Newsquawk Daily European Equity Opening News - 16th November 2023

16th November 2023

ASIA

Asia-Pac stocks were mostly negative after the choppy performance in the US and as the recent data-driven momentum lost steam. ASX 200 (-0.7%) traded lower with the energy and mining-related sectors pressured by a deterioration in the commodities complex and with stronger-than-expected employment data doing little to spur risk appetite. Nikkei 225 (-0.3%) failed to sustain its early gains despite better-than-expected exports and machinery orders as investors took the opportunity to book profits. Hang Seng (-1.0%) and Shanghai Comp. (-0.5%) weakened amid mixed tech earnings ahead of Alibaba’s results and with participants digesting the rhetoric from the Biden-Xi meeting which was said to be constructive and productive as they agreed to restart cooperation on counter-narcotics and create forums for military-to-military contact. However, reports also noted that Biden said Xi was a dictator and raised concerns with Xi about China's human rights abuses in Xinjiang, Tibet and Hong Kong, as well as emphasised the US would take action to prevent its technology from being used to undermine its security.

Lenovo (992 HK) - Q2 (USD) net 249mln (prev. 541mln Y/Y), rev. 14.4bln (prev. 17.1bln), says SSG will launch new AI-embedded services in the areas of digital workplace, and hybrid cloud, among others. (Newswires)

EUROPEAN CLOSES

CLOSES: DAX +0.86% at 15,748.17, FTSE 100 +0.62% at 7,486.91, CAC 40 +0.37% at 7,211.99, Euro Stoxx 50 +0.60% at 4,317.45, IBEX 35 +0.18% at 9,640.70, FTSE MIB +0.42% at 29,466.93, SMI -0.07% at 10,708.19, PSI -0.62% at 6,30.

SECTORS: IT 1.82%, Consumer Disc 1.37%, Industrials 1.08%, Materials 0.76%, Financials 0.69%, Energy 0.15%, Consumer Stpl -0.22%, Utilities -0.34%, Telecoms -0.56%, Healthcare -0.69%

FTSE 100

Barclays (BARC LN) – Co. received demand in excess of USD 13bln for a June 2030 redeemable AT1, via FT citing an investor; strong demand caused the yield to be revised down to 9.6% from 10.5%. (FT)

Energy Names – The UK Government will increase the price offered to offshore wind farm developers in the next auction round, AR6, to GBP 72/MWh, according to Sky News with an announcement potentially on Thursday. (Sky News) The article reminds us this is an increase from the failed AR5 auction’s price of GBP 44/MWh and comes as industry players reportedly said the figure needs to be around GBP 70/MWh to be viable.

Ex-Dividends - Pershing Square Holdings (PSH LN), Bunzl (BNZL LN), Hargreaves Lansdown (HL/ LN), Unilever (ULVR LN), GSK (GSK LN), Shell (SHEL LN), Marks & Spencer (MKS LN), B&M (BME LN) will trade without entitlement to their latest dividend payout. (Newswires)

Pershing Square Holdings (PSH LN) - Announces additional share buyback program of USD 250mln. (Newswires)

UK Cos – Chancellor Hunt will extend the tax breaks for freeports by five years, as part of the November 22nd Autumn Statement. (FT)

OTHER UK COMPANIES

BROKER MOVES

Deliveroo (ROO LN) downgraded to Market Perform from Outperform at Bernstein

easyJet (EZJ LN) upgraded to Overweight from Equal Weight at Morgan Stanley

Entain (ENT LN) downgraded to Neutral from Outperform at BNP Paribas

Marks & Spencer (MKS LN) upgraded to Buy from Neutral at Goldman Sachs GS says "the company has also seen the most significant earnings revisions and the greatest share price outperformance within the firm's coverage"

Sainsbury's (SBRY LN) initiated with Neutral at Goldman Sachs; GS highlights notable market share gains. Free cash flow margin lower than peers. Potential risks from disinflation-driven slowdown in UK grocery.

Tesco (TSCO LN) initiated with Buy at Goldman Sachs; GS notes of positive market share progress and leading free cash flow margins among peers.

SSE (SSE LN) upgraded to Outperform from Neutral at BNP Paribas

Wizz Air (WIZZ LN) downgraded to Equal Weight from Overweight at Morgan Stanley

DAX

Fresenius Medical Care (FME GY) - Recalls Sanxin single-use syringes for leakages, according to FDA. (FDA)

Mercedes-Benz (MBG GY) - Launches the first EV charging hub in North America. (Newswires)

Siemens (SIE GY) - Q4 (EUR): Revenue 21.4bln (exp. 21.1bln); Orders 21.8bln (exp. 19.4bln), Comparable Revenue +10% (exp. +6%), sees FY Comparable Revenue between +4-8% (exp. +4.5%); Announces a share buyback of up to EUR 6bln for up to five years. Net Income 1.72bln (exp. 1.71bln). Prepares standalone options for the Innomotics unit. Proposes a dividend increase to EUR 4.70/shr (prev. 4.25/shr). OUTLOOK: Digital Industries expects fiscal 2024 comparable revenue development of 0% to 3%. This is based on the assumption that following the destocking of customers, global demand in automation businesses, especially in China, will pick up again in the second half of the fiscal year. The profit margin is expected to be 20% to 23%. Smart Infrastructure expects for fiscal 2024 comparable revenue growth of 7% to 10%. The profit margin is expected to be 15% to 17%. Mobility expects for fiscal 2024 comparable revenue growth of 8% to 11%. The profit margin is expected to be 8% to 10%. This outlook excludes burdens from legal and regulatory matters. (Newswires) Siemens holds the second largest weighting in the DAX 40 of ~8.8%. Shares seen opening +1.7%

OTHER GERMAN COMPANIES

Ceconomy (CEC GY) - JD.com said currently there are no significant M&A projects to comment on. (Newswires) Follows reports yesterday that JD.com were showing interest in Cecenomy

CTS Eventim (EVD GY) - 9M (EUR): Normalised EBITDA 343.3mln (256.6mln Y/Y), Revenue 1.75bln, +23%. (Newswires)

HelloFresh SE (HFG GY) - Lowers top end of its FY23 revenue growth outlook to +2-5% from +2-8% and lowers FY23 adj. EBITDA outlook to EUR 430-470mln from 470-540mln. In Q4 to date, the North American segment has somewhat lower revenue growth and higher expenses than previously anticipated. (Newswires)

MorphoSys (MOR GY) - Q3 (EUR): EPS -3.50 (prev. -0.60 Y/Y), Revenue 63.8mln (prev. 95.8mln Y/Y). Co. upgraded guidance for Monjuvi US net product sales to between USD 85-95mln (prev. USD 80-95mln)(Newswires) Shares seen opening +3.6%

BROKER MOVES

BASF (BAS GY) downgraded to Underperform from Hold at Jefferies

HelloFresh SE (HFG GY) downgraded to Hold from Buy at Deutsche Bank

K+S (SDF GY) downgraded to Hold from Buy at Jefferies

Wacker Chemie (WCH GY) initiated with Buy at Jefferies Shares seen +2.2% in pre-market trade

Zalando (ZAL GY) upgraded to Buy from Add at Baader Helvea

CAC

Sanofi (SAN FP) - Reportedly noted to work with Rothschild on OTC spinoff preparations, according to Bloomberg; adds OTC arm has drawn early interest from PE firmsSanofi is in early talks on a separate listing of its consumer health division, which could be valued at over USD 20bln. (Bloomberg)

OTHER FRENCH COMPANIES

ADP (ADP FP) - Reports October traffic +8.3% Y/Y, 8.9mln passengers.

Carrefour (CA FP) initiated with Neutral at Goldman Sachs; GS notes stable market share in France. Faces intense competition in the French grocery market. Lower profitability in France relative to other group segments. Latin America business facing headwinds; food prices in deflationary territory.

Soitec (SOI FP) - H1 (EUR): Net 2mln (prev. -2mln Y/Y), Revenue 401mln (exp. 395mln). (Newswires)

BROKER MOVES

PAN EUROPE

Aegon (AGN NA) - Trading Update: Raises FY23 guidance amid continued commercial momentum in US business. Raises FY23 capital generation EUR 1.2bln (prev. guidance 1bln). (Newswires)

ArcelorMittal (MT NA) - Announces it is entering the additive manufacturing industry as a steel powder supplier. (Newswires)

Santander (SAN MC) - Bank of Portugal tells Millenium BCP, BPI and Novo Banco to create a capital buffer for home mortgages from October 2024; this will be equivalent to 4% of loan portfolios collateralised by home mortgages in Portugal. (Newswires)

Strabag (STRV AV) – 9-month (EUR): Output Volume 13.6bln (prev. 12.6bln), Order Backlog 24.4bln (prev. 23.3bln). FY23 outlook raised: volume output of 18.9bln & EBT margin ≥ 4%. (EQS)

BROKER MOVES

Ahold Delhaize (AD NA) initiated with Neutral at Goldman Sachs; GS initiated at Neutral due to modest upside compared to sector peers. Challenges anticipated in the US and Europe markets.

Akzo Nobel (AKZ NA) downgraded to Hold from Buy at Jefferies

SMI

Roche (ROG SW) - Roche launches automated serology hepatitis E virus tests, including a test to detect acute HEV infections, recommended in the new WHO 2023 Essential Diagnostics List. (Roche)

Zurich Insurance (ZURN SW) – On track to deliver 8% EPS growth target, reaffirming 2023-2025 targets. (Newswires)

OTHER SWISS COMPANIES

Baloise (BALN SW) – 9-month (CHF): Business Volume 6.95bln, +2.2% Y/Y. The high volume of natural disaster claims and large claims incurred will reduce earnings by an exceptionally high amount of up to 200mln. The Swiss Solvency Test ratio remains around 240%. Maintains an “attractive dividend policy”. (EQS)

BROKER MOVES

SCANDINAVIA

Volvo (VOLVA SS) - UAW said members at Mack Trucks have voted by 93% to ratify the contract. (Newswires)

BROKER MOVES

Tomra Systems (TOM NO) downgraded to Equal Weight from Overweight at Barclays

Orsted (ORSTED DC) downgraded to Hold from Buy at Jefferies

US

CLOSES: SPX +0.16% at 4,503, NDX +0.03% at 15,817, DJI +0.47% at 34,991, RUT +0.16% at 1,801.

SECTORS: Consumer Staples +0.7%, Communication Services +0.6%, Financials +0.57%, Materials +0.47%, Industrials +0.2%, Real Estate +0.16%, Health +0.07%, Consumer Discretionary -0.04%, Technology -0.08%, Utilities -0.33%, Energy -0.34%.

Cisco Systems Inc (CSCO) - Q1 2024 (USD): Adj. EPS 1.11 (exp. 1.03), Revenue 14.7bln (exp. 14.61bln). Cuts FY guidance amid slowing orders due to high customer inventories.Sees Q2 Adj. EPS USD 0.82-0.84 (exp. 0.99). Sees Q2 revenue USD 12.6bln-12.8bln (exp. 14.2bln). Lowers FY ADJ EPS guidance to USD 3.87-3.93 from USD 4.01-4.08 (Exp. 4.06). Lowers FY revenue guidance to USD 53.8bln-55.0bln from USD 57.0bln-58.2bln (exp. 57.84bln). COMMENTARY: "Cisco saw a slowdown of new product orders in the first quarter of fiscal 2024 and believes the primary reason is that customers are currently focused on installing and implementing products in their environments following exceptionally strong product delivery over the past three quarters. Cisco estimates there are one to two-quarters of shipped product orders still waiting to be implemented by its customers." (Newswires)

Leonardo DRS (DRS) - Leonardo DRS commences a secondary offering of 16.5mln common stock shares by Leonardo US Holding, a Leonardo

16 Nov 2023 - 06:52- Research Sheet- Source: Newsquawk