concerns on the shares and explain why we believe that at this stage the negative impact is overdone, which is why LafargeHolcim continues to be our preferred pick in the sector.
We also update our forecasts slightly to reflect lower demand growth in 2016 and cut our price target to €73 as a result.
Concern #1: the 65% attributable EBITDA exposure LHN has in
emerging markets (EM). We believe earnings have already troughed in
2015. Since 2012 the significant capacity accretion seen in EM regions globally
has been hitting the price-cost balance materially and, while demand growth is
still below long-term averages, limited new capacity to be added until 2018
should reverse the balance and allow for margin expansion starting in 2016.
Thus, based on a recovery in supply / demand balance, we believe earnings in
EM regions will not be as negative as the shares seem to be pricing in today.
Concern #2: Current valuation multiples are high. While we agree 2016e
comps look rich, they diminish rapidly as cost cutting delivers and debt
reduces fast, so by 2017 our estimated EV/EBITDA is already at 8x vs. historical
averages of ~8.3x. Regarding P/E, if we eliminate the SFr550mn new
depreciation charge on the purchase price allocation impact, the 2016e P/E
would be 14.4, below the historical average of 16.5x.
Concern #3: Integration challenges. While we agree that integration could
face challenges, we believe a large amount of the announced cost cutting
should be delivered. We estimate c.45% of the cement capacity installed is in
markets where both were operating before. In these, savings in headquarters,
central systems and transportation should be delivered easily and fast. Overall,
we estimate 69% of the total cost savings target will be delivered but believe
none is reflected in the current share price.
Where could we be wrong? We believe the main risk to our view at this
stage is a material additional fall in cement demand in EM vs. the modest
improvement we assume in 2016, with India, Mexico, Egypt and Africa regions
the key countries for delivery at this stage.