Newsquawk Daily European Equity Opening News - 19th October 2023

19th October 2023

ASIA

APAC stocks were lower across the board amid spillover selling from global peers following the latest earnings releases and as geopolitical risks lingered, while further upside in yields also added to the headwinds.ASX 200 was pressured amid mixed jobs data and with underperformance in yield-sensitive sectors. Nikkei 225 suffered firm losses despite the mostly better-than-expected Japanese trade figures. Hang Seng and Shanghai Comp. conformed to the downbeat mood with the Hong Kong benchmark being the worst hit amid weakness in Chinese tech stocks and the property industry with the latter not helped by ongoing debt woes and after Chinese property prices remained at a contraction.

EUROPEAN CLOSES

CLOSES: DAX -1.03% at 15,094.91, FTSE 100 -1.14% at 7,588.00, CAC 40 -0.91% at 6,965.99, Euro Stoxx 50 -1.11% at 4,106.15, IBEX 35 -0.92% at 9,212.70, FTSE MIB -0.82% at 28,135.79, SMI -1.35% at 10,668.20.

SECTORS: Energy 0.49%, Consumer Stpl 0.06%, Telecoms -0.07%, Consumer Disc -0.56%, Utilities -0.59%, Financials -0.68%, Healthcare -1.46%, Materials -1.89%, Industrials -2.02%, IT -2.80%

FTSE 100

Ex-Dividends - BAE Systems (BA/ LN) and Smiths Group (SMIN LN) will trade without entitlement to their latest dividend payouts. (dividenddata)

Rolls-Royce (RR/ LN) - Co. announced a further expansion of its global services infrastructure for business aviation customers in North America, opening a new global AOG support storage location on the US East Coast. (Newswires)

OTHER UK COMPANIES

Darktrace (DARK LN) – FT’s Kate Burgess writes as part of an opinion piece “To my mind, Darktrace may not be a dead cert but it is worth a punt, as long as it displays consistency and durability.” (FT)

BROKER MOVES

DAX

Deutsche Boerse (DB1 GY) - Q3 (EUR): Adj. EPS 2.16, Revenue 1.19bln (exp. 1.19bln); raises FY revenue and EBITDA guidance. (Newswires)

SAP (SAP GY) - Q3 (EUR): Adj. EBIT 2.28bln (exp. 2.16bln), Adj. EPS 1.45 (exp. 1.33), Revenue 7.74bln (exp. 7.78bln); reaffirms 2023 outlook. Non-IFRS cloud revenue 3.47bln (exp. 3.57bln). Still sees FY non-IFRS operating profit at 8.65-8.95bln. Still sees FY non-IFRS cloud revenue at 14-14.2bln. SAP called to open +1.8%. SAP holds a 9.7% weighting in the DAX (largest), a 4.2% in the Euro Stoxx 50, and a 1.3% weighting in the Stoxx 600

OTHER GERMAN COMPANIES

BROKER MOVES

Suedzucker (SZU GY) downgraded to Underweight from Equal Weight at Barclays Shares seen opening -3%

CAC

Renault (RNO FP) - Q3 (EUR): Revenue 10.5bln (exp. 10.8bln). Co. sees Ampere IPO likely in H1 2024. Co. affirms FY operating margin 7-8% and operating FCF at 2.5bln. Co. expects H2 operating margin H1. Auto revenue 9.4bln (+5% YY). Group registrations up 6.1% globally and 15.3% in Europe. (Newswires/ Renault)

OTHER FRENCH COMPANIES

BROKER MOVES

PAN EUROPE

Auto Names - Tesla (TSLA) shares fell 4.2% after-hours after missing expectations on Adj. EPS, Revenue, Gross Margin, and FCF, while CEO Musk tempered expectations regarding the Cybertruck.

Chip Names - TSMC (2330 TT) Q3 (TWD): Net Profit 211bln (exp. 195.5bln); Gross margin 54.3% (exp. 52.9%). (Newswires)

Intesa Sanpaolo (ISP SM) - Co. is reportedly leaning towards boosting capital rather than paying government bank tax, according to Reuters sources. (Newswires)

Repsol (REP SM) - Co. said it will defend its legal rights in the contract dispute with US exporter Venture Global LNG. (Newswires)

Universal Music Group (UMG NA) – Co. has filed a copyright infringement lawsuit against Anthropic, an AI firm which it alleges has scraped their songs without permission to produce near identical lyric copies. (FT)

BROKER MOVES

SMI

Nestle (NESN SW) 9-month (CHF): Sales 68.8bln (exp. 69.6bln); N. America 19.03bln (prev. 19.09bln), Europe 14.14bln (prev. 13.96bln), China 9.14bln (prev. 8.65bln). FY23 outlook confirmed. CEO said "Growth was driven by pricing as we continued to navigate historic inflation levels. The recovery of our volume and mix is underway". "We are seeing the benefits of our portfolio optimization initiatives and increasing marketing investments behind our billionaire brands. These steps underpin our confidence that real internal growth, the sum of volume and mix, will turn positive in the second half of the year and again become the main driver of growth going forward." Separately, Co. proposes closing its infant formula operations in Ireland which could impact 542 jobs; is proposing transferring formula ops. to China and Switzerland. Nestle holds an 18% weighting in the SMI (largest) and a 3% weighting in the Stoxx 600 (largest)

Roche (ROG SW) - Q3 (CHF): Revenue 14.3bln (exp. 14.4bln). Co. reaffirms FY23 revenue decline in the "low single digit range" due to a sharp decline in COVID products; Appreciation of CHF against most currencies "had a significant adverse impact". Group sales grow by 1% at constant exchange rates (CER) in the first nine months, showing a strong increase of 7% in the third quarter. Excluding COVID-19 products, Group sales increased by 9%. Pharmaceuticals Division sales grew by 9%, driven by continued high demand for newer medicines. The Diagnostics Division’s base business increased by 7%; overall divisional sales are down 18% due to a surge in demand for COVID-19 tests in 2022. (Newswires/Roche) Roche holds a 16.5% weighting in the SMI (third largest) and a 2% weighting in the Stoxx 600

OTHER SWISS COMPANIES

Schindler Holdings (SCHN SW) - Q3 (CHF): Revenue 2.81bln (exp. 2.89bln). Net 228mln (exp. 209mln). Co. raised the lower end of its FY23 revenue guidance to +6-8% (prev. +5-8%). Co. raised the midpoint of its FY23 net guidance to 880-910mln (prev. 860-900mln). (Newswires)

BROKER MOVES

SCANDINAVIA

Nokia (NOKIA FH) - Q3 (EUR): Sales 4.98bln (exp. 5.67bln), EBIT 241mln (exp. 546mln), EPS 0.05 (exp. 0.07). Long term targets remain unchanged and outlook maintained, despite weak operator spending in Q3. Expect a more normal seasonal improvement in the network business during Q4. Co. is to cut up to 14k jobs as part of the cost reduction; taking total employees to circa. 72-77k from the current 86k. Co. targets a reduction of the cost base on a gross basis by between EUR 0.8-1.2bln by end-2026; at least 400mln of in-year savings in 2024 and 300mln in 2025. Co. notes of a 10-15% reduction in personnel expenses. Cost savings are expected primarily in mobile networks, cloud, network services and corporate functions. (Newswire)

Nordea Bank (NDA SS) - Q3 (EUR): Operating profit 1.73bln (exp. 1.68bln). NII 1.91bln (exp. 1.87bln). Net loan losses 33mln (exp. 87.4mln). CET1 ratio 16.3% (prev. 16.0% QQ, 15.8% YY). Co. affirms FY23 ROE above 15%. (Newswires)

BROKER MOVES

US

CLOSES: SPX -1.34% at 4,314, NDX -1.41% at 14,909, DJIA -0.98% at 33,665, RUT -2.11% at 1,728.

SECTORS: Materials -2.58%, Industrials -2.43%, Consumer Discretionary -2.33%, Real Estate -2.18%, Financials -1.7%, Communication Services -1.59%, Technology -1.23%, Utilities -0.94%, Health -0.9%, Consumer Staples +0.39%, Energy +0.93%.

Alcoa (AA) - The largest US aluminium producer reported Q3 EPS -1.14 (exp. -1.02), Q3 revenue USD 2.6bln (exp. 2.58bln). Q3 aluminium production 532,000 MT (exp. 532,750 MT), aluminium shipments 630,000 metric tons (exp. 641,250); Alumina production 2.81mln MT (exp. 3.10mln), Bauxite production 10.7mln DMT (exp. 10.9mln). Is to cut jobs at an Australian alumina refinery due to a surplus of raw material, and will incur a USD 6mln charge. (Newswires)

Meta (META) - CEO Zuckerberg said they are bringing broadcast channels to Facebook and Messenger and are currently testing the ability for pages to create broadcast channels; expect to roll it out in coming weeks. (Newswires)

OpenAI - Co. is said to be in talks to sell existing employees' shares at an USD 86bln valuation, according to Bloomberg sources. (Bloomberg)

Netflix Inc (NFLX) - Q3 2023 (USD): EPS 3.73 (exp. 3.49), Revenue 8.54bln (exp. 8.54bln), Streaming paid net additions 8.76mln (exp. +6.20mln). Sees Q4 EPS USD 2.15 (exp. 2.17). Sees Q4 revenue USD 8.69bln (exp. 8.76bln). Sees Q4 net paid additions similar to Q3 (exp. 7.85mln). Boosting some prices in the US, UK and France. COMMENTARY: Says "very optimistic" about long run ads opportunity, laying the foundation for what it believes should be a multi-billion dollar revenue stream over time. Now expect FY23 FCF of ~6.5bln, up from our prior forecast of at least 5bln. Repurchased 2.5bln of shares in Q3 and increased our buyback authorization by 10bln. (Netflix) Netflix shares rose 12.5% after market.

Steel Dynamics (STLD) - Reported a decline in Q3 profits due to higher manufacturing costs and lower steel prices. Q3 EPS 3.47 (exp. 3.42), Q3 revenue USD 4.59bln (exp. 4.49bln). CEO believes that increased demand for low-carbon US-made steel and reduced imports will support steel pricing in the future. (Newswires)

Tesla Inc (TSLA) - Q3 2023 (USD): Adj. EPS 0.66 (exp. 0.73), Revenue 23.35bln (exp. 24.1bln); Cybertruck deliveries scheduled to begin on November 30th. Gross margin 17.9% (exp. 18%). FCF 848mln (exp. 2.59bln). Still sees FY production 1.8mln vehicles (exp. 1.82mln). Implemented upgrades in Q3 to enable unit cost reduction. Continue to make progress on next generation platform. CEO Musk said in post-earnings conference call that energy is becoming the highest margin business. (Newswires) Tesla shares fell 4.2% after market.

19 Oct 2023 - 06:49- Research Sheet- Source: Newsquawk