LCM Dawn Patrol – 15.05.13 – Earnings (VIV+, BOUYGUES-, more…) JPM ups CredAg, MS ups BG Group,

(all LCM Dawn Patrol are available here: (https://lcmdawnpatrol.wordpress.com/)

Bonjour,

European shares were expected to climb to a new five-year high on Wednesday, with improving macroeconomic conditions in the United States and forecast-beating results from some companies further improving sentiment. The S&P continued to rise after Europe’s close at another all-time high of 1650.34, with tech underperforming. Nikkei above 15,000.

Today, we’ll watch the BoE CPI, the EuroZone Q1 GDP but the most important data will be the US IP and the Empire manufacturing survey. It’s all in the nice table I’ve drawn below (like far below).

The Gadget of the Day…
Now summer is coming (I hope). And what better way to chill out after a long work day than exercise? Margarita!
Margaritaville Mixed Drink Maker

NEWS

France’s GDP Contracts 0.2% Q/q in 1Q; Est. Contracts 0.1% Q/q

EUTELSAT’s new 3D satellite successfully launched by ILS Proton.

Gagfah Says Making Progress on Refinancing, Sticks to Guidance

Lafarge to Sell 14% Stake in Indian Subsidiary

EADS. Airbus discussing A350 orders from Japanese airline BBG

EARNINGS

Allianz 1Q Net EU1.71b vs EU1.38b, Confirms FY Target

Arkema 1Q Ebitda Beats Estimates; Confirms Outlook

Bouygues 1Q Sales Miss, Says 1Q Not Representative of FY. Really not great and despite the reassuring comment I expect the stock to continue to underperform despite its valuation.

Finmeccanica 1Q Adj. Ebita Misses Est.; Rev. Beats

GFK 1Q Net Falls 39%; Reiterates 2013 Forecast

Iliad 1Q Sales Rise 38% as Mobile Revenue Triples

Mediaset 1Q Net Income Falls to EU9.3 Mln Vs EU10.1 Mln

RWE 1Q Recurrent Net Income Beats Est.; Confirms 2013 Targets. Good numbers and great Div (7%). Have a look…

Scor 1Q Net EU111m vs Est. EU109m, Says FY Sales to Exceed EU10b

ThyssenKrupp Posts Net Loss, Cuts Staff After Writedown

VimpelCom 1Q Net Rises 28% as Ebitda Margin Expands to 42%

Vivendi 1Q Ebita Falls on SFR Decline; Confirms FY Forecast. Numbers were actually better than estimates and the group reiterated it has binding offers for MarocTel (IAM).

Wendel 1Q Rev. EU1.56b Vs EU1.52b Y/y

CURRENT STUFF

HSBC said it will target $2bn to $3bn of additional cost savings. The bank has sold or closed 52 businesses and announced 46,000 job cuts to eliminate $4bn of annual costs since CEO Stuart Gulliver took up the role in 2011. (Bloomberg)

The Bank of France wants to help banks package loans to businesses into tradable securities with the creation of a special-purpose vehicles, in what could become a template for the euro area. (Bloomberg)

Hedge funds, including Paulson & Co, are betting on a Fannie and Freddie rise. (Wall Street Journal)

Private equity focus shifts as buyout returns become more difficult. (Wall Street Journal)

UPS&DOWNS

French Banks (JPM, Lee). Stress testing asset quality in French Retail – Upgrading CASA to OW.
We assess the earnings risk in a stress loan scenario for French retail asset quality with average NPL more than doubling from 2.8% end 2012 to 6.4%, well above 2009 level of 3% and closer to 1995 level of 8%. CASA is more resilient to French credit deterioration than expected and we upgrade CASA to OW at capital adjusted 8.4x PE in 2014e vs. 10x for the sector.

BG Group (MS, Rats) Strategy Update Alleviates Key Concerns; Upgrade to OW
BG’s strategy update has reduced key concerns relating to long-term strategy, project execution, financing and its investment opportunity set. With these concerns reduced, the firm increasingly stands out through a combination of greater capital discipline and stronger growth outlook.

BG Group (GS della Vigna) Buy: Focus on monetization of assets; growth from 4Q; reiterate CL-Buy
BG’s strategy presentation supported our view on the company’s superior cash flow and production growth. All targets were in line with our expectations and management has committed to monetisation of assets and return of cash to shareholders. CL-Buy.

Gemalto (GS, Duval): A firm growth trajectory, but higher costs; remain Buy
We remain confident in top-line growth but are adjusting estimates for new opex assumptions based on required investment for long-term opportunities. 12-month price target down to €75 based on 11x 2014E EV/EBITDA. Remain Buy.

Gas Natural Added to UBS’s Least Preferred List, REE Removed

GDF Suez Added to UBS’s Most Preferred List, Drax Removed

ACTELION CUT TO NEUTRAL VS BUY AT UBS
BANCO POPOLARE CUT TO SELL VS HOLD AT SOCGEN
Betfair Group Rated Overweight at Morgan Stanley, PT 1,000p
BG GROUP RAISED TO OVERWEIGHT VS EQUALWEIGHT AT MORGAN STANLEY
COMMERZBANK RAISED TO NEUTRAL VS REDUCE AT NOMURA
CREDIT AGRICOLE RAISED TO OVERWEIGHT VS NEUTRAL AT JPMORGAN
DCC RATED NEW NEUTRAL AT JPMORGAN; PT 2,650P
ENAGAS CUT TO NEUTRAL VS BUY AT UBS
ENERGIAS DE PORTUGAL CUT TO NEUTRAL VS BUY AT CITI
GEDEON RICHTER RAISED TO BUY VS UNDERPERFORM AT BOFAML
GOLAR LNG CUT TO SELL AT GOLDMAN
INTER RAO RAISED TO OVERWEIGHT VS NEUTRAL AT JPMORGAN
MEDIASET RAISED TO BUY VS NEUTRAL AT UBS
MERCIALYS CUT TO HOLD VS BUY AT SOCGEN
PANDORA RAISED TO BUY VS HOLD AT NORDEA
PURECIRCLE RAISED TO BUY AT LIBERUM
RUSHYDRO RAISED TO OVERWEIGHT VS NEUTRAL AT JPMORGAN
S&P UPGRADES EADS TO STRONG BUY FROM BUY
UNILEVER RAISED TO BUY VS REDUCE AT NOMURA
WOLSELEY CUT TO SECTOR PERFORM VS OUTPERFORM AT RBC

ECONOMIC CALENDAR

Time Event Survey Actual Prior Revised
01:50 JN Tertiary Industry Index (MoM) Mar -0.70% -1.30% 1.10% 1.20%
07:30 FR Gross Domestic Product (QoQ) 1Q P -0.10% -0.20% -0.30% -0.20%
08:00 GE GDP s.a. (QOQ) 1Q P 0.30% -0.60%
08:45 FR Consumer Price Index (YoY) Apr 0.90% 1.00%
10:00 IT GDP sa and wda (QoQ) 1Q P -0.40% -0.90%
10:30 UK Claimant Count Rate Apr 4.60% 4.60%
10:30 UK ILO Unemployment Rate (3mths) Mar 7.90% 7.90%
10:30 UK Jobless Claims Change Apr -3.0K -7.0K
11:00 EC Euro-Zone GDP s.a. (QoQ) 1Q A -0.10% -0.60%
13:00 US MBA Mortgage Applications May-10 7.00%
14:30 US Producer Price Index (YoY) Apr 0.80% 1.10%
14:30 US PPI Ex Food & Energy (MoM) Apr 0.10% 0.20%
14:30 US Empire Manufacturing May 4 3.05
14:30 US Producer Price Index (MoM) Apr -0.60% -0.60%
15:15 US Capacity Utilization Apr 78.30% 78.50%
15:15 US Industrial Production Apr -0.20% 0.40%

OVERNIGHT MARKETS: UP

Asian markets
Nikkei 225 up +272.90 (+1.85%) at 15,031
Topix up +21.18 (+1.72%) at 1,252
Hang Seng up +115.97 (+0.51%) at 23,046

US markets
S&P 500 up +16.57 (+1.01%) at 1,650
DJIA up +123.57 (+0.82%) at 15,215
Nasdaq up +23.82 (+0.69%) at 3,463

European markets
Eurofirst 300 up +5.57 (+0.45%) at 1,237
FTSE100 up +54.30 (+0.82%) at 6,686
CAC 40 up +20.86 (+0.53%) at 3,966
Dax up +59.82 (+0.72%) at 8,339

Currencies
€/$ 1.29 (1.29)
$/¥ 102.13 (102.38)
£/$ 1.52 (1.52)

Commodities ($)
Brent Crude (ICE) up +0.08 at 102.68
Light Crude (Nymex) up +0.08 at 94.29
100 Oz Gold (Comex) up +0.50 at 1,425
Copper (Comex) unchanged 0.00 at 329.05

10-year government bond yields (%)
US 1.98%
UK 1.91%
Germany 1.39%

CDS (closing levels)
Markit iTraxx SovX Western Europe -0.14bps at 89.45bp
Markit iTraxx Europe -0.82bps at 96bp
Markit iTraxx Xover -8.2bps at 388bp
Markit CDX IG -0.73bps at 72.75bp

Sources: FT, Bloomberg, Markit

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