(BFW) Ad Markets Could Get ‘Major Boost’ From Oil Price Drop: Natixis

Ad Markets Could Get ‘Major Boost’ From Oil Price Drop: Natixis
2014-12-04 10:20:00.242 GMT


By Blanche Gatt
Dec. 4 (Bloomberg) -- Ad markets could see big rally in
2015 on recent drop in oil prices, with European TV stocks
likely to benefit most, Natixis says in note.
* Natixis says lower oil prices strengthen household spending,
which in turn strengthen advertising
* Oil price down 34.5% since start of 2014; decline is
“impressive,” very rare because it’s not linked to
drop in global growth, but is due to jump in oil output
in U.S. plus OPEC’s failure to respond to this increase,
and weaker oil demand from China
* Decline in price leads to disinflation, greater
purchasing power, which then boosts household
consumption of goods, services other than energy
* There’s close correlation between household consumption
and the ad market
* European TV stocks to gain most due to leverage effect
* Reiterates buy on TF1; lifts PT to EU14.7 vs EU14.5
* Reiterates buy on ProSiebenSat.1, PT EU41
* Reiterates buy on ProSiebenSat.1, PT EU41</li></ul>
* NOTE Dec. 2: U.K.’s TV Advertising Revenue May Withstand
Growth in Digital: Bloomberg Intelligence

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>>> FRANCE DEBT AGENCY (AFT) SELLS TOTAL €4.0B VS. €3.0-4.0B INDICATED RANGE IN

FRANCE DEBT AGENCY (AFT) SELLS TOTAL €4.0B VS. €3.0-4.0B INDICATED RANGE IN 2023, 2025 AND 2027 OATS 
- Sells €2.075B in 1.75% May 2023 OAT; Yield: 0.76% v 0.94% prior; bid-to-cover2.03 x v 2.62x prior
- Sells €1.332B in 6.0% Oct 2025 OATs; avg yield 1.11% v 3.31% prior; Bid-to-cover: x v 2.50x prior
- Sells €590M in 2.75% Oct 2027 OAT; Yield 1.39% v 1.61% prior; bid-to-cover 2.09x v 2.60x prior

>>> SPAIN DEBT AGENCY (TESORO) SELLS TOTAL €3.51B VS. €2.5-3.5B INDICATED RANGE

SPAIN DEBT AGENCY (TESORO) SELLS TOTAL €3.51B VS. €2.5-3.5B INDICATED RANGE IN 2017, 2020 AND 2024 BONDS 
- Sells €1.24B in 0.50% 2017 bono bond; Avg Yield: 0.584% v 0.638% prior; Bid-to-cover: 2.94x v 3.28x prior; Maximum Yield: 0.595% v 0.677% prior
- Sells €1.0B in 1.40% 2020 bono; Avg Yield 0.946% (record low) v 1.060% prior; Bid-to-cover 2.75x v 2.77x prior; Maximum Yield: 0.959% v 1.084% prior 
- Sells €1.27B in 2.75% 2024 bono; Avg Yield 1.840% (record low) v 2.123% prior; Bid-to-cover 2.19x v 2.98x prior; Maximum Yield: 1.850% v 2.148% prior

Global Relative Value: Oil - integrated and E&P



From: LAURENT CHEKROUN () At: Dec 4 2014 05:34:12
Subject: Global Relative Value: Oil - integrated and E&P
Global Relative Value: Oil - integrated and E&P


Relative Value Global: Oil – integrated & E&P

LONG (on a relative basis)
XLE US: $78.90; IXC US: $37.7; XOP US: 49.00; OIL FP: Eur33.00; PBR US: $9.00; LKOD LI: $46.48; Brent M05: $75.3
December 1, 2014
Following OPEC’s decision not to cut output after the recent fall in oil prices, in particular due to a glut of crude brought about by overproduction in the US (aka the fracking revolution), oil prices collapsed further last Friday, causing a crash in oil/energy related shares on Friday, and this morning in Europe. E&P companies are the most affected, being the high beta stocks in the sector as they are directly linked to changes in the price of crude. One immediate consequence of the oil bear market was the abandonment of the Petroceltic deal by Dragon Oil, with Petro Celtic dropping by almost 40%.
Following our positive report on oil drilling and services, we are positive on oil/energy stocks in general, and particularly on E&P companies which are reaching ridiculous levels of valuations, exceeding (on the downside) the lows of 2008/09 when crude collapsed to $40.

1. OIL in the global valuation context
As highlighted in our global strategy report (Oct 8), out of the top 50 best value stocks, 18 are energy stocks highlighting the undervaluation of the sector. In the US, of the top 25 best value stocks, 13 are energy, including 10 oil stocks (4 integrated; 6 E&P) and 3 oil services stocks. In Europe, out of 14 top undervalued stocks, 4 are energy. The story is the same in emerging markets where Russian oil stocks, Petrobras, and CNOOC (China) feature prominently amongst the best value opportunities. Even in Japan, Inpex is ranked #1 in terms of value vs. margins In fact on a global basis, of the top 10 best value vs. margins stocks, 9 are oil stocks (Inpex, 6 Russians, Statoil, Sasol).
In terms of relative performance, the oil sector, be it on a global basis, or market by market is not only significantly oversold, but is selling on relative lows that are overshooting the preceding lows of 2008-09 when oil collapsed to $40. This would suggest that either the oil price is on for another significant leg down, or that on the contrary, if oil prices were to stabilize, the energy sector is due for a significant rally.
E&P
E&P are the high beta stocks in the energy sector. The following two charts are showing the relative performance of US E&P stocks to the US Energy sector and to the Oil Services sector. As can be seen, E&P are massively underperforming in the current oil rout. In fact as the chart below shows, the relative underperformance of the E&P sector vs. Energy is similar to the 2008 relative collapse. However, again the 2008 move took place in an environment where oil collapsed from over 140 to $40
CONCLUSIONS & TRADE RECOMMENDATIONS
As demonstrated above, oil stocks are undervalued relative to world equity markets, and particularly so in the US and Europe. Relative performance of energy stocks to indices would tend to indicate that either oil stocks are extremely oversold (relative), or oil prices should plunge further. As such, we would overweight energy stocks in any long equity portfolio. This sector allocation bet was also highlighted in our last strategy report where we highlighted through a bottom-up stock selection based on relative values and profitability trends and cycles that the energy sector was the most attractive in all markets.
CORE LONG OIL STOCKS
ENI (ENI IM): Eur 16.7
STATOIL (STL NO): NOK 126
ENCANA (ECA CN): C$ 17.80
PETROBRAS ON (PBR US): $9.12 (we recommend Petrobras in US$)
Russian Oil or Market Vector Russia (RSX): $19.60
(Gazprom, Novatek, Lukoil, Bashneft)
KMG EP (KMG LI): $ 15.25
DRAGON OIL (DGO LN): GBP 5.02
OIL & NATURAL GAS (ONGC IN): INR 364.4
OIL INDIA (OINL IN): INR 571
INPEX (1605 JP): JPY 1219
BEACH ENERGY (BPT AU): A$ 0.98



SPECIAL SITUATIONS:
BAKER HUGHES (BHI US): US$ 56.5 long the US sector with a 15% cushion/kicker
PETROCELTIC (PCI LN): GBP 1.14 collapsed deal more than 100% higher; co. is for sale.
PETROBRAS ARGENTINA (PZE US): $ 6.0 potential minority buyout; at a fraction to YPF
TALISMAN ENERGY (TLM CN): C$ 5.14 ultra-cheap Canadian E&P co. Icahn main shareholder.
PACIFIC RUBIALES (PRE CN): C$ 10.18 stake building by Alfa Group above C$20. High probability of a take-out
BASHNEFT (BANE RM): RUB 1219 (US$ 23.6) majority stake expropriated by Russian gvt from Sistema. Significantly undervalued; stake could be resold later at a much higher price.

LONG / SHORT MEAN REVERTING / RELATIVE VALUE TRADES:
The following tables are showing the MRI for the various possible pair trades in the global energy sector. Highly mean reverting trades are highlighted in yellow. Of these we recommend the following trades based on relative values and price dislocation:
Long E US (ENI ADR), Statoil (STL NO) / Short IXC US
Long Oil futures (CLH5) /Sshort CNOOC (883 HK)
Long Lukoil (LKOD LI), Novatek (NVTK LI) / Short XLE US
Long XOP US, (OXY US, APC US) / Short RDSA LN
Long Petrobras (PBR), OIH US, RSX US / Short CNOOC (883 HK)
Long Lukoil (LKOD LI) / Short Sinopec (386 HK)
Long Gazprom (OGZD LI) / Short RSX US
Long RSX UX, Lukoil (LKOD LI), Gazprom (OGZD LI) / Short Schlumberger (SLB)
We note that the Russian stock market (RTSI$ or ETF RSX) is most mean reverting with crude oil prices and a large number of oil stocks. Russian oil stocks have been among the best performing energy stocks in the last 3 months.

FT : China’s anti-corruption drive targets Sinopec

China’s anti-corruption drive has turned its attentions to Sinopec, claiming the scalp of a senior executive at the state-owned group’s oilfield services unit.
This week’s detention of Xue Wandong, vice-chairman and general manager of Sinopec Oilfield Services Corp, comes as the unit prepares an initial public offering in Hong Kong.

Investigators have previously said Sinopec and several other state-owned enterprises would be the new front in anti-graft probes that have netted thousands of officials and executives at private and state-owned companies.
Sinopec has until now been relatively unscathed by the investigations, while the purge has hit the management ranks of rival PetroChina.
The inquiry into Sinopec was portrayed in Chinese media as a chance for Fu Chengyu, the company’s ambitious chairman, “to build a clean Sinopec”.
Many of those detained so far are tied to the patronage networks of former energy and security tsar Zhou Yongkang, who began his career in the Liaohe and Shengli oilfields of northeastern China. Mr Zhou is also under investigation, but no formal charges have been laid against him nor against the majority of those detained.
Sinopec said it had fired Mr Xue from its oilfield services unit, which this year entered a joint venture with Weatherford International of the US.
“Sinopec has always had zero tolerance of any behaviours that are against laws or regulations, and it will resolutely investigate whoever is involved and there will not be any soft-pedalling,” the company said.
Mr Xue could not be reached for comment.
Mr Xue began his career at the Shengli oilfield, China’s second-largest, and then oversaw Sinopec’s operations in the southwest of the country.
Businesses linked to the Shengli oilfield in Shandong, the launch pad for Mr Zhou and now one of Sinopec’s largest production centres, have also been tied to corruption allegations in China and Iraq.
But Sinopec itself has been largely untouched during the purge after losing its chairman, Chen Tonghai, five years ago amid spectacular tales of corruption at Shengli, millions of dollars spent on fine wines, and the $1.7m purchase of a chandelier in the company’s Beijing headquarters. Sinopec at the time said the chandelier cost only $250,000.
The investigations can be fickle, and devastating for the individuals and companies involved who have virtually no legal recourse while under investigation.
Last month, private petrochemicals contractor Wison Engineering resumed trading after 13 months of suspension following the detention of its founder Hua Bangsong. Company accounts were frozen, triggering loan defaults.
After months of disruption, Mr Hua was cleared of allegations that he owned the company on behalf of Mr Zhou’s son. He and the company now face two charges: of allegedly bribing a customer with a $1m house in 2009, and of conspiracy to commit fraud in a 2004 tender, Wison said.

(BFW) JPMorgan’s Hessberger Sees M&A Picking Up Next Year

JPMorgan’s Hessberger Sees M&A Picking Up Next Year
2014-12-04 08:49:18.70 GMT


By James Ludden
Dec. 4 (Bloomberg) -- Big companies have a lot of cash so
M&A will be a driver for another year, Klaus Hessberger, co-head
of ECM for EMEA at JPMorgan, tells Bloomberg TV’s Jonathan
Ferro.
* Regarding private equity deals, Hessberger says: “a lot of
good assets are still with PE firms so we’ll see some good
activity”

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NYT - Booyah! Activist Investor Hurls Purple Prose at Jim Cramer

Activist investors have long used sharply worded letters as weapons in their campaigns to shake up companies. Some, like Daniel S. Loeb, have built fortunes by telling chief executives that they deserve “a well-worn boot planted in the backside.”

But even a practiced Wall Street wielder of the poison pen can learn a thing or two from J. Carlo Cannell.

The investment manager, who now owns nearly 9 percent of TheStreet Inc., sent the financial news publisher a letter on Wednesday that brimmed with invective for the media company’s most familiar face: its co-founder, James J. Cramer.

The stock price of TheStreet has tumbled to $2.25 from $60 in 1999, as the television show host — in Mr. Cannell’s words — has “enjoyed considerable nonpecuniary compensation such as perfumed sedan driver(s) and assorted assistants who spray ionized lavender water on your barren cranium.”

The matchup promises to pit the investor against the voluble Mr. Cramer, known for his “Booyah!” exclamations on the frenetic CNBC show “Mad Money.”

And the attention the letter received on Wednesday is a reflection of the influence that activist shareholders wield. Shares of TheStreet jumped more than 7 percent after Mr. Cannell called on the company to consider selling itself — or for Mr. Cramer to give up his cable TV job and focus solely on TheStreet’s offerings.

TheStreet’s chief executive, Elisabeth DeMarse, offered a calmly worded response, saying in a statement that the company’s board regularly debates its strategy and “welcomes” suggestions from investors.

Mr. Cannell lacks the prominence of a Mr. Loeb or a Carl C. Icahn. For starters, his firm, Cannell Capital, is much smaller than those of the hedge fund titans, managing about $450 million.

But Mr. Cannell has carved out a tidy business over 22 years by taking aim at smaller companies with florid, sometimes torrid literary assaults. A letter sent to the BKF Capital Group nine years ago began with a quote from Cicero’s “First Oration Against Lucius Catilina.”

In his letter on Wednesday, the investment manager declared that Mr. Cramer would “now suffer my opinions and recommendations.”

The letter, Mr. Cannell said in a telephone interview, took some time to write, slowing down considerably as compliance officials reviewed it.

The investor conceded that some elements of his letter were hyperbolic. (“I cannot prove to you that the water was ionized,” he said.) But he argued that his broader point, the underperformance of TheStreet, bore merit.

He added that he had twice sought an audience with Mr. Cramer, to no avail. “I mean no ill will of Mr. Cramer,” Mr. Cannell said. “But I am frustrated with, and he should be ashamed of, his company’s circulation numbers. It’s embarrassing.”

Behind the campaign is the sluggish stock performance of TheStreet, whose shares have risen just 1.7 percent over the last five years and whose market capitalization of $83 million is a fraction of its former value.

Part of the problem, according to the investor, is Mr. Cramer. Wednesday’s letter outlined a number of problems with the television personality’s compensation. By Mr. Cannell’s reckoning, Mr. Cramer has drawn over $14 million in cash payouts from TheStreet.com, excluding stock option grants.

Not all is wrong with TheStreet, Mr. Cannell said. Its actual management team is qualified, having cut costs without harming sales. And the company’s acquisition of The Deal, a trade publication for the world of mergers and acquisitions, has done well.

But another major issue, according to the investor, is that Mr. Cramer’s commitments to CNBC prohibit him from fully promoting TheStreet.com’s own paid-subscription offerings, leaving the company handicapped in its fight against rivals like The Motley Fool.

“Media companies that have a brand, and are able to monetize that brand, are tremendously profitable,” Mr. Cannell said in the telephone interview. TheStreet, he argued, has failed to truly take advantage of its most famous spokesman.

And, according to Mr. Cannell, the TV host’s compensation has not been commensurate with his contributions to the company. The investor recommended that Mr. Cramer voluntarily cut his pay by 70 percent, resign from CNBC and direct his energy to “helping your fellow shareholders crawl back from Hades.”

Ms. DeMarse of TheStreet, offered support for the company’s most visible spokesman in her statement. “We’re proud to have TheStreet’s founder, Jim Cramer, under contract,” she said. “He is a committed member of our team and is appropriately aligned with the success, growth and profitability of the firm.”

Mr. Cannell, however, framed Mr. Cramer’s circumstances in decidedly more existential terms.

“When you lie upon your deathbed, how will you reflect upon on your legacy?” the activist investor wrote in his letter. “You have done well, but how has the common shareholder done?”

(BFW) Ryanair Raises FY Profit After-Tax Forecast to EU810m to EU830m

Ryanair Raises FY Profit After-Tax Forecast to EU810m to EU830m
2014-12-04 07:35:15.669 GMT


By Brian Lysaght
Dec. 4 (Bloomberg) -- Ryanair Nov. traffic jumps 22% to
6.35m pax.
* Ryanair revised FY traffic guidance just over 90m customers
* Ryanair Nov. rolling annual traffic to Nov. grew 5% to 85.4m
* NOTE: Ryanair FY est. adj net profit EU749m: Bloomberg data
* Link to Statement:Story Link

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(Le Figaro) CGG remains under pressure Technip

The leader of the oil services set the tone Tuesday night: because he expects "to decrease in exploration expenses" among its major customers, the group Schlumberger announced a major restructuring plan and bring its fleet of 23 15 seismic vessels.
Ad immediately echoed in France. Because the future of seismic vessels that carry ultrasounds offshore hydrocarbon deposits, potential or actual, is at the heart of the deaf battle between Technip and CGG . The first proposed, on 10 November, a redemption in the second , 8.30 euros per share paid cash. And was refused rather dry .
End of story? Certainly not. The two groups, supported by their many respective investment banks, preparing the second "round". "The bridges are not completely cut off," says a source close to the matter. The negotiation seems in any case inevitable to many observers. " The fall in oil prices , which has accelerated since the OPEC meeting last week hurt the entire sector. The cuts that oil majors realize their exploration budgets likely to increase, "says one expert dossier.
Neither does protagonists of comments since the revelation of the failed attempt to Technip. But at CGG, the line is still clearly a defense of the independence of the company. "The company is organized to withstand difficult conditions and lowered its breakeven point accordingly," says a close case. CGG has renegotiated with its banks and initiated a restructuring of its activities, with 1,000 job cuts in the key and reducing its fleet from 18 to 13 boats.
Schlumberger followed suit Wednesday CGG comforted in his analysis. Better: the group can hope that the price of his profession of "acquisition" (collection of seismic data) will be held better with the reduction of capacity undertaken by his great rival.
Issue price

The company resulting from the merger with Veritas Geophysical in 2006, disputes the industrial project that was offered Technip, now run by Thierry Pilenko , the former boss of Veritas precisely. The leading French oil services, which weighs four times heavier than CGG stock market with a capitalization of € 6 billion, intends to expand its range of services to aggregating devices CGG (Sercel) and its reservoirs analysis services .dropoff window
It has however not hide its intention to separate from business acquisition - that is to say the fleet of ships - subject to his eyes to too strong competitive pressure. Technip asserted its 20 billion order book for CGG greater stability in a turbulent environment.
For CGG, the juxtaposition of its businesses with those of Technip has little meaning. The company warns against the risk of social destruction and "destruction of its integrated model" suggests a close case. Above all, she refuses to sell so cheaply Technip, which has rightly chosen this moment to cycle down to start the onslaught of a company whose shareholders have not seen the color of a dividend since long time. "Technip has behaved as if CGG would fall like ripe fruit. It takes effort on the price to reopen the case, "one expert analysis. Financial Technip's operating margins are narrow, however, the group of Pilenko having reaffirmed its commitment to maintain its credit rating.
"I prefer a CGG at Technip as a competitor or a Chinese," analyzes a player in the sector. The challenge is indeed perhaps the one. The state shareholder of both companies, is sensitive to the argument, but public power, Bercy Bpifrance through IFP has not yet made a religion on the record. "We will not go jumping on the argument of the creation of the national champion, a little artificial. But the subject deserves at least to be examined, "says a public source. The Notice of Total, mute but often considered a "godfather" of Technip can also weigh in the balance.