(KeplerCheuvreux) Oil : Total & ENI upgraded to Buy BP downgraded to Neut

Investment case summary
On balance, we believe rising oil prices, spending reductions alongside
potential upstream cost deflation, greater opex reduction plans as well as
an earlier-than-expected (one year) financial inflection point are likely to
be largely offset by lower shareholder distributions, possibly higher decline
rates and evidence of project delivery still in its early days. Hence, we
maintain our broadly neutral view on European Integrateds.


Stock pick recommendations
We still recommend stocks with a robust balance sheet and business
portfolios, which are approaching a material turning point and are in the
position to significantly raise shareholder returns, once oil prices start
trending up again. Total and ENI (upgrade to Buy) therefore stand out as our
sector most preferred stocks. While BG Group remains a Buy, we downgrade
BP to Hold and maintain Hold ratings on RDS, Repsol, Statoil, and OMV.

(Citi) Total - Bigger Squeeze, More Juice - Buy PT €52

* Buy thesis underpinned by cultural change — Performance in Global Big Oil, we
think, will be dependent on the ability of companies to make a rapid transition to a
$65-75/bbl oil world. The company that seems most in touch with this ambition is
TOT, where deep-seated changes look to prioritise a culture of cost-cutting and
better capital allocation. Although this increasing emphasis on costs has been a
feature of TOT for several months now, we think the market underestimates the
extent to which this change in focus is becoming imbedded in the organisation.

* FCF >> DY — Our forecasts see the business delivering improving ROE and 2017E
FCF, some 40% higher than consensus estimates. Forecast 2017E FCF yield of
7.7% is the highest in Big Oil. While we are generally wary of “wall of cash” stories
in the oil sector we think the deep changes around capital allocation within TOT
suggest higher capital returns to shareholders will be a priority.

* $9 B self-help — As part of updating medium-term business plans this summer we
expect TOT to increase cost-cutting targets in the core Upstream from -10% to -
20%. No other Big Oil player is cutting as deep; indeed many have no cost-cutting
agenda at all. Costs drive 20% of an estimated $9 B self-help, with the other 80%
from delivery on growth investment currently in-train.

* The cost of change — A shift to a lower oil world will call into question some of
past capital. TOT has already impaired $8 B of assets; we think another $10 B is
possible. That will put gearing >40%, in our view explaining the pre-emptive moves
around the hybrid bond issue and discounted scrip dividend introduced in 1H.

* Sustainability — Does 7.7% FCF yield = higher shareholder returns? Under a
changed strategy that prioritises returns over growth, and taking benefit from
supply-chain deflation, we think that TOT can hold capex at c. $20 B and still grow
in-line with the industry. We do not see a need or ambition to make acquisitions.

(CS) Global Equity Strat. : Europ. Equity : More clarity, more positive

We increase the size of our overweight in Continental European equities: 5 of the tactical factors that led us to reduce the size of our overweight in May have improved. Europe's sector adjusted P/E is now the same as the US (versus the 8% premium in early May); PMI new orders are heading up, after their April pause (and consistent with 2% GDP growth versus 1.5% consensus); Bunds are now oversold, having been overbought (the sell-off in Bunds has supported the euro); May and June are typically the worst months of the year for European equity performance; and we were worried about an overbought
market ahead of Greek debt repayment deadlines this month.

We stick to our Eurostoxx 50 target of 4,000 for year-end and take Europe to 19% overweight (from 17%) 
highlighting: i) European equities are pricing in a 20% chance of a Grexit (we think there is a 5-10% chance of Grexit, with a
15-20% probability of capital controls). Greek bonds are pricing in a 40-50% chance of default. On 4 measures of normalised earnings, Europe is trading 8% below its typical valuation discount to the US and 36% cheap in absolute terms against the US; ii) European markets seem to be discounting c0.5% GDP growth (yet there are lots of reasons why we believe growth will be 1.5% to 2%); iii) Europe outperforms when global PMI new orders rise (as we think they will); and iv) the differential pricing power of labour: wage growth is falling in Europe but rising in Japan, the US and the UK (this is key to monetary policy, margins and length of cycle).

Greece: We continue to see a very high probability of a temporary deal. Deposit outflows have now reached levels where weaker Greek banks are running out of collateral, and hence Syriza will likely have to compromise. We think even if there were a Grexit, there is only a one in three chance of a systemic crisis. Under such a scenario, France would be more vulnerable than investors realise (not least because French equities are trading on a near record P/E relative).

Stock screens: We highlight Outperform-rated stocks that have underperformed since the market peak and look abnormally cheap on Credit Suisse HOLT® with positive earnings revisions: Assa Abloy, Akzo Nobel and DT; and European companies which simply look cheap (on P/E, P/E rel, HOLT): Valeo, Swatch, AXA, Atos, Rieter and Total.

>>> Clariant rumoured to be in line for CHF 28-per-share bid from Solvay

Clariant rumoured to be in line for CHF 28-per-share bid from Solvay

Solvay, the Belgium-headquartered listed chemical company, is rumoured to be planning a bid for the Swiss-quoted chemical group Clariant, Daily Mail reported. Dealer chatter suggested Solvay is set to offer CHF 28 per share in a break-up bid, then sell parts of the business on to UK-based Croda International and Johnson Matthey in secondary deals, the market report said.

Germany-based Evonik Industries was rumoured to be a potential acquirer of Clariant several months ago, the report noted.

Clariant shares ended the day at CHF 18.80m up CHF 0.21 on 23 June, the item reported.

 Daily Mail 

>>> Bouygues Telecom likely to reject improved offer from Altice and Numericable

Bouygues Telecom likely to reject improved offer from Altice and Numericable SFR 

Listed French conglomerate Bouygues is likely to reject an improved offer from Altice group and subsidiary Numericable SFR for its mobile phone business Bouygues Telecom, French daily Le Figaro reported. The report cited a person familiar with the matter as saying that the board of Bouygues would not be enticed by a new and improved bid.

At its meeting of 23 June 2015, Bouygues' board of directors had decided unanimously, after an in-depth review, not to follow up on the Altice group's unsolicited offer to acquire Bouygues Telecom.

 Le Figaro 

>>> Sika: SAM acquires 3% for EUR 250m and opposes sale to Saint Gobain (transla

Sika: SAM acquires 3% for EUR 250m and opposes sale to Saint Gobain

Investment fund Southeastern Asset Management has acquired a 3% stake in listed Swiss chemicals group Sika for EUR 250m, French daily Les Echos reported. The report cited SAM Managing Partner Josh Shores as confirming the news. He added that he was also opposing the EUR 2.5bn acquisition by listed French construction group Saint Gobain of the 16.1% stake in Sika from the SWH family holding that controls 52.4% of the voting rights in Sika. Shores said that the deal was bad for Sika and for Saint Gobain, and would not create fair value for all shareholders in Sika.

He then claimed that SAM would rather act as a “mediator” and would work with all of the concerned parties to explore strategic options in order to create a fair and just value for all of them. According to Shores, there are several mechanisms that can protect the interest of all the shareholders, without having to launch a public offer for all the shares in Sika.

Les Echos

>>> Europe : Brokers Upgrades & Downgrades - 24th of June 2015

>>> Up
*AHOLD RAISED TO BUY FROM HOLD AT ING: TP RAISED TO EU22
*ALSTRIA OFFICE REIT RAISED TO BUY VS HOLD AT BANKHAUS LAMPE
*CATALANA OCCIDENTE RAISED TO NEUTRAL VS SELL AT UBS
*COLRUYT RAISED TO HOLD VS REDUCE AT RABOBANK
*ENI RAISED TO BUY AT KEPLERCHEUVREUX (Note attached)
*NEXT RAISED TO OVERWEIGHT VS EQUALWEIGHT AT BARCLAYS
*SAINSBURY RAISED TO BUY VS HOLD AT SOCIETE GENERALE
*SHELL RAISED TO BUY VS HOLD AT DEUTSCHE BANK
*TOTAL RAISED TO BUY AT KEPLERCHEUVREUX (Note attached)
*VOLVO RAISED TO BUY VS NEUTRAL AT GOLDMAN (note attached)

>>> Down
*ACCELERATE PROPERTY FUND CUT TO NEUTRAL AT MACQUARIE
*AUTOLIV CUT TO SELL VS NEUTRAL AT GOLDMAN
*BP CUT TO HOLD AT KEPLERCHEUVREUX (Note attached)
*HELVETIA HOLDING CUT TO NEUTRAL VS BUY AT GOLDMAN
*KUONI CUT TO NEUTRAL VS OUTPERFORM AT CREDIT SUISSE
*MONITISE CUT TO HOLD AT JEFFERIES

>>> PT Change


>>> Initiation
*AUTOTRADER RATED NEW EQUALWEIGHT AT BARCLAYS, PT 315P
*CARLSBERG REINSTATED UNDERPERFORM AT BOFA
*CAMPARI RATED NEW BUY AT BOFA, PT EU7.50
*DIAGEO REINSTATED BUY AT BOFA, PT 2,200P
*DEUTSCHE BOERSE RATED NEW BUY AT BANKHAUS LAMPE
*HEINEKEN REINSTATED UNDERPERFORM AT BOFA, PT EU64
*PERNOD RICARD REINSTATED BUY AT BOFA, PT EU135
*RAI WAY RATED NEW BUY AT BERENBERG, PT EU4.85
*REMY COINTREAU REINSTATED UNDERPERFORM: BOFA, PT EU50
*SABMILLER REINSTATED BUY AT BOFA, PT 3,800P


>>> Call

>>> What to look at today - 24th of June 2015

Dow+0.13% S&P+0.06% NAsdaq+0.12% Russell+0.26% VIX 12.11 V2X 23.5179
US Market closed slightly higher after being flat most of the day. optimism on greece helped sentiment in Europe. Better US numbers helped also. Volume were in line with average @ 700mil shares... US After Hours MEET +18.8%, KOOL -13.1%, EXFO -7.3%, PRXL -0.8% following earnings/guidance, NFLX +3.3% after hours on 7 for 1 stock split...Sysco’s $3.5b U.S. Foods Bid Blocked by Federal Judge ({NSN NQF0YH6JIJUQ<Go>}) -->SYY -2.6%, PGN -2.4% tio be replaced in S&P600 by SMTC, NKTR+4.3% to replace CASY in S&P400...Shanghai Composite continues its bounce after an outsized 13% drop last week. Analysts have processed the latest release of China flash PMI and now anticipate further PBoC easing. Nomura sees two more RRR cuts and two more interest rate cuts by PBoC this year, forecasting Q2 GDP slowing to 6.6% from 7% in Q1. BOJ released the minutes of its May meeting when it upgraded economic assessment for the first time in 2 years, largely reiterating easing is exerting intended effects with continued monitoring of risks and price trends. Of note, one board member warned the side effect of easing could top benefits, sending USD/JPY to session lows. Recall the more recent BOJ decision last week did not produce a rumored fracture that would have questioned opend ended QE stance.

Nikkei +0.55% Hang Seng +0.065 Shanghai +0.77%

Eur$ 1.1198 JPY 124.03 GBP 1.5750 EURCHF 1.0444 CHF 0.9327 RUB $53.9967 WTI $61.04 (+0.05%)

S&P -0.08% EuroStoxx +0.22% Dax +0.29% SMI +0.05%

Macro :
- Bill Gross Says ‘Stocks Stuck Even if Greece Goes Well’

Keep an eye on :
- ABBN VX : ABB Faces ‘Hard-Weather Sailing’, CEO Spiesshofer Tells Reuters
- ABBN VX : Cevian Capital Sees ’Big Value Potential’ in ABB, DI Reports
- ABG/P SM : Abengoa to Maintain Current Dividend Policy, Expansion Reports
- AH NA : Ahold, Delhaize to Merge in All-Share Deal /Ahold 61% / Delhaize 39%, €500m/y synergies, €1b return to shareholder
- AIR FP : Airbus Said in Talks to Sell 50-70 A330 Jets to China: Reuters
- EN FP : Bouygues Rejects Altice Bid to Buy Bouygues Telecom
- EN FP : Martin Bouygues Says There Was No Political Pressure Over Drahi
- COLR BB : Colruyt FY Adj. EPS Beats Ests.; 2H Rev. Misses as Growth Slows
- EDF FP : EDF’s Application to Operate EPR Is Incomplete, Regulator Says
- FCA IM : Ford CEO Says ‘No Interest’ in Merging With Fiat Chrysler
- LBTYA US : Liberty Global CEO Says Always Looking at Targets: Handelsblatt
- LACR FP : Lacroix Supervisory Board Names Vincent Bedouin as CEO
- LEG GY : LEG Immobilien Says Fiscal 2015, 2016 Forecasts to Be Updated
- LEG GY : LEG Immobilien Places 1,196,344 New Shrs at Price of EU61.54/Shr
- ORA FP : Orange Says Targets Confirmed Regardless of French Consolidation
- RI FP : Pernod Targets 2018 Sub-Saharan Africa Sales of EU600M: Echos
- SYY US : Sysco’s $3.5b U.S. Foods Bid Blocked by Federal Judge

>>> Asian Update

Asian Mid-session Update: Nikkei hits 18-year high; Shanghai continues

***Economic Data***
- (CN) CHINA MAY CONFERENCE BOARD LEADING ECONOMIC INDEX M/M: 1.1% v 1.4% prior
- (CN) CHINA JUN WESTPAC BUSINESS SENTIMENT SURVEY: 112.3 V 111.1 PRIOR
- (AU) AUSTRALIA MAY SKILLED VACANCIES M/M: -1.0% V -0.8% PRIOR
- (JP) JAPAN MAY PPI SERVICES Y/Y: 0.6% V 0.5%E; 2-year low

***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 +0.6%, S&P/ASX +0.3%, Kospi +0.1%, Shanghai Composite +0.9%, Hang Seng +0.1%

***Commodities/Fixed Income***
- Aug gold -0.1% at $1,176/oz, Aug crude oil -0.1% at $61.09/brl, Jul copper flat at $2.61/lb
- (US) API Petroleum Inventories: Crude -3.2M v -2.5Me (3rd straight draw); Gasoline +0.4M v -0.5Me
- (CN) China MOF sells 2-yr bonds, avg yield 2.44%
- (JP) BOJ offers to buy ¥375B in 1-3yr JGBs, ¥400B in 3-5yr JGBs, and ¥400B in 5-10yr JGBs

***Market Focal Points/FX***
- Shanghai Composite continues its bounce after an outsized 13% drop last week. Analysts have processed the latest release of China flash PMI and now anticipate further PBoC easing. Nomura sees two more RRR cuts and two more interest rate cuts by PBoC this year, forecasting Q2 GDP slowing to 6.6% from 7% in Q1. ANZ also stated latest data sees 2015 GDP 7% as challenging to achieve. Today's data were also mixed - Westpac business index rose to 112.3 from 111.1, but Conf Board Leading Index growth slowed. Residend economist said LEI was dragged down by weak manufacturing data, poor export performance, and still-struggling new construction starts

- BOJ released the minutes of its May meeting when it upgraded economic assessment for the first time in 2 years, largely reiterating easing is exerting intended effects with continued monitoring of risks and price trends. Of note, one board member warned the side effect of easing could top benefits, sending USD/JPY to session lows. Recall the more recent BOJ decision last week did not produce a rumored fracture that would have questioned opend ended QE stance.

- Australia released May skilled vacancies decline of 1% m/m. The fall registered advertisements of 153.5K, a 10-month low.

- Bank of Korea Gov Lee continued to express concern about the impact of MERS on broader economy. Recall the latest surprise BOK rate cut was attributed on the potential impact of the outbreak.

***Equities***
US ADRs:
- MEET: Guides Q2 higher to R$10.5-10.7M v $9Me ($9-9.5M prior); +20.1% afterhours
- VNDA: Announces Positive Results from the Relapse Prevention Study in Patients with Schizophrenia (REPRIEVE) Demonstrating the Long-Term Maintenance Effects of Fanapt (iloperido); +4.6% afterhours
- NFLX: *ANNOUNCES 7-1 STOCK SPLIT; +3.3% afterhours
- PRXL: Guides Q4 $0.70-0.78 v $0.74e, Rev $517-533M v $533Me, initial FY16 $3.02-3.38 v $3.24e, R$2.16-2.216B v $2.21Be; -0.8% afterhours
- SYY: US Judge: Merger with US Foods should be halted for further antitrust review, ruling in favor of FTC - financial press; -1.9% afterhours