The Dawn Patrol – 09.01.13 – MS on SAP, Media. GS on Media. JPM on Banks.

Hello,

European stocks seen opening a touch higher on Wednesday as an upbeat start to the U.S. earnings season revived appetite for equities after a two-day drop.

Today, we’ll monitor the German IP, the UK trade balance, Sodexo and Sainsbury numbers and the German Auction.

Good…

HOT STUFF

AIR FRANCE sees Toulouse, Nice, Marseille losses, Tribune says

ALCOA kicked off earnings season by hitting its earnings target as cost cuts helped offset a drop in aluminum prices.Also said it expects global aluminum demand to rise to 7 percent for 2013, up from 6 percent in 2012.

AVIVA PLC has raised 353 million pounds ($566 million) from the sale of its remaining stake in Dutch insurer DELTA LLOYD, a disposal intended to help turn around the flagging share price of Britain’s second biggest insurer.

CAPITAL GOODS – Japanese machinery makers strong overnight, Mitsubishi and Sumitomo Heavy’s both +5% on a broker upgrade.

CGGVERITAS Expects Positive Free Cash Flow For 2012

DAIMLER. Mercedes Benz expects record sales in US this year (RT)

DISH NETWORK put in a bid for CLEARWIRE Corp on Tuesday that trumped SPRINT NEXTEL’S $2.2 billion offer, setting the stage for a takeover battle for the wireless service provider that owns crucial mobile spectrum.

NESTLE said to be working with Rothschild to sell Latin American assets valued at >$1b to win regulatory approval for purchase of PFIZER’S nutrition unit

PEUGEOT FY Global Vehicle Sales Fall 16.5% to 2.965m

PEUGEOT sells $4bn asset-backed bonds to boost bank arm. BBG

SAINSBURY 3Q LFL Sales Ex-Fuel In-Line With Est., Slows From 2Q

SODEXO 1Q revenue rises 7.4%, sees ‘modest’ organic growth. BBG

Spain’s TELEFONICA raised 1.5 billion euros ($1.96 billion) on Tuesday via a 10-year bond, the first debt sale this year by a company from southern Europe.

UBS’s investment banking and risk management bosses will be quizzed by British parliamentarians on Wednesday on standards and controls at the Swiss bank after a string of scandals.

OVERNIGHT MARKETS: UP (Should I put this in the end?)

Asian markets
Nikkei 225 up +93.68 (+0.89%) at 10,602
Topix up +9.41 (+1.08%) at 881.29
Hang Seng up +92.68 (+0.40%) at 23,204

US markets
S&P 500 down -4.74 (-0.32%) at 1,457
DJIA down -55.44 (-0.41%) at 13,329
Nasdaq down -7.00 (-0.23%) at 3,092

European markets
Eurofirst 300 down -1.37 (-0.12%) at 1,160
FTSE100 down -10.95 (-0.18%) at 6,054
CAC 40 up +1.24 (+0.03%) at 3,706
Dax down -36.83 (-0.48%) at 7,696

Currencies
€/$ 1.31 (1.31)
$/¥ 87.43 (86.99)
£/$ 1.60 (1.61)

Commodities ($)
Brent Crude (ICE) down -0.17 at 111.77
Light Crude (Nymex) down -0.20 at 92.95
100 Oz Gold (Comex) unchanged 0.00 at 1,662
Copper (Comex) unchanged 0.00 at 365.70

Deutsche Bank: Rights issue rethink could ease sting for Deutsche

CURRENT STUFF

On Hedge Funds
Ex-SAC analyst names 20 insider traders: “Wesley Wang, a former analyst for the $14bn hedge fund SAC Capital, has named 20 people who traded on inside information, including some subjects of the US government’s wide-ranging investigation who are yet to be charged, according to prosecutors.” (Financial Times)

On Switzerland
Button-Down Central Bank Bets It All

Switzerland, for decades a paragon of safety in finance, is engaged in a high-risk strategy to protect its export-driven economy, literally betting the bank in a fight to contain the prices of Swiss products sold abroad.

UPS & DOWNS

SAP AG (MS, Wood): Solid end to a good year
OW, PT €61 to €69 | Positive RTI

Recent results and market positioning positive: Software results have been mixed over the last quarter but the strong results of the key peer, ORCL, to the end of November suggest that demand has held up well overall. Expectations are admittedly higher for SAP but we believe its product mix shift leaves it well placed to deliver. We also believe investors have become more concerned about valuation (especially vs. ORCL) and this could mean SAP only has to deliver slightly ahead of consensus for the shares to perform on the day. The change of US leadership gives some incremental nerves but overall we are positive going into the quarter.

JPM on Global IBs (Kian Abouhossein)
4Q to beat expectation leading to positive operating leverage: retain OW IBs, own both UBS and CSG

Global Investment Banking. JPM publishes publish a 64 page preview of results from the sector ahead of 4Q reporting, which begins at the end of next week. We remain OW IBs with 4Q12E to be a relatively good revenue quarter, compared to last two years. We estimate FICC revenues to be -14% QoQ in 4Q12. We estimate equities revenues to be down -11% qoq. We estimate IBD revenues to be up 1% qoq. Our pecking order [by preference] within Global IBs is: UBS, CS, BARC, MS, GS and DB. In 2012E/11 we estimate clean IB revenues to be +6% with absolute comp estimated down YoY (except for GS) leading to positive operating leverage for the industry. We expect no IB revenue growth in 2013/12E – with Equities outperforming FICC. OW both equity geared IBs UBS and CSG.

MS on Media (Patrick Wellington)
Our top 5 for 2013: Reed Elsevier, Publicis, ITV, Informa and Eutelsat.
Media outperformed for the fourth year in a row in 2012. Improved structural positioning and a plethora of opportunities for cash return and corporate activity, coupled with a discount rating vs. other consumer sectors, make it well placed to outperform again in 2013.

GS on Media (Richard Jones)
Mixed macro outlook so no cyclical vs. defensive preference The macro outlook remains mixed. We forecast 4.0% global advertising growth in 2013, slightly better than 2012, but well below the 6+% of stronger years. We expect geographic dispersion to remain wide, with 9% growth in emerging markets, 1%-2% in the US/Northern Europe, -2% in France and -5% to -8% in Southern Europe. In this environment, we do not have a preference for cyclical vs. defensives, but continue to focus on structural change and industry positioning. We update our estimates and price targets to reflect the revised macro outlook and our new base year of 2014.

We maintain our Conviction Buys on BSkyB and SES, which we see as core structural winners. In our view, Havas, Pro7 and MTG offer particularly good value given positive outlooks; we maintain our Conviction Buy on Havas, and also add Pro7 and MTG to the Conviction List. JCDecaux remains on our Conviction Sell List; it is at a significant premium to the sector, but we do not believe it will see structural growth. We remove UBM from the Conviction List, but maintain our Buy rating; we also reiterate our Buys on ITV, WPP and Publicis. We upgrade Antena3 and Mediaset Espana to Neutral from Sell, but downgrade Vivendi and M6 to Neutral from Buy.

MARKS & SPENCER PT Cut to 420p VS 450p at HSBC

ESSILOR PT Raised to Eu90 From Eu70 at HSBC

SVENSKA Handelsbanken Exits Least Preferred Banks At BofAML

UBI Added to Least Preferred Banks at BofAML

SOCGEN Removed From Most Preferred Banks at BofAML

DANSKE Added To Most Preferred Banks at BofAML

REXEL Raised To Buy From Hold at Berenberg

LLOYDS Raised To Buy VS Neutral at UBS

SULZER Cut To Hold From Buy at Berenberg

ALSTOM, ANDRITZ, KUKA Cut To Hold From Buy at Berenberg

Have a great day.

Max Kamir

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
I http://www.louiscapital.com

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