(BFW) Swisscom Needs Stable Shareholder for Investment: NZZamS


Swisscom Needs Stable Shareholder for Investment: NZZamS
2015-03-22 09:34:42.665 GMT


By Giles Broom
(Bloomberg) -- Co. is investing in networks and information
technology, so it needs a stable shareholder rather than one
focused on short-term dividends, Swisscom Chairman Hansueli
Loosli says in in an interview with NZZ am Sonntag.
* Swisscom is majority owned by the Swiss government and any
decision to sell the stake will be up to the government, not
the chairman: Loosli
* Other European telecommunications providers paid high
dividends over the yrs and the networks aren’t as good as
they should be: Loosli


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(BFW) Three Bidders Lined Up for 33% Stake in AB Ports: Sunday Times


Three Bidders Lined Up for 33% Stake in AB Ports: Sunday Times
2015-03-22 09:39:10.290 GMT


By Benjamin Katz
(Bloomberg) -- Three intl infrastructure investment groups
to compete for 33% stake in Associated British Ports, first bids
due Thursday, Sunday Times reports without saying where it got
the information.
* Deal could raise GBP1.2b, newspaper says
* Pension Service of Korea, Canada’s OPTrust, Dutch APG Asset
Management to form consortium managed by Global
Infrastructure Partners
* Canada Pension Plan, Hermes to make joint bid
* 3i Infrastructure, Abu Dhabi Investment Authority and Wren
House Infrastructure to form 3rd group


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Barron's : Yandex, Russia’s Biggest Internet Play, Looks Cheap


Yandex, Russia’s Biggest Internet Play, Looks Cheap


Searching for value in Russian stocks may seem like a pointless task given the country’s economic, military, and political challenges. Unless you consider, well, search.
Yandex (ticker: YNDX) is Russia’s largest Internet search player with a 60% market share, which allows it to take in roughly half of the nation’s online advertising. It also operates in Belarus, Kazakhstan, Turkey, and, yes, Ukraine. Despite the dire macroeconomic environment, Yandex reported a 29% increase in 2014 revenue to $902 million (50.8 billion rubles, based on the Dec. 31 exchange rate), and a 26% increase in adjusted net income to $244 million. Search queries increased 7% in the fourth quarter compared with the same period in 2013, and the number of advertisers rose 14% year over year in the fourth quarter.
Contextual advertising — automated, individualized ads – generates 90% of Yandex’s revenue, and was the only segment of Russian advertising that produced fourth-quarter growth, according to Citigroup. Russia’s consumer sector, where modernized businesses can still grow by improving on older, inefficient services and goods shortages, should boast better medium-term growth and corporate governance, with less risk than commodity-driven businesses, says James Syme, who runs the JOHCM Emerging Markets Opportunities fund (JOEAX).
Yandex’s U.S.-traded shares reflect the decimation of the ruble against the U.S. dollar and a host of other Russian woes. They’ve tumbled 52% over the past year–19% so far this year even as the Market Vectors Russia ETF (RSX) has gained, mostly unnoticed, by 11% in 2015. With the weak currency hitting margins, Yandex’s earnings are under pressure and are expected to fall this year to 62 cents a share, from 70 cents a share in 2014, according to FactSet. But that is anticipated to be the trough as Yandex boosts ad monetization, cuts costs, and manages currency risk. As more advertising shifts online, revenue should rise by at least 15% in 2015, according to Bank of America/Merrill Lynch.
The projected earnings drop means Yandex trades at 23 times estimated 2015 earnings, which may seem a little rich. However, that’s cheaper than China biggest Internet search player, Baidu (BIDU), at 27 times. And Yandex’s multiple of enterprise value to 2015 earnings before interest, taxes, depreciation, and amortization (EV/Ebitda) is even more attractive compared with other emerging Internet plays, notes Syme, whose fund owns the stock. Yandex sports an EV/Ebitda multiple of about 10.4 times, while Baidu trades at 23 times. If analysts’ $22 consensus price target is met, the stock has 50% upside from a recent $14.54.


Although it sports a market value of just $4.6 billion — Google’s (GOOGL) is $382 billion–Yandex doesn’t lack for ambition. It just launched Yandex Data Factory, which offers big-data services for businesses.
The risks are obvious, but they appear to be baked into profit estimates and price targets for Yandex. It’s worth a wager.
DESPITE TERRORIST THREATS, the Egyptian government’s mid-March international conference to attract investors came off without a hitch. Gulf neighbors pledged billions in new investments; BP (BP), General Electric (GE), and other companies also announced fresh projects. But in a plan worthy of a Pharaoh’s ambition, Egypt unveiled a design for a $45 billion new capital city between Cairo and the expanding Suez Canal. The hope: finance and build new government, education, and housing structures, and thousands of miles of roads in just seven years.

Barron's: Swiss Sunrise Has 25% Upside and a 3% Yield


Swiss Sunrise Has 25% Upside and a 3% Yield

Sunrise Communications Group, which went public only last month, could herald a bright dawn for investors. Shares of Switzerland’s No. 2 telecom company (ticker: SRCG.Switzerland) have risen almost 20% since their debut on the SIX Swiss Exchange on Feb. 6. They could climb another 20% over the next 12 months as the company’s prospects for 2016 become clearer and investors re-rate the stock.


At Friday’s closing price of 81.75 Swiss francs ($83.78), Sunrise has a market value of CHF3.68 billion and trades at a price/earnings ratio of almost 30 times next year’s earnings. It doesn’t look cheap, especially next to Swisscom (SCMN.Switzerland), the Swiss market leader, which trades at a more reasonable multiple of 17 times.
But P/E isn’t the best way to value Sunrise because it doesn’t account for current high levels of capital expenditures while the company completes the build-out of its 4G network. Depreciated cash flow, which allows for Switzerland’s favorable tax environment, is the best way to go.
On that basis, Zurich-based Sunrise shares could be worth 100 Swiss francs, according to Berenberg, a German investment bank and asset manager. That suggests upside approaching 25%.
Analysts’ consensus price target is CHF92.80.
What’s creating buzz around the stock is the lucrative dividend policy. Sunrise has pledged a dividend of CHF135 million, even though it expects to post a per-share loss this year. That’s a payout of CHF3 a share for a yield of 3.8%.


In the next few years, it could get even better. Sunrise is committed to a dividend payout ratio of at least 65% of free cash flow, or earnings before interest, tax, depreciation, and amortization (Ebitda). The yield could be 6% by 2017, based on the current price.
If that isn’t enough, after Sunrise reaches its medium-term target of net debt to Ebitda of 2.5 times, the company plans to return excess cash to shareholders. It had a ratio of 2.7 after its initial public offering, which was the second largest in Europe this year after airports operator Aena (Aena.Spain).
Sunrise’s dividend yield could reach 11% by 2018, and by 2019 it could return as much as one-third of its market value to shareholders. No wonder analysts draw comparisons to the returns made in leveraged buyouts.
Sunrise, which traces its roots to 1996, has come a long way in a short time. It is Switzerland’s only full-service alternative to Swisscom, with a 27% share of mobile, 9% of broadband, and 2% of TV subscriptions. And the Swiss market is growing, unlike most of the rest of Europe. Swiss consumers generally are more affluent, and they favor reliability over price.
Mobile accounts for about 63% of Sunrise’s revenues, which are estimated at over CHF2 billion in 2014. The company reports full-year earnings March 26.


Free cash flow is estimated at a negative CHF20 million for 2014, but it is likely to turn positive in this year, at CHF199 million, and rising to CHF313 million in 2016.
Sunrise has made a good recovery from a damaging attempt to merge with No. 3 player Orange Switzerland in 2010. It put investments on hold while regulators scrutinized the deal. Ultimately, the tie-up was blocked, and Sunrise was forced to play catch-up in a fast-moving industry.
That required a splurge on investment. Capital expenditure peaked last year at about CHF355 million, or about 18% of sales, and should normalize to about 11% of sales in 2016.
That heavy spending has helped Sunrise transform itself from a price leader to a premium challenger, competing on the quality of its network, customer service, and flexible tariffs rather than on price. An endorsement agreement with Swiss tennis star Roger Federer is helping, as well.
Revenues are forecast to grow at a steady 2% to 3% clip annually, just above the level of GDP growth.
SUNRISE ALSO COULD BENEFIT from a pilot network-sharing deal with Orange Switzerland, which would generate synergies for both companies. The savings are difficult to estimate but could amount to as much as CHF40 million for Sunrise.
The cooperation also has fueled suggestions that the two companies could attempt to rekindle their merger. Orange Switzerland is under new ownership, having been acquired last year by the investment vehicle of Xavier Niel, who also controls Iliad (ILD.France). Switzerland’s regulator may welcome a stronger competitor to Swisscom.
Throw in some M&A appeal, and Sunrise could put rivals in the shade.

>>> Weekly Update

Weekly Market Update: Fed's patience is gone but not forgotten


As expected, the FOMC altered its forward guidance this week, replacing the "patient" line with broad language that emphasized its core policy principle of remaining data dependent. Fed Chair Yellen couched the change in pretty stark terms: "just because we removed the word patient from the statement doesn't mean we're going to be impatient." The FOMC also lowered its economic forecast for 2015-16, hinting that the data might not be as rosy as required for a normalization of interest rates. Nearly every global asset class saw big moves on the decision: equities soared, the euro saw an astonishing move across five big-figures (EUR/USD made a round trip from 1.0580 to 1.1050 and back to 1.0650, the second broadest one-day range seen since 2000), and the 10-year UST yield dropped as low as 1.90% and remained below 2% through the end of the week. By Friday, the Shanghai Composite posted a fresh multi-year high, the FTSE index surged above 7,000 for the first time ever, while the Nasdaq approached its all-time closing high of 5048 set in March 2000. For the week, the DJIA added 2.1%, the S&P500 rose 2.7% and the Nasdaq gained 3.2%.

The FOMC replaced patient with a statement that policy tightening would be appropriate when the Fed "has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term." Maybe more importantly though the updated economic forecasts revealed officials now foresee the rising US Dollar serving as a significant headwind to exports and thus a potential drag on growth as well as inflation. Officials also adjusted their outlook for remaining slack in the labor market; forecasts for the long-run level of the unemployment rate shifted down a couple of tenths of a percent. Yellen affirmed that every meeting starting in June will be a "live" meeting for considering rate lift off, but indicated a number of reservations about wage growth, low inflation, and the strong dollar, leaving most analysts saying she was more dovish than they had hoped.

The impact of the brutal winter weather in the US showed up in housing data this week. February housing starts dropped 17% from January to an annualize rate of 897K, while building permits hit a nine-month low of 1.09M. Permits grew slightly over the January rate, although the bulk of permits were for multi-family units, with continued softness in single-family permits. Homebuilder confidence dipped lower than expected in March. The NAHB index of homebuilder sentiment fell for the third straight month and missed expectations. Despite the data homebuilders KB Home and Lennar reported solid Q1 results and suggested the spring selling season is getting off to a solid start.

Greece and its European patrons remain locked in contentious negotiations. Greece is at the very edge of solvency, a position the Europeans appear to be using for maximum advantage to squeeze more reforms out of Athens and beat back Syriza's electoral pledges to end austerity. Right now the consensus is that Greece has enough funds to pay debt coming due in March but may run out of cash in April, though it may unlock a few billion more euros at next week's Eurogroup meeting. On Friday, German press sources were reporting that German Finance Minister Schaeuble expected Greece to be ultimately forced out of the Eurozone even as Chancellor Merkel still wanted to keep Greece in the monetary union for political reasons.

On Monday Russian President Putin appeared at a press conference with Kyrgyz President Atambayev, breaking an 11-day absence from public life. During the period, wild conspiracy theories circulated in media and the internet about a possible power struggle among the various political factions in the Russian leadership, with some analysts suggesting that a slow-motion coup was underway. Responding briefly to the chatter, Putin noted "without gossip, life would be boring."

Iran and the P5+1 group appeared to edge closer to a nuclear deal. Diplomats suggest the two sides should iron out most of their remaining differences over weekend, but another round of talks likely will be needed to seal any deal. Despite the prospect of Iranian oil spilling back onto the market, Brent moved higher this week, from lows around $55 as high as $56.80 on dollar weakness stemming from the Fed decision. WTI slipped into the low $40's on Tuesday but closed out the week at around $46/barrel.

Scandinavian central banks behaved unpredictably this week in rate actions. On Wednesday, Sweden's Riksbank delivered an unscheduled interest rate cut and expanded its QE bond purchase plan. The Riksbank cut its benchmark repo rate to -0.25% from -0.10% and expanded its bond-buying program by 30 billion kronor, adding to the 10 billion kronor in purchases that started last month. Norway's central bank arrested the slide in its currency by refraining from an expected 25 basis point rate cut on Thursday. Governor Olsen explained that the economy has performed better than was feared, and while rates could still be cut if needed, the central bank has not considered any additional measures beyond a rate action.

Valeant clinched its deal to acquire Salix Pharmaceuticals, raising its offer by about a billion dollars in a new deal that knocked out rival bidder Endo International. Valeant hiked its all-cash bid to $173/share, or about $11.1 billion total, up from its original offer of $158/share. Mall operator Simon Property raised its offer for Macerich to $95.50 from $91 just three days after it rejected Simon's earlier offer and adopted measures to prevent a hostile takeover. Analysts had suggested Macerich would not be satisfied with much less than $100/share, and shares of MAC fell as low as $84 as investors doubted the board would embrace Simon's "best and final" offer.

The Shanghai Composite had its best week of the year, rising over 7% to close above 3,600, the highest level in nearly 7 years. China Premier Li helped spark the rally at a press conference on Monday, promising more substantial fiscal support if the economy slows too much, especially given that recent measures were not considered very potent. February power consumption, which is one of Premier Li's favored economic indicators, slowed to just 2.5% from 3.3% last month and 3.8% in 2014. The Premier's promise to build more affordable housing was also particularly timely as this week's price data showed growing imbalances in the property sector - across the top 70 cities, February prices fell m/m for the 10th straight time and the y/y decline widened by 0.6pts to -5.7%.

In Japan, the BOJ policy statement was largely a reiteration of the prior month, maintaining annual rate of monetary base increase at ¥80T, and reiterating the economic assessment as continuing a moderate recovery trend. The biggest change in the statement pertained to inflation, as the BOJ scaled back its current CPI view to 0.0-0.5% from around 0.5% and the outlook for inflation to around 0% from prior assessment of "slow for time being." On Friday, Governor Kuroda reiterated his more optimistic stance that inflation will achieve the 2% target by the end of the intended FY15/16 period, just as the minutes from last month's meeting showed some growing concern related to the sustainability of the central bank's monthly JGB purchases. On Monday, the cabinet office is set to release its monthly economic assessment which local press speculated will show the first upgrade 8 months.

>>> US Close Dow+0,94% S&P+0,90% Nasdaq+0,68% Russell+0,92%

Closing Market Summary: Stocks End Strong Week on Upbeat Note

The major averages ended the week on an upbeat note with the Dow Jones Industrial Average (+0.9%) in the lead. The price-weighted index ended the week higher by 2.1% while the S&P 500 (+0.9%) gained 2.7% for the week.

Equity indices climbed throughout the session with trading volume running well above average due to today's quadruple witching. As a result, more than two billion shares changed hands at the NYSE floor.

Meanwhile, the Dollar Index (97.89, -1.37), which was a point of focus throughout the week, fell 1.4% to narrow its March gain to 2.5%. Notably, the euro gained 1.3%, climbing to 1.0800 against the greenback with the move partially supported by upbeat comments from the Eurogroup. Specifically, Greece has agreed to present a new reform plan within the next few days in order to receive funds needed to prevent a liquidity shortage.

Today's pullback in the dollar was a supportive factor for the commodity market. Crude oil settled higher by 2.4% at $46.58/bbl, but backed off its best level of the session after the latest Baker Hughes rig count registered its 15th consecutive weekly decline (-56 to 1069). Meanwhile, the energy sector (+1.4%) finished well ahead of other groups.

Elsewhere among cyclical sectors, financials (+1.3%) and consumer discretionary (+1.1%) outperformed with the discretionary sector rallying behind homebuilders after KB Home (KBH 15.26, +1.19) reported better than expected results. Shares of KBH jumped 8.4% while the broader iShares Dow Jones US Home Construction ETF (ITB 27.82, +0.54) gained 2.0%. Meanwhile, apparel and luxury retailers were a bit more mixed. Dow component Nike (NKE 101.98, +3.66) spiked 3.7% after beating bottom-line estimates while Tiffany & Co (TIF 82.99, -3.38) lost 3.9% after below-consensus revenue and light guidance overshadowed in-line earnings.

Also of note, the technology sector (+0.5%) slumped to the bottom of the leaderboard during the final minutes as Apple (AAPL 126.05, -1.45) fell to a fresh session low.

Over on the countercyclical side, the consumer staples sector (+1.2%) outperformed while health care (+0.8%) lagged. Despite today's underperformance, health care gained 4.5% for the week, ending ahead of other sectors. Volatility in the biotech space pressured the sector from its early high as the iShares Nasdaq Biotechnology ETF (IBB 366.52, +1.27) narrowed its gain to 0.4% after being up near 2.0% at the start. The early strength stemmed from a 9.8% spike in the shares of Biogen Idec (BIIB 475.98, +42.33) after the company issued an encouraging report on a developmental drug for the treatment of Alzheimer's disease. For its part, the biotechnology ETF logged a 5.7% gain for the week.

Treasuries climbed throughout the morning, ending on their highs with the 10-yr yield lower by five basis points at 1.93%.

Monday's economic data will be limited to the Existing Home Sales report for February, which will be released at 10:00 ET.
  • Nasdaq Composite +6.1% YTD 
  • Russell 2000 +5.1% YTD 
  • S&P 500 +2.4% YTD 
  • Dow Jones Industrial Average +1.7% YTD 

(BFW) Permanent TSB Said to Hire Goodbody, KBW to Help Raise Capital

Permanent TSB Said to Hire Goodbody, KBW to Help Raise Capital
2015-03-20 16:20:40.939 GMT


By Joe Brennan
(Bloomberg) -- Permanent TSB hires Goodbody Stockbrokers
and Keefe Bruyette & Woods to help it raise EU525m of capital by
July, two people with knowledge of the matter say.
* Deutsche Bank and Davy are leading the capital increase
* Goodbody, KBW retained as co-lead managers on planned
transaction, according to people, who asked not to be
identified, as appointment not yet public
* PTSB preparing to formally start marketing EU400m share
sale, EU125m AT1 securities placement in April: people
* Spokesmen for Permanent TSB, Goodbody, KBW declined to
comment
* NOTE: On March 11, Ireland’s PTSB to Raise $560 Million
After Stress Tests


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FT : China’s CNCC in €7bn talks to take over Pirelli owner Camfin


Camfin, the holding company behind tyremaker Pirelli, is in talks with would see China National Chemical Corporation become its main shareholder in a deal valued at about €7bn.
The takeover would allow chairman Marco Tronchetti Provera to cut the Italian group’s exposure to Rosneft, its main shareholder, in the wake of western sanctions against Russia over Ukraine.

If successful, the deal would also be the latest example of Chinese investors picking up infrastructure assets in Italy as local investors have sold up during the country’s crippling triple dip recession.
In a statement, Camfin confirmed rumours that talks were under way to secure “an international industrial partner”.
The deal, which people close to the talks said was with CNCC, would see Camfin sell its entire 26 per cent stake at €15 per share to a new group of investors in which the Chinese would take a significant part.
Alongside Rosneft and Mr Tronchetti Provera, Camfin’s other main shareholders are Italian bankers Intesa Sanpaolo and UniCredit.
Once that deal is completed, the newly-formed vehicle would undertake a takeover of the remaining shares in Pirelli, Camfin said in a statement.
Shares in Pirelli rose 4 per cent to €15.56, their highest level in the past five years in early trading in Milan.
A deal struck a year ago with Rosneft to become Camfin’s largest shareholder has been strained by the roll out of sanctions on Russia over Ukraine.
People familiar with the negotiations said the deal would allow Mr Tronchetti Provera to ensure the whole or partial exit of Rosneft. The Russian company’s chairman, Igor Sechin — a close ally of President Vladimir Putin and a target of western sanctions — would also leave the board of Pirelli.
One banker said that Mr Tronchetti Provera was limited in his options for finding a partner to strike a deal with Rosneft as any US buyers would be banned under the sanctions.
The talks confirm the resilience of Mr Tronchetti Provera, a businessmen well connected among Italy’s establishment, who has been chairman of Pirelli since 2003 and chief executive since 2011.
Reuters reported the negotiations included a clause that would see Mr Tronchetti continue in his role until 2021 when he will be 73.
In the past year, Chinese investors have snapped up stakes in Fiat Chrysler Automobiles, Mediobanca, Telecom Italia, Prysmian, Eni and Enel.
In July last year, China’s state grid, the world’s largest utility, bought a 35 per cent stake in CDP Reti, a subsidiary of Italy’s state financing agency that controls the country’s electricity grid operator and gas distribution.
According to bankers, Chinese investors are looking at other Italian infrastructure assets including the port system in Venice.