(Nomura) LVMH - Deep dive – finding value in the parts; upgrading to Buy

Deep dive – finding value in the parts; upgrading to Buy

Key analyses and conclusions include:
* LVMH is a quality company and not just a sector proxy. We investigate lesser-known and under-analysed brands, and suggest their diversified value will become clearer during challenging times.
* Deep dive into all five divisions. We forecast sales and margin by brand, supporting a five-year EPS CAGR of 10% to 2020.
* Divisional, bottom-up SOTP valuation suggests upside potential to EUR 200. Further potential exists to increase shareholder returns or reinvest as the group de-levers.
* SOTP valuation and current share price imply that the Watches & Jewellery, Perfume & Cosmetics and Selective Retailing divisions are valued at zero.

(Exane) Montupet - Takeover offer from Linamar

Takeover offer from Linamar
On Oct 15, Canadian automotive equipment maker Linamar offered to buy Montupet for EUR71.53
per share in cash, translating into a premium of c.15% to the previous day’s closing price but an
8% discount to the February peak of EUR77.8.
Implied valuation in line with the sector, below our TP
Linamar’s offer price implies 8.4x 2017e EV/EBIT and 10x 2017e P/E, i.e. broadly in line with the
European equipment maker sector (8x 2017e EV/EBIT, 10.3x P/E). However, it stands below our
TP of EUR78, which is based on a 10% sector premium justified by Montupet’s long-term growth
prospects and above-average margins and FCF generation.
Higher counter-bid still possible
Montupet’s senior managers and anchor shareholders, who collectively own c.36.6%, have agreed
to support the tender offer and not to solicit any other offers. However, they may still withdraw in
the event of a higher competing offer, in which case a break-up fee will be payable to Linamar.
Linamar’s offer is contingent on a 50% acceptance rate, including the management stake.
We maintain our Outperform rating and EUR78 TP
The shares are trading roughly in line with the offer price. We think it is worth holding on to them at
this point in the expectation of a potential counter-bid. With significant recent M&A activity in this
space, we see potential strategic interest from other European/North American peers or Chinese
players trying to enter the European market. Given Montupet’s small global market share we see
no major antitrust issues.
Timeline
Linamar’s tender offer is expected to open to the public in early December 2015, pending approval
by the AMF, and is expected to close in February 2016.

(CS) Zodiac : Company presentation

ZODIAC AEROSPACE (OP, EUR29.00): In this primer presentation, we discuss the overall company setup, its management, its different division. Moreover, we provide insights in the business prospects for cabin retrofitting, as well as we give a detailed overview of the acquisition history of the company, in which we split the different acquisition targets according to the division, in which they find entry. We round up the primer with a short run through the financials

>>> What to look at today : 20th of October 2015

Dow+0.08% S&P-0.02% NAsdaq+0.38% Russell +0.16%
US Marker Srate the week on the quiet day near the flat line. Market respond to Q3 GDP in China. Asian Markets were flat also on Monday even if detils of Data sent Commo lowers. Crude Oil closed -3% @ $45.90/bbl, Enerrgy closed lower -2%, HAL -2% after repprtingbetter earnings, Materials underpderomed too (-0.8%). Weight Watchers (WTW 13.92, +7.13) soared 105.0% after announcing Oprah Winfrey will purchase newly-issued shares representing 10.0% of all shares outstanding. IBB was up 2 % ut surrendered that gain after presidential candidate Hillary Clinton sent a letter to the Food and Drug Administration and the Federal Trade Commission, requesting an inquiry into drug pricing. The biotech ETF returned into the green by the closing bell, ending higher by 0.5%. Volume today were below average at 800milshares...US After Hours TACO +13.6%, HSTM +13.1%, FLEX +7.7%, RMBS -19.4%, HXL -9.2%, IBM -4.9% following earnings/guidance...ERII +133.7% (signed 15-year license with Schlumberger (SLB), SNDK+7.9% after hours on talks of working on Wester Digital Deal...Asian equity markets are mixed, Economic data released yest. continue to weight on commo. In notable Chinese press reports, influential former PBoC adviser Li said China GDP wold be about 6.8% in 2015 and 6.9% in 2016 as the economy bottoms out in H1 of next year. A separate report anticipated a moderate rebound in Q4, even though analysts continued to question the accuracy of Q3 GDP print in light of a more pronounced slowdown of other datapoints.

Nikkei +0.52% Hang Seng -0.58% Shanghai +0.41%

Eur$ 1.1331 CNY 6.3526 JPY 119.43 EURCHF 1.0834 GBP 1.5474 BRL 3.8863 RUB$ 62.4648 WTI $46.12

S&P -0.17% EuroStoxx -0.21% Dax -0.23% SMI -0.33%
Macro :
- Noyer Says ECB’s Current Bond Buying Pace Is ‘Well Calibrated’
- Commodities Resume Selloff on China GDP, Stocks Little Changed

Keep an eye on :
- ABI BB : China Hasn’t Received Review Request on AB Inbev-SABMiller Deal
- ATLN VX : Actelion Lifts FY Profit Forecast, Announces Shareholder Return
- EDPR PL : EDPR Signs Agreement With China Three Gorges for UK Wind Project
- BT/A LN : EE Sees Preliminary CMA Ruling on BT Deal in 2 Weeks, CEO Says
- ACA FP : Credit Agricole US Fine Terms to Be Announced Today: Reuters
- DBK GY : Deutsche Bank Shareholder Hermes Wants More Clarity: HB
- DBK GY : Deutsche Bank Said to Have Paid a Client $6b in Error: FT
- DTE GY : German Govt, States Agree EU2b Broadband Expansion: Handelsblatt
- DEC FP : JCDecaux in Talks With Publicis to Buy Rest of Metrobus
- EDF FP : China to Take One-Third Stake in U.K. Nuclear Power Project: FT
- ENG SM : Enagas 3Q Ebitda Misses Estimates, Net Profit Rises Y/y
- LHA GY : Lufthansa Offers Pay Rise, Pension Contribution to Cabin Crew
- MOB BB : Mobistar Sees Adj. Ebitda at High End of Range as 3Q Beats Ests.
- OCS FP : Oberthur Had Received Interest From Investment Funds, CEO Says
- PC IM : ChemChina’s Marco Polo Reaches About 87% in Pirelli After Bid
- PRS SM : Prisa Seeks Halt of TV License Awards to Mediaset, Atresmedia
- SAP GY : SAP Expects About 3,000 Job Cuts by Year End, CFO Mucic Says
- TIT IM : Telecom Italia Said to Name Morandini Head of Regulatory Affairs
- TKA AV : Telekom Austria 3Q Ebitda Beats Est.; 2015 Outlook Unchanged
- TOM2 NA : TomTom 3Q Rev. Exceeds Ests., Keeps 2015 Outlook Unchanged
- UBSN VX : UBS’s Weber Confident Bank Can Meet Swiss Capital Rules: FAZ
- TEC FP : Technip Wins Hydrogen Facility Contract From Tecnicas Reunidas
- TLSN SS : TeliaSonera 3Q Ebitda Beats Est.; Cuts 2015 Outlook
- TLSN SS : TeliaSonera Said to Revive Sale of Spanish Mobile Unit Yoigo
- TLSN S : TeliaSonera Donated More Than SEK7.7m to Karimov Charity: SVD
- UCG IM : UniCredit Weighs Austrian Consumer Sale to Bawag: Standard
- VIV FP : Canal+ Subs Seen -10% in Sept: Le Parisien; Vivendi Denies
- VOW3 GY : Volkswagen May Face Fine of Up to EU600M in Spain: Economista

>>> Europe : Brokers Upgrades & Downgrades - 20th of October 201

>>> Up
*AVEVA RAISED TO BUY VS HOLD AT BERENBERG
*DEUTSCHE TELEKOM RAISED TO CONVICITON BUY VS NEUTRAL AT GOLDMAN
*LVMH RAISED TO BUY VS NEUTRAL AT NOMURA, PT EU200
*OUTOKUMPU RAISED TO NEUTRAL VS UNDERPERFORM AT EXANE
*SKW STAHL-METALLURGIE RAISED TO HOLD AT BAADER-HELVEA
*TDC RAISED TO CONVICTION BUY AT GOLDMAN

>>> Down
*ABERTIS CUT TO REDUCE VS NEUTRAL AT NOMURA
*EUROFINS SCIENTIFIC CUT TO HOLD AT JEFFERIES
*EUTELSAT CUT TO SELL VS NEUTRAL AT GOLDMAN
*GAZPROM CUT TO REDUCE VS HOLD AT HSBC
*GIVAUDAN CUT TO UNDERWEIGHT VS EQUALWEIGHT AT BARCLAYS
*SAINT GOBAIN CUT TO SELL VS NEUTRAL AT UBS
*SES CUT TO SELL VS NEUTRAL AT GOLDMAN
*SKF CUT TO NEUTRAL VS BUY AT NOMURA

>>> PT Change


>>> Initiation
*CONTINENTAL RATED NEW OVERWEIGHT AT MORGAN STANLEY
*MICHELIN RATED NEW EQUAL-WEIGHT AT MORGAN STANLEY
*NOKIAN RENKAAT RATED NEW EQUAL-WEIGHT AT MORGAN STANLEY
*OCADO INITIATED OUTPERFORM AT MACQUARIE, PT 410P
*TOWER SEMICONDUCTOR RATED NEW BUY AT DREXEL HAMILTON, PT $28

>>> Call
>> Stock
*DEUTSCHE TELEKOM RAISED TO CONVICITON BUY VS NEUTRAL AT GOLDMAN
*METRO ADDED TO BANKHAUS LAMPE’S ALPHA LIST, VONOVIA REMOVED
*UNITED INTERNET EXITS GOLDMAN CONVICTION BUY LIST, STAYS BUY

>>> Asian Update

Asian Mid-session Update: US Treasury currency report softens view on CNY; RBA minutes show no hints of easing bias


***Economic Data***
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 113.3 v 115.6 prior
- (KR) South Korea Sept PPI M/M: -0.3% v -0.5% prior; Y/Y: -4.5% (14th straight decline) v -4.4% prior
- NPD: Sept US total video game sales $1.0B, -9% y/y

***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 +0.3%, S&P/ASX -0.5%, Kospi +0.1%, Shanghai Composite -0.1%, Hang Seng -0.5%, Dec S&P500 -0.1% at 2,025

***Commodities/Fixed Income***
- Dec gold -0.4% at $1,168/oz, Dec crude oil +0.2% at $46.39/brl, Dec copper -0.5% at $2.35/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 3.5 tonnes to 697.3 tonnes
- JGB: (JP) Japan's MoF sells ¥1.10T in 1.2% (1.2% prior) 20-year JGBs; Avg yield: 1.078% v 1.164% prior; bid-to-cover: 3.04x v 2.56x prior
- USD/CNY: (CN) PBoC sets yuan mid point at 6.3614 v 6.3527 prior setting; Weakest Yuan setting since Sept 29th
- (CN) PBoC to inject CNY25B in 7-day reverse repos (31st consecutive injection, smallest injection since mid-July )

***Market Focal Points/FX***
- Asian equity markets are mixed, with Australia's S&P/ASX as a regional underperformer. The aftermath of the soft China economic data overnight continues to weigh heavily on basic materials names, as shares of BHP and Rio Tinto are both down over 2%. Decline is somewhat exacerbated by a fairly neutral to positive set of RBA policy meeting minutes from this month, denting a minority view of economists (including Goldman) anticipating more near term RBA easing. RBA said that there is more evidence of economic rebalancing toward the non-mining sector, that labor market strengthened and unemployment rate would not rise further. Australia's 3-year rates ticked up about 2bps to 1.85% on the minutes release and AUD/USD strengthened some 20pips to 0.7275.

- Other USD majors were little changed in Asian trading, though there was some volatility in the far east FX after the release of the Semi-annual Currency Report from the US Treasury. The report once again did not declare any major trading partner as "currency manipulator", and actually softened its stance on China in spite of the August devaluation. The Treasury said CNY remains below appropriate "medium term valuation", compared to prior view of being "significantly undervalued", in a nod to slowing Chinese economic growth justifying the response by Chinese authorities. The Treasury also called for more policy transparency, stating the devaluation underscores its importance. Likewise, KRW weakened by about 1% after the US report called South Korea interventions as roughly balanced. For Japan, the Treasury is calling for more efforts on fiscal policy and reduced reliance on JPY depreciation to steer its economy.

- In notable Chinese press reports, influential former PBoC adviser Li said China GDP wold be about 6.8% in 2015 and 6.9% in 2016 as the economy bottoms out in H1 of next year. A separate report anticipated a moderate rebound in Q4, even though analysts continued to question the accuracy of Q3 GDP print in light of a more pronounced slowdown of other datapoints.

***Equities***
US equities / ADRs:
- ERII: Signs $125M 15-year license with Schlumberger to provide exclusive rights to its VorTeq Hydraulic Fracturing Technology; +124% afterhours
- SNDK: Said to be in late stage deal talks with WDC, a merger announcement possible by this week; +7.6% afterhours
- FLEX: Reports Q2 $0.27 v $0.25e, R$6.32B v $6.15Be; +6.7% afterhours
- ETH: Guides Q1 $0.45-$0.46 v $0.45e; +1.7% afterhours
- IBM: Reports Q3 $3.34 v $3.33e, R$19.3B v $19.6Be; -4.8% afterhours
- ZGNX: Continues to expect Phase 3 ZX008 Clinical Program to begin in Q415; -7.4% afterhours
- HXL: Reports Q3 $0.55 v $0.59e, R$448.8M v $466Me; To repurchase additional $250M in common stock (5.6% of market cap); -8.3% afterhours
- RMBS: Reports Q3 $0.14 v $0.14e, R$73.8M v $76.0Me; -15.4% afterhours
- NEOS: Provides Cotempla XR-ODT FDA Update; -13.7% afterhours

Notable movers by sector:
- Consumer discretionary: Nine Entertainment Co Holdings NEC.AU -1.2% (Apollo to sell stakes)
- Financials: PAX Global Technology 327.HK +4.0% (9-month result); China State Construction Holdings 3311.HK +3.5% (9-month result); Australia and New Zealand Banking Group ANZ.AU -1.4%, Westpac Banking Corp WBC.AU -1.1% (Australia banking regulator's liquidity inquiry)
- Industrials: Anhui Ankai Automobile Co 000868.CN +4.6% (9-month result); Sinosteel Engineering & Technology Co 000928.CN -3.3% (parent extends bond redemption date); Aurizon Holdings AZJ.AU -0.8% (Q1 result)
- Technology: AVIC International Holdings 161.HK -2.9% (terminates acquisition proposal); Fujian Newland Computer Co 000997.CN +7.1% (9-month result); Sichuan Changhong Electric Co 600839.CN +1.7% (9-month result)
- Materials: Newcrest Mining NCM.AU -5.1% (Q1 result); OZ Minerals OZL.AU -4.5% (gold price declines); Nitto Denko Corp 6988.JP +0.5% (H1 result speculation)
- Energy: China Shenhua Energy Co 1088.HK -2.3% (Sept result); Oil Search OSH.AU -2.0% (Q3 result); Yanzhou Coal Mining Co. 1171.HK -1.7% (Q3 coal business result)
- Telecom: KDDI Corp 9433.JP +6.0% (to start power retail sales service)
- Utilities: China Datang Renewable Power Co 1798.HK -1.9% (Q3 power generation); Huaneng Power International 600011.CN +2.3%(Q3 power generation)

>>> US After Hours Summary: TACO +13.6%, HSTM +13.1%, FLEX +

After Hours Summary: TACO +13.6%, HSTM +13.1%, FLEX +7.7%, RMBS -19.4%, HXL -9.2%, IBM -4.9% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings: TACO +13.6%, HSTM +13.1%, FLEX +7.7%, SONC +6.7%, GIG +4.3%, ETH +1.7%, CE +1.6%, VLRS +0.8%, STLD +0.8%

Companies trading higher in after hours in reaction to news: ERII +133.7% (signed 15-year license with Schlumberger (SLB) to provide exclusive rights to its VorTeq hydraulic fracturing technology; deal includes $125 mln in upfront payments paid in stages), ONE +21.7% (sold its Campus Labs data analytics business to Leeds Equity Partners, for $91 mln in cash), SNDK +8.0% (Bloomberg reporting co is in discussion to be acquired by Western Digital (WDC)), MPAA +1.6% (to replace OMG in the S&P SmallCap 600), 

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: RMBS -19.4%, HXL -9.2%, IBM -4.9%, WIBC -1.4%, ETN -1.4%, SIX -0.7%, ELS -0.6%, IEX -0.6%, HA -0.5%

Companies trading lower in after hours in reaction to news: NEOS -17.7% (received notification that the FDA has identified deficiencies that preclude discussion of labeling & postmarketing requirements/commitments for Cotempla XR-ODT), ZGNX -7.4% (co received a request from the FDA for additional information related to the proposed Phase 3 program for ZX008 prior to the FDA declaring the Investigational New Drug Application effective), MSB -4.9% (reported that due to a delay in the reporting of Cliffs Natural Resources (CLF) regarding shipments of iron ore products, no distribution will be paid in November 2015), WDC -1.9% (lower following Bloomberg report that co may acquire SanDisk (SNDK)), SGY -1.4% (filed mixed securities shelf offering)