FT : South32 hires advisers to boost defences

South32 hires advisers to boost defences

South32, the mining group demerged from BHP Billiton, has hired advisers to bolster its defences in the event of a bid for the A$9.4bn Australian company which has seen its shares fall 19 per cent since listing in May.
South32 is working with Macquarie and Morgan Stanley, according to people familiar with the matter, as its falling equity valuation and an expected $1.9bn writedown have led to speculation of interest from suitors.

The move to hire advisers, which took place in the last several weeks, comes as miners had their stock prices knocked sharply by a fresh downturn in commodity prices. South32 and the two banks declined to comment.
While the slump has hit the sector broadly, South32 is one of the few mid-sized mining companies that is seen as a target for larger groups or private equity bidders.
Analysts have said South32’s portfolio could attract bidders including Glencore, the commodities trading house run by Ivan Glasenberg, or X2, the private equity vehicle targeting the sector, which offered to buy the assets from BHP Billiton last year.
BHP spurned the approach from X2, which is led by Mick Davis, the former head of Xstrata. X2 is in “serious” talks with Rio Tinto about a multibillion-dollar offer to buy some of that miner’s Australian coal assets, the FT reported last month.

Meanwhile, Glencore is thought to view South32 as still too expensive in spite of the weakness in commodity prices.
Perth-based South32, named from the latitude linking its main operations in Australia and South Africa, was assembled from assets previously controlled by BHP, the world’s largest mining group.
The portfolio - deemed non-core by BHP - includes aluminium, manganese, coal and a large silver mine.
South32 is led by Graham Kerr, the former chief financial officer at BHP. Shares in South32 fell 3.4 per cent to A$1.73 on Thursday, near its lowest level since listing. BHP lost 2.9 per cent to A$25.50, its fifth-biggest one-day drop of the year. The pair were among the worst performers on Australia’s S&P/ASX 200, which dropped 0.4 per cent.
Graham Kerr, chief financial officer of BHP Billiton Ltd., speaks during the Bloomberg Australia Economic Summit in Sydney, Australia, on Wednesday, April 10, 2013. BHP, the world's biggest mining company, expects annual economic growth in China to moderate toward 6 percent, saying prospects in its largest customer present its main business risk. Photographer: Brendon Thorne/Bloomberg *** Local Caption *** Graham Kerr©Bloomberg
Graham Kerr
In a recent report, analysts at Citigroup said South32 could be a target for Glencore, saying the company would be comfortable increasing its exposure to coal and South Africa.
Citi said Glencore’s marketing team would also “salivate” at being the largest producer of manganese and the trading opportunities that could present.
However, South32’s valuation is not at a level where it would attract serious attention from Glencore, say industry watchers. A bid from a Chinese entity is also seen as unlikely because of South32’s aluminium business. China has a surplus of the lightweight metal that it is exporting to the rest of the world and does not need to increase its exposure.

(BFW) *SOUTH32 SAID TO HIRE ADVISERS TO DEFEND AGAINST POSSIBLE BID:FT

BFW 07/23 07:52 *SOUTH32 SAID TO HIRE ADVISERS TO DEFEND AGAINST POSSIBLE BID:FT
Tony Tassell: South32 has hired advisers to bolster its defences - scoop by @ArashMassoudi @humenm @_PeterWells
2015-07-23 07:49:49.293 GMT

South32 has hired advisers to bolster its
defences - scoop by @ArashMassoudi @humenm
@_PeterWells @James_Wilson_UK
ft.com/cms/s/0/10b832…
Tony Tassell @TonyTassell
 
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found here.

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-0- Jul/23/2015 07:49 GMT

>>> Fortinet beats by $0.02, beats on revs --> +8.8% After Hours...JPM Upg

Fortinet beats by $0.02, beats on revs

Reports Q2 (Jun) earnings of $0.11 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.09; revenues rose 30.3% year/year to $239.8 mln vs the $227.61 mln consensus.
FTNT reports Q2 billings rose 40% y/y to $297 mln, Guidance was in the range of $263-268 mln.
Total deferred revenue was $657.6 million as of June 30, 2015, an increase of $57.4 million from $600.2 million as of March 31, 2015.

Fortinet: Q3 and FY15 Outlook- Guides lower on Q2 EPS, Above on Revs; Raises FY15 revenue outlook

- Q2
Q2 EPS approx $0.12 , $0.14 Capital IQ consensus
Q2 Revenue $255-260 mln , $235.14 mln Capital IQ consensus
Q2 Gross Margin 70-71%
Q2 Operating Margin approx 12%
Q2 Billings $285-295 mln

- FY15
FY15 EPS- Reaffirms $0.51-0.52 vs $0.51 Capital IQ Consensus;
FY15 Revenues- Raised to $935-940 mln from $915-925 mln vs $943.65 mln Capital IQ Consensus;
FY15 Bookings- Raised to $1.20-1.21 bln from $935-940 mln
FY15 Operating Margin- Reaffirms Approx 14%.

- Conf Call
Delivered highest billing gross rate in six years (40%).
Says it won two major contracts from competitors.
Strong billings was also against a tough comp.
Cash generation was $74 mln in FCF; 116% increase y/y.


- JPM Upgrade
JPMorgan Chase and Co Raised FTNT to Overweight from Neutral, price target: $54 
- price target raised to $54 from $40
- citing strong June quarter and estimate increases
- Firm notes company reported 2Q15 revenue/ non-GAAP EPS of $239.8M/$0.11 vs. firms estimates of $226.8M/$0.08 and consensus of $227.7M/$0.09
- Firm notes that acceleration in billings should lead to 43% y/y growth in FCF and believes there is the potential for more if management continues to outpace margin estimates and improves inventory turnover back to levels seen in the past

(MKR) Makor - Tech View Euro Stoxx 50 Index (3,635 last) - a move above 3,69...

Makor - Tech View Euro Stoxx 50 Index (3,635 last) - a move above 3,691-3,714 would suggest a low in place and a re-test of the
2015-07-23 07:04:31.308 GMT

Technical Research – Euro Stoxx Index (3,635)

•The Index filled the open gap from the July 15-16th yesterday and closed well
above the 3,600 support level.
•In order to argue for a higher low being in place would need to see a sustain
move above 3,691-3,714.
•Looking forward, the break above 3,651 negated the path of lower highs which
is bullish and also from an Elliot Wave perspective the recent setup favors a
minimum re-test of the 3,836 cycle high if not above.

Strategy: Step aside for now.

Support: 3,600 (breakout level), 3,536-61 & 3,433-74 (open gaps)

Resistance: 3,691-3,714 & 3,782-3,836

Full Report Attached

Contributed via: Bloomberg Publisher WEB Service

Provider ID: 4d4f9f0bd8814bdbb305641825778038


-0- Jul/23/2015 07:04 GMT

(Nomura) European Autos initiation :

Renault top pick, TP +25%; Faurecia -17%
Pent-up demand in Europe to drive positive
operating leverage; China volumes to recover in 2H

Initiating coverage of five stocks in the European autos sector
Although we initiate with a Bullish view on the sector, based on year-to-date stock performance we see selective opportunities for investors to capitalise on current valuations, and initiate coverage with the following ratings:
* Buy: Renault (EUR 117 TP; 25% upside potential)
* Reduce: Faurecia (EUR 31; 17% downside potential)
* Neutral: Continental (EUR 211), Valeo (EUR 126), Peugeot (EUR 17)


Renault is our top pick with 50%-plus potential upside (blue-sky scenario) 
Our analysis suggests that the core Renault business (ie, excluding any investment holdings), for which we expect EBIT to increase by 30%-plus in each of the next two years, is being undervalued by the market. Simply stripping out its owned portion of the listed investments (Nissan, Daimler and Avtovaz) implies that the core business trades at a 40% discount to its pre-crisis peak in 2007. We believe that this valuation gap will close as investors’ willingness to pay a higher multiple for a growing business with strong momentum (helped by the launch of new models in the next 12 months) increases. 

If we were to apply our house view on Nissan (Buy; JPY 1,900 TP), and use the target price set by our Japanese analyst, the increase in the value of Renault’s ~44% stake would add 25% to our target price