Tesco mulling GBP 10bn listing of Asian businesses
Tesco, the FTSE-100 supermarket group, is thinking about spinning off and listing its Asian businesses, The Daily Telegraph reported. A report on The Daily Telegraph website said senior City sources believe that Tesco chief executive Dave Lewis is thinking about listing the Asian operations as it would raise a large sum while retaining most of the company’s international businesses.
Analysts cited by the report estimated a valuation in the range of GBP 8bn (EUR 10.16bn) to GB 10bn for Tesco’s Asian businesses, which include supermarkets in South Korea, Thailand and Malaysia.
Tesco is considering options including substantial asset disposals in the wake of several profit warnings and its GBP 250m overstatement of profits, the article said.
Lewis is unlikely to give an update on his turnaround strategy for Tesco’s UK business or to confirm any plans to sell assets, the item continued.
As previously reported, Tesco is also thinking about selling Dunnhumby, the data analytics business that operates the supermarket group’s Clubcard loyalty scheme. Up to four private equity groups may have sounded out Tesco in recent weeks regarding Dunnhumby, the report said.
Tesco refused to comment, according to the report.
Source Daily Telegraph
* Q3 revenues weaker than expected due to weakness in Mobile
Gemalto reported weaker than expected Q3 revs of €626m compared to UBSe/Cons of
€659m/€648m. Within the divisions, Payment & Identity revenues of €289m, growing
at 12% y-o-y in constant currency due to the benefit of US/Asia EMV card roll-outs was
in-line with expectations but Mobile revenues of €331m were below both UBSe/Cons
of €362m/€352m. The company has reiterated its full year guidance for double digit
PFO growth in '14E (consensus +11%, UBSe +9%) but we would expect consensus
'14E PFO to come down slightly towards us (cons €387m vs. UBSe €378m).
* Mobile: Growth in new areas overshadowed by declines elsewhere
Within mobile, despite embedded secure elements having grown +57% and its highend
4G and multi-tenant SIMs growing +19%, products revenue declined 5% y-o-y in
constant currency. Indeed, we estimate that Mobile Comms product revenues were
down 8-9% y-o-y in Q3 despite multi-tenant SIM cards now accounting for 7% of
shipments (and we believe significantly more of revenues).
* Focus on the conference call around recent news flow
As can be seen from the presentation for the call, we expect the focus on Gemalto's
conference call (3pm CET) will be around the recent newsflow that has been impacting
the shares, particularly Apple's entrance into payments (which we believe Gemalto is
not benefiting from) and the 'Apple SIM' launched with the iPad Air 2. In our view,
while we recognise that Gemalto's TSM Hub solution does break down some of the
barriers to adoption for mobile payments using a SIM, we believe service providers will
likely still prefer either Apple Pay type approaches or HCE approaches (if they can get
comfortable with the security/pricing model). On the Apple SIM launch, we believe this
is initially relatively benign and we remain sceptical on the likelihood of operators
wanting to push this solution into handsets anyway.
* Valuation: €65 DCF-based price target (WACC 9%, g 2%)
Gemalto currently trades on 16x '15E P/E.
Tullow Oil plc (Tullow) announces the results of a series of recent exploration and appraisal activities conducted in Blocks 10BB and 13T onshore Kenya.
Kodos-1 wildcat exploration well in the Kerio Basin
The Kodos-1 exploration wildcat in Block 10BB is the first well drilled in the Kerio Basin, northeast of the successful South Lokichar Basin. Hydrocarbon shows were encountered in Kodos-1 which indicates the presence of an active petroleum system. However reservoirs were mixed quality alluvial sands close to the basin boundary fault at this well location.
The Weatherford Rig-804 drilled Kodos-1 to a final depth of 2,500 metres and the well will be plugged and abandoned. The rig will now be moved to drill the second well in the basin at Epir-1, 25 km north of Kodos-1 in a separate sub-basin. Following up on the encouraging hydrocarbon shows at Kodos-1, further drilling in the greater Kerio Basin can be expected during 2015.
Ekosowan-1 exploration well in the South Lokichar Basin
The Ekosowan-1 well in block 10BB is the most southerly well drilled to date in the South Lokichar Basin, 12 km south east and up-dip of the previous Amosing-1 oil discovery. The well extended the proven oil basin southwards having encountered a 900 metre section of near continuous oil shows throughout an interval of tight faulted sands.
The Ekosowan area is located within the ongoing 3D seismic survey in the South Lokichar Basin, acquisition of which is expected to complete in December this year. Follow up drilling will target better developed reservoir expected between Amosing-1 and Ekosowan-1, further away from the faulting at the basin margin.
The Sakson PR-5 rig drilled the Ekosowan-1 well to a final depth of 2,029 metres. The well will be plugged and abandoned, following which the Sakson PR-5 rig will be replaced by the new SMP-106 rig which is currently mobilising to the Engomo-1 wildcat well location, the first test of the North Turkana Basin.
Ngamia-4 appraisal well in South Lokichar Basin
The Ngamia-4 well in Block 10BB continued the successful appraisal of the Ngamia oil field. The well was drilled 1.1 km west of the Ngamia-1 discovery well and successfully encountered up to 120 metres of net hydrocarbon pay, of which up to 80 metres was oil. The well has been suspended for use in future appraisal and development activities.
The PR Marriott Rig-46 drilled Ngamia-4 to a final depth of 1,814 metres. The rig will now drill the Ngamia-5 appraisal well which will help assess reservoir connectivity in the Ngamia field, the largest oil discovery to date in the South Lokichar Basin.
Twiga-2A well test in South Lokichar Basin
The SMP-5 Workover Rig has successfully completed four flow tests on the Twiga-2A well in Block 13T, achieving production rates between 150 and 3,270 bopd under natural flow with no depletion, the highest oil production rate seen to date in Kenya. With optimised equipment the maximum flow potential from the best zone could have increased to around 10,000 bopd demonstrating excellent reservoir deliverability.
The SMP-5 rig will now move to the Amosing oil field to begin Extended Well Testing, where production and injection interference testing, involving the Amosing-1 and 2A wells, will help provide dynamic flow characterisation of the Amosing stacked reservoirs.
Tullow Operates Blocks 10BB and 13T with 50% equity and is partnered by Africa Oil Corporation, also with 50%.
Commenting today, Angus McCoss, Exploration Director, said:
“The Kodos-1 well is the first test of the Kerio Basin and hydrocarbon shows provide encouragement, indicating the presence of an active petroleum system. The potential of the Kerio Basin remains highly prospective and the rig is now moving to drill the next well, Epir-1, in a sub-basin to the north of Kodos-1.
South Lokichar Basin activity continued with exploration and appraisal drilling and well testing. The Ekosowan-1 well encountered a significant interval of oil shows however reservoirs at this location were tight. We look forward to stepping out from Ekosowan towards the Amosing oil field in pursuit of better reservoirs. Appraisal and well testing success continues with Ngamia-4 finding a substantial section of oil pay and Twiga-2A recording our highest flow rates to date.”
Set against a backdrop of sharply falling oil prices it is hard not to feel that this reporting season is more likely reflective of a world that, for now, is past than one that is impending. Nevertheless, rear view mirror or not the quarter should provide important indications of the extent to which project starts and cost restraint are beginning to influence cash flow. Overall, with hydrocarbon prices falling by c6% YoY and volume essentially flat we look to a 3% weighted decline in YoY earnings. Disparity amongst the names is, however, meaningful with exposure to R&M for once proving an atypical source of earnings upside. Most likely upside? BG and Total. Most likely downside? ENI and Statoil.
--> Valuation & Risk
--> Valuation & Risk
As to the individual names we see stronger than anticipated production in Brazil as likely driving upside surprise at BG Group (Buy 1400p). Combined with the potential for the removal of significant execution risk as key Brazilian and Australian projects move to cash delivery we remain constructive on the shares. At Total (Buy €55) we believe that both project start-ups and material exposure to European refining also imply upward quarterly earnings risk, with yield (5.6%) offering share price support. By contrast we see scope for disappointment at Statoil (Buy NOK 195) given a potential high exploration write-off and the guided deferral of NCS gas volumes to later quarters. ENI’s exposure to challenging Italian gas markets (Buy €22) in a faltering economy advises similar caution. Our target prices, which assume $103/bbl 2015 Brent, target an 11x 2015E PE multiple, the key risk being sustained lower oil pricing.
BN 10/23 06:17 *S&P: EUROZONE MAY BE ENTERING STUBBORN PHASE OF SUBDUED GROWTH
BN 10/23 06:15 *S&P SAYS EUROZONE CRISIS IS STILL NOT OVER YET
BN 10/23 06:15 *S&P SAYS EUROZONE CRISIS IS STILL NOT OVER YET
S&P Says Euro Area May Enter ‘Stubborn Phase of Subdued Growth’
2014-10-23 06:25:01.431 GMT
By Dara Doyle
Oct. 23 (Bloomberg) -- Says “worst may be over, but the
difficult job of tending to unfinished business lies ahead.”
* S&P says “we believe that the eurozone’s problems are still
unresolved”
* “We believe that as an unintended consequence of its OMT
promise, the ECB may have instilled a sense of policy
complacency,” says analyst Moritz Kraemer.
* Says the ECB may continue to expand its accommodative
policy, for example through quantitative easing
Link to Statement:{NSN NDVW2B3PWT1C <GO>}
Link to Company News:{2539Z GR <Equity> CN <GO>}
For Related News and Information:
First Word scrolling panel: {FIRST<GO>}
First Word newswire: {NH BFW<GO>}
To contact the editor responsible for this story:
Dara Doyle at +353-1-523-9521 or
ddoyle1@bloomberg.net
2014-10-23 06:25:01.431 GMT
By Dara Doyle
Oct. 23 (Bloomberg) -- Says “worst may be over, but the
difficult job of tending to unfinished business lies ahead.”
* S&P says “we believe that the eurozone’s problems are still
unresolved”
* “We believe that as an unintended consequence of its OMT
promise, the ECB may have instilled a sense of policy
complacency,” says analyst Moritz Kraemer.
* Says the ECB may continue to expand its accommodative
policy, for example through quantitative easing
Link to Statement:{NSN NDVW2B3PWT1C <GO>}
Link to Company News:{2539Z GR <Equity> CN <GO>}
For Related News and Information:
First Word scrolling panel: {FIRST<GO>}
First Word newswire: {NH BFW<GO>}
To contact the editor responsible for this story:
Dara Doyle at +353-1-523-9521 or
ddoyle1@bloomberg.net
Integrating GS Competitive Positioning (CP), commodity preference and valuation
We sort our best ideas into three groups to reflect the cyclical nature of stock picking in the global mining sector:
1) Strong CP / Strong commodity exposure:
BHP Billiton, First Quantum, Lundin Mining, Boliden, Vedanta, Freeport, Southern Copper, Dominion Diamonds, Sandfire Resources.
2) Strong CP / Poor commodity:
Rio Tinto, Anglo American, FMG, Vale, Coal India, PT Tambang, PT Adaro, Yanzhou Coal, Shanxi Lu’an
and Atlas Iron.
3) Weaker CP / Strong commodity play:
Alcoa, Norilsk Nickel, Norsk Hydro, Rusal, Lonmin and Alrosa.
Details :
Investing in miners remains challenging
The mining sector has underperformed the wider market every year since 2011, and 2014 has also
been tough – with the SXPP down 6% ytd. We explore 4 themes driving the sector:
1) Changing China,
2) oversupply in key commodities,
3) cost reduction and productivity lowering cost curves and
4) higher taxes / royalties as commodity prices fall. These are all presenting challenges to returns for the miners; and although some observers have been calling for a bottoming in the global mining sector to occur this year, we believe
single stock selection has become more critical than a broad sector call.
CP important, but cyclical factors matter
The strength of a company’s Competitive Position has been a strong indicator of through-the-cycle performance, with Q1 names outperforming on a 3- and 5-year basis. However, cyclical factors of commodity preference and valuation, combined with CP, are vital to call shorter range stock performance.
see attached monitor
Oct 22 (Reuters) - Private equity firms are circling Bayer's 10 billion-euro ($12.7 billion) plastics business, hoping to divert the German drugmaker from its plan to list the division, two people familiar with the matter said on Wednesday.
Advent, Carlyle, Cinven, CVC and KKR are among those eyeing MaterialScience after Bayer said in September that it planned to spin off the division through a stock market listing, helping it focus on its more profitable life sciences business.
Given the size of the asset, the funds are also in discussions to form consortia, potentially with investors including sovereign wealth funds (SWFs).
"All the SWFs and pension funds are being drafted in," one of the sources said.
Bayer, Advent, Carlyle and KKR declined to comment. CVC and Cinven were not immediately available to comment.
The sources added that funds may wait until Bayer publishes full-year results next February before deciding on a bid.
Bayer MaterialScience's products include panoramic roofs for expensive cars, transparent plastics for blu-ray discs and chemicals for insulation.
Reuters reported in September that Rothschild had been appointed to advise on the listing.
However market conditions for initial public offerings (IPOs) have weakened in recent weeks, forcing a number of companies to pull their listings and potentially heightening the attractiveness of a sale to private equity firms eager to deploy large pools of unused capital.
Equinet analysts have valued MaterialScience at almost 10 billion euros, while brokerage DZ Bank has said it is worth about 11 billion euros including debt.
The division, which has been hit by big increases in raw materials costs, has profit margins of less than half the average across the Bayer group. Shares hit record highs after the corporation declared its intention to spin off the business in the next 12-18 months.
MaterialScience generated adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of 1.2 billion euros in the 12 months to June, 14 percent of the group total.
Stora Enso ready to talk on sale of paper business
Stora Enso, the Finnish paper and pulp company, is ready to negotiate regardingits paper business, Kauppalehti reported.
The Finnish-language item cited the company’s chief executive, Karl-Henrik Sundström, who said the company is open to offers about its paper business if the offer is decent and has a cash component. The offer would have to be substantially large so that it would replace the cash flow the paper business currently generates.
Source Kauppalehti