READ the strategy section! JPM on Spanish banks, MS on the deleveraging. And another day of results…


Please have a look at the MS and JPM pieces on banks…

Europe set for slightly lower start with Spain likely to come under pressure after S&P cut Spain to BBB+ with neg outlook. AMZN soared after hrs as tablet sales boosted earnings. Japan rallied as BoJ keeps target rate unchanged but announces buying add’l 10Trn in JGB purchases. Macro eyes on US 1Q GDP figs.

S&P cuts SPain ratings two notched to BBB+ from A with a negative outlook.

AMZN: +13% – Amazon 1Q EPS 28c, est. 7c; rev. $13.19b, est. $12.9b. Sees 2Q net sales $11.9b-$13.3b, est. $12.8b. Sees 2Q operating income between loss of $260m, income $40m.

SBUX: -4.5% – 2Q adj. EPS 40c vs est. 39c. 2Q rev. $3.2b vs est. $3.19b. Starbucks raises yr adj. EPS forecast to $1.81-$1.84, saw $1.78 $1.82 in Jan., est. $1.86; sees rev. growth in low teens, saw at least 10%, implies at least $12.9b, est. $13.4b


On Markets
Same old same. Lack of conviction, lack of volume, nervous investors. Earnings in the US continue to be strong, but Europe is weighting on any uplift. Even if the S&P is able to make progress beyond 1400, setting fresh 52w highs (>1422) may be difficult just given all the events still on the calendar (US elections, “fiscal cliff”, Iran, China leadership transition, Europe, etc).

On the US
The near term economic data should remain choppy as the recent good data has benefited from a warm weather. The Q1 GDP number is expected at +2.5% today (14:30 Paris time).

On Japan
The BoJ eased more than market expectations. The JGB purchases was increased by JPY1tn, with an extension on maturity from 2 to 3 years. TheBoJ expects inflation to be between 0.5% and 1% to 2013. Small impact on the JPY, small impact on the Nikkei…

On China
CNBC noted more speculation of an “imminent” PBOC bank RRR cut (although chatter on a cut seems to recur every other day; recall expectations are for another RRR reduction in Apr and some think it could come ahead of the joint China/US economic talks next week).

On European Earnings:
(as of Wednesday) with 24% of the Stoxx 600 companies having reported.
(from Barclays).


ASK your MS representative for a copy of the MS report.

MS (Van Steenis, Bartsch et al.) Economics/Banks
LTRO eased credit conditions but deleveraging continues.
This was published this morning and you already know what the ECB lending standards showed. It looks slightly better on the lending side, but corporates borrowed even less. In Spain lending fell by 5-11% in Q1 (YoY) and in Italy, it’s the worst quarter in 20 years.

I only provide two charts here, but the piece is a MUST READ!

JPM (Henriques) Europe Credit Research
Chronicle of a Banking Crisis Foretold.
A very good piece that shows the depth of the crisis in Spain. This piece has been written by the Credit team and it focuses on the next big problem in Spain: the residential mortgages. The analyst sees no solution other than a worsening situation for Spanish banks. This piece was published before Santander’s numbers.

So far the NPLs haven’t worsened dramatically on the mortgage side as the social security provides a safety net (from €497 to €1398 per month for up to two years depending on the previous salary, the number of dependents and other matters – this may look like a lot to some and very little compared to the French system). But given the rise in unemployment, this safety net will collapse.

The recent changes in changes in the provision regime doesn’t change much as it focuses on the developers exposure not the mortgage.
There will be some opportunities for distressed assets funds as the governement tries some solutions such as a “bad bank” to collect the mortgages, but in the meantime, say no to banks.


Memo To Draghi: We, The People, “Don’t Trust You One Inch” | ZeroHedge
Jeff Gundlach: Getting There – Business Insider
If it keeps raining this week end, or if you think nothing can save us from this crisis:


– Deutsche Boerse 1Q sales EU552.4m vs est. EU567.4m;1Q EBIT EU260m vs est. EU270.6m; 1Q net EU146.2m; may pay a special dividend of EU1/share
– DNB 1Q net NK1.76b vs est. NK2.6b; 1Q profit NK1.76b vs NK2.85b; 1Q adj. EPS NK1.08 vs est. NK1.623

– Buy Barclays, 2012 EPS Est. Raised 10%, BofA says
– Barclays PT Raised to 290p vs 283p at Morgan Stanley; Kept at Overweight
– Buy ING, price levels ‘a rather attractive entry point’, BofA says
– Svenska Handelsbanken PT Raised 5% to SEK250 at Exane; Kept at Outperform

– NORSK Hydro 1Q rev. NK21.7b vs est. NK23.5b; net income NK585m vs est. NK381m; lower realized aluminium prices, continued weak markets weighed down result
– Ferrovial 1Q net EU7.6m vs est. EU5.2m
– Vinci 1Q rev. EU8.1b vs est. EU7.64b
– Daimler 1Q rev. EU27b vs est. EU26.7b; 1Q Ebit EU2.13b vs est. EU1.94b; sees 2012 deliveries higher than 2.1m in 2011

– BRITISH LAND COMPANY raised to Overweight vs Neutral at JPMorgan
– CRH raised to Overweight at JPMorgan
– Italcementi PT Raised to EU4.1 vs EU4 at Citi; Kept at Sell
– Vinci PT Raised 2% to EU41 at Exane; Kept at Neutral
– Fiat PT Cut to EU3.8 at Morgan Stanley; Kept at Underweight
– Volvo PT Raised 4% to SEK100 at Exane; Kept at Neutral
– Volkswagen AG PT Raised to EU180 vs EU155 at Credit Suisse
– Piaggio’s potential market share in Asia is underestimated, Exane says
– Technip PT Raised to EU110 vs EU101 at Morgan Stanley; Kept at Overweight
– Safran PT Raised 18% to EU33 at Exane; Kept at Outperform

– Galp 1Q adj. net EU50m vs Est. EU52.6m; 1Q Ebitda EU200m vs est. EU208.7m; says marketing volumes to “remain depressed”
– BASF rev. EU20.6b vs est. EU19.04b; 1Q Ebit ex-items EU2.53b vs est. EU2.41b; EPS EU1.88 vs est. EU1.70; says business in 1H ‘unlikely’ to match last year’s; expects gain in sales and profit in 2H Y/y
– Areva 1Q rev. EU2.03b; had EU45.1b in backlog at March 31
– Sanofi 1Q rev. EU8.51b vs est. EU8.51b; 1Q business net EU2.44b vs est. EU2.20b; 1Q performance in-line with FY forecast; reiterates plan to increase dividends
– Novo Nordisk 1Q rev. DKK17.8b vs est. DKK18b; 1Q net DK4.66b vs est. DK4.81b; sees FY local currency rev. growth of 8%-11% vs 7%-11% previously
– ENI 1Q adj net EU2.48b vs est EU2.28b

– Rhoen Klinikum PT Raised 36% to EU22.5 at Exane; Kept at Neutral
– NOVOZYMES cut to Hold at Deutsche Bank
– AstraZeneca PT Cut 10% to 2,800p at Exane; Kept at Underperform
– Bayer PT Raised 3% to EU60 at Exane; Kept at Neutral
– Coloplast Raised to Neutral vs Sell at UBS
– Grifols Cut to Sell vs Neutral at UBS
– Fortum PT Cut to EU18 vs EU19 at Morgan Stanley; Kept at Underweight; Raised to Neutral vs Underperform at BofA
– Neste Oil Cut to Neutral vs Outperform at Credit Suisse
– Shell PT Raised 4% to 2,650p at Exane; Kept at Outperform
– Arkema PT Raised 14% to EU67 at Exane; Kept at Underperform

– Samsung 1Q oper. profit 5.85t won vs est. 4.98t won; 1Q phone business oper. profit 4.27t won; regained lead from Apple, shipping 44.5m smart phones in 1Q (30.6% of market) vs Apple’s 35.1m units (24.1%)

– Dassault Systemes PT Raised 12% to EU87 at Exane; Kept at Outperform
– Alcatel-Lucent PT Cut 5% to EU0.95 at Exane; Kept at Neutral; PT Cut to EU1.2 vs EU1.6 at Credit Suisse; Kept at Underperform
– Gemalto PT Raised 3% to EU62 at Exane; Kept at Outperform

– ORIFLAME 1Q rev. EU396m vs est. EU386.7m; 1Q Ebitda EU55m vs est. EU49.9m; 1Q net EU34.5m vs est. EU30.4m; 2012 focus is to reverse sales trend return to growth with improved op margin

– Pernod Ricard PT Raised to EU90 vs EU85 at Morgan Stanley; Kept at Overweight
– Whitbread PT Raised 9% to 1,850p at Exane; Kept at Underperform
– Puma Rated New Neutral at UBS, PT EU270
– Adidas Rated New Buy at UBS, PT EU70
– SEB Raised to Buy vs Neutral at UBS
– Edenred PT Raised to EU25 vs EU18 at Credit Suisse

– Bucher 1Q sales SF685.9m; sees sales, op. profit and profit rising
– NOBEL BIOCARE 1Q rev. EU147.6m vs est. EU147m; 1Q net income EU13.7m vs est. EU13.1m; targets modest FY rev. growth
– Rheinmetall 1Q rev. EU1.1b vs est. EU972.2m; 1Q Ebit EU45m vs est. EU61.9m; reiterates 2012 rev. EU4.9b, Ebit at same level of EU354m
– SOFTWARE 1Q rev. EU254.6m vs est. EU260.9m; 1Q net EU35.9m vs est. EU36.8m
– Stockmann 1Q net sales EU450.3m vs est. EU450.1m; net loss EU20.9m vs est. EU17.1m loss
– Technopolis March quarter net sales EU25.4m
– USG 1Q sales EU705m vs est. EU712m; 1Q net EU6.3m
– Uponor 1Q net sales EU192.5m vs est. EU167.3m; net income EU4.5m vs est. EU1.3m
– Viscofan 1Q rev. EU177.9m vs est. EU173.4m; 1Q net EU23.3m vs est. EU23.6m
– Wessanen 1Q rev. EU171m vs est. EU169.5m ; 1Q net EU1.5m vs est. EU3.1m (2 ests.)
– YIT 1Q net sales EU1.1b vs est. EU1.03b; net income EU36.5m vs est. EU32.5m; reported EPS EU0.29/shr vs est. EU0.258/shr
– Zeltia 1Q sales EU31.3m; net loss EU4.3m
– Ebro Foods is to sell its Nomen business to Arrossaires for €30 million
– Unipol and Premafin’s merger is suspended by Italy’s competition authority; it will complete a review within 45 days
– Amplifon PT Raised to EU5.24 vs EU4.67 at Mediobanca; Kept at Outperform
– Be Semiconductor Raised to Buy vs Hold at ING; PT EU7 vs EU5.30
– Cofinimmo Cut to Hold vs Buy at ING
– Vueling PT Raised to EU5.5 vs EU4.9 at Morgan Stanley; Kept at Equalweight (they did the IPO…)

Louis Capital Markets UK,LLP
Authorised and regulated by the FSA and Banque de France
39-41 rue Cambon
75001 Paris

T +33 (0)1 53 45 10 74
E mkamir


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