* Adding Peugeot (UG FP; Buy; CP EUR16.38; TP EUR21.00)
We are attracted to Peugeot because we see significant upside to consensus EPS
expectations for 2017e. Our forecast of EUR2.48 indicates a doubling of operating
EPS from 2015e and is c30% ahead of consensus, driven by a reduction in net
financial expenses, lower taxes and the benefits of restructuring. From a strategy
perspective, we have also just turned positive on the autos sector with an upgrade
to overweight
* Adding Credit Agricole S.A. (ACA FP; Buy; CP EUR11.10; TP EUR14.70)
We are attracted to Credit Agricole S.A. (CASA) for two key reasons. First, the recent IPO
of Amundi has provided a clearer line of sight on the valuation of ‘core CASA’ (a 2017e
P/E of 6.9x) and second, we believe funding costs could be significantly reduced given
that CASA is already well above its TLAC targets.
* Removing Air France-KLM (AF FP; Buy; CP EUR6.39; TP EUR8.45)
We remove Air France-KLM from the portfolio because we believe that Peugeot
offers a more attractive investment opportunity.
* Removing Erste Group Bank (EBS AV; Buy; CP EUR28.76; TP EUR33.00)
We remove Erste Group Bank from the portfolio because we believe that Credit
Agricole SA offers a more attractive investment opportunity.
* Performance
Since inception on 5 January 2010, the Europe Super Ten portfolio has returned
+70.1% versus a return of +29.7% for MSCI Europe. Year-to-date, the portfolio has
returned 0.9% versus a return of -0.8% for MSCI Europe. These performance figures
are in USD terms, priced at 4 December 2015 and are calculated by Euromoney.
* Super Ten rules
Adjustments to the portfolio will be triggered by changes to analysts’ stock ratings or
strategists’ themes. Changes may also be made if better ideas become available,
e.g. through the publication of new research or through movements in share prices.