Newsquawk Daily European Equity Opening News - 20th July 2023

20th July 2023

ASIA

APAC stocks traded mixed following on from the choppy performance stateside as participants digested the latest data releases, corporate earnings results and performance updates. ASX 200 was positive with the mining industry underpinned after the world’s largest miner BHP reported higher quarterly iron ore output and with its full-year production at a record high, while the latest jobs data topped forecasts but could also be seen as a double-edged sword with further scope for the central bank to hike rates. Nikkei 225 was the worst performer after the latest trade data showed weaker-than-expected exports and a wider contraction of imports, although the trade balance returned to a surplus for the first time in almost 2 years. Hang Seng and Shanghai Comp diverged with Hong Kong lifted by early strength in the property sector after the PBoC eased cross-border funding for firms and financial institutions, while the mainland was lacklustre after the central bank unsurprisingly maintained benchmark lending rates and despite the latest guidelines for the promotion of the private economy.

Chinese Property Market - China is reportedly considering mortgage easing to spur buying in the large cities, according to Bloomberg. (Newswires)

TSMC (2330 TT) - Q2 (TWD): Net Profit 181.8bln (exp. 172.5bln), Capex 8.17bln (prev. 9.94bln). Gross margin 54.1% (prev. 53.3%). (Newswires)

EUROPEAN CLOSES

CLOSES: : Euro Stoxx 50 -0.17% at 4,362, FTSE 100 +1.80% at 7,588, DAX 40 -0.10% at 16,108, CAC 40 +0.11% at 7,326, FTSE MIB +0.02% at 28,712, IBEX 35 -0.04% at 9,451, SMI +0.12% at 11,117.

SECTORS: Energy 1.16%, Consumer Stpl 0.63%, Healthcare 0.56%, Utilities 0.52%, Telecoms 0.38%, Financials 0.26%, Consumer Disc -0.04%, Materials -0.12%, Industrials -0.51%, IT -0.64%

FTSE 100

Mining Names - BHP (BHP AT) reported Q4 WAIO iron ore output 72.7mln tons vs prev. 71.7mln tons Y/Y, copper output 476.2k tons vs prev. 461.8k tons Y/Y, nickel production 22.0k tons vs prev. 18.8k tons Y/Y, says finished year with a strong Q4. Co sees FY24 WAIO iron ore output at between 250mln-260mln tons and at 282mln-294mln tons on a 100% basis and sees FY24 copper output at 1,720-1,910 kt. (Newswires)

OTHER UK COMPANIES

BROKER MOVES

DAX

BASF (BAS GY) - Kamieth, a top exec. in China, reportedly has the backing of outgoing CEO Brudermuller to become the next CEO, via FT citing sources. (FT)

Deutsche Bank (DBK GY) - Co. has been fined USD 186mln by the Federal Reserve for making insufficient progress in addressing prior shortcomings flagged by the regulator. (Newswires)

OTHER GERMAN COMPANIES

BROKER MOVES

CAC

OTHER FRENCH COMPANIES

Getlink (GET FP) - H1 (EUR): Revenue 934mln (exp. 935mln), EBITDA 496mln (exp. 494mln), Net 159mln (exp. 173mln). FY23 guidance: intends to exceed EBITDA of 910mln. (Newswires)

BROKER MOVES

PAN EUROPE

Auto Names - Tesla (TSLA) shares fell 4.2% during the conference call as CEO Musk said the Co. may cut prices again during turbulent times. CEO Musk also said the Co. is noting an improvement in commodity costs.

Steel Names - EU trade chief Dombrovskis said he is hopeful of a breakthrough in talks with the US regarding the steel dispute but will not support any US proposal that flouts global standards, according to FT. (FT)

Tech Names - IBM (IBM) shares fell 1.0% after market after revenue missed forecasts.

BROKER MOVES

SMI

Roche (ROG SW) - New clinical and real-world data for Roche’s Vabysmo at ASRS reveal improved outcomes for people with two leading causes of vision loss. (Globe Newswire)

OTHER SWISS COMPANIES

BROKER MOVES

Geberit (GEBN SW) upgraded to Buy from Neutral at Goldman Sachs

SCANDINAVIA

Fingerprint (FINGB SS) - Q2 2023 (SEK): Revenue 203.3mln (prev. 228.1mln Y/Y). Operating profit 75.7mln (prev. -12.2mln). Gross margin 13.1% (prev. 31.1%). (Newswires)

Nokia (NOKIA FH) - Q2 2023 (EUR): Revenue 5.71bln (exp. 5.89bln), EPS 0.05 (exp. 0.07), EBIT 474mln (exp. 553mln), Gross Margin 38.2%. Cuts FY23 sales outlook to EUR 23.2-24.6bln (exp. 25.57bln, prev. 24.6-26.2bln). See net sales annual run rate of 1.1bln from January 2024, remain confident it will return to a 1.4-1.5bln band. Significant decline in N. American operators investments. Decline in fixed networks, driven by fixed wireless access and modest inventory management. Mobile networks, still substantial need for operators to invest in 5G globally. Some sequential improvement visible into Q4. CEO said the highlight of the quarter was the new long-term patent license agreement signed with Apple (AAPL). This is another major milestone in our smartphone license renewal cycle. "Earlier in the year I highlighted that we were starting to see signs of macroeconomic challenges along with inventory digestion impacting customer spending and this has intensified through the second quarter. In the second half we expect these trends to continue to impact our business, meaning we now see second half net sales broadly similar to the first half in both Network Infrastructure and Mobile Networks with some sequential improvement visible into Q4." (Newswires)

Telenor (TEL NO) - Q2 2023 (NOK): Revenue 20.2bln (prev. 19.2bln Y/Y). EBITDA 8.78bln (prev. 8.46bln). Net +821mln (prev. -1.11bln Y/Y). Co. affirms FY23 Capex/Sales of around 17%. (Newswires)

Telia (TELIA SS) – Q2 2023 (SEK): Revenue 23.3bln (prev. 22.9bln Y/Y). Net 917mln (prev. 1.68bln). Adj. EBITDA 7.78bln (prev. 7.68bln). Co. affirms FY23 adj. EBITDA guidance. (Newswires)

Volvo Cars (VOLCARB SS) - Q2 2023 (SEK): Revenue 102.2bln (exp. 97.9bln). EBIT 5.0bln (exp. 5.86bln). EPS 1.12 (prev. 3.00 (Y/Y). "As the company enters the second half of 2023 this dynamic will change, since it will not only benefit from lower lithium prices, but also realise the effects of increased pricing on MY2024 fully electric cars. Therefore, margins on fully electric cars are expected to improve in the coming quarters." Co. sees supply and demand continue to normalise in the wider market, which brings some additional pricing pressure as price levels have also started to normalise in several markets. "Yet while rising interest rates in some of its largest markets put pressure on the consumer and the overall market, demand for Volvo cars continues to be healthy. Assuming there are no further unexpected supply chain disruptions, Volvo Cars expects a solid double-digit growth in retail sales for the full year. It also expects the share of fully electric car sales to come in even higher than last year’s full-year share of 11 per cent." (Newswires/ Volvo Cars IR)

BROKER MOVES

US

CLOSES: SPX +0.24% at 4,565, NDX -0.09% at 15,826, DJIA +0.31% at 35,061, RUT +0.45% at 1,984.

SECTORS: Real Estate +1.12%, Utilities +1.02%, Consumer Staples +0.93%, Energy +0.52%, Consumer Discretionary +0.52%, Health +0.49%, Financials +0.45%, Communication Services +0.23%, Industrials -0.05%, Technology -0.27%, Materials -0.52%.

Alphabet (GOOG) - Google is said to be testing AI technology to produce news stories, according to NYT. (NYT)

Apple (AAPL) - Co. has created an internal ChatGPT-style bot for employees; building large language model AI framework dubbed ‘Ajax’; "races" to develop own generative AI tools to catch OpenAI, according to Bloomberg. The piece notes the company has yet to devise a clear strategy for releasing the technology to consumers. (Newswires)

International Business Machines Corp (IBM) - Q2 2023 (USD): Operating EPS 2.18 (exp. 2.01), Revenue 15.48bln (exp. 15.57bln).REVENUE SEGMENTS: Software 6.61bln (exp. 6.35bln), +7.2% Y/Y. Consulting 5.01bln (exp. 5bln), +4.2% Y/Y. Infrastructure 3.62bln (exp. 3.88bln), -15% Y/Y. Financing 185mln (exp. 162.3mln), +27% Y/Y. FY GUIDANCE: Still sees revenue at constant currency +3% to +5% (exp. +2.89%). Still sees free cash flow about 10.5bln (exp. 9.65bln). COMMENTARY: Continue to respond to the needs of our clients who seek trusted, enterprise AI solutions, and we are particularly excited about the response to the recently launched WatsonX AI platform. (Newswires) Shares fell 1.0% after market.

Netflix Inc (NFLX) - Q2 2023 (USD): EPS 3.29 (exp. 2.86), Revenue 8.19bln (exp. 8.29bln); Streaming paid net additions +5.89mln (exp. +2.07mln). KEY METRICS: FCF 1.34bln (exp. 1.58bln). Operating margin 22.3% (exp. 19.1%, prev. 19.8% Y/Y). Streaming paid memberships 238.4mln (exp. 234.5mln), +8% Y/Y. Operating income 1.83bln (exp. 1.58bln), +16% Y/Y. Q3 GUIDANCE: Revenue view 8.5bln (exp. 8.67bln).EPS view 3.52 (exp. 3.23). Sees Q3 streaming paid net additions similar to this quarter. COMMENTARY: Anticipate at least 5bln in FCF for 2023 (prev. at least 3.5bln). Updated FY FCF expectation reflects lower cash content spend than expected due to timing of production starts and ongoing strikes. Plan to deliver substantial positive FCF in 2024. Revenue in each region where paid sharing was launched now higher than pre-launch, with sign-ups already exceeding cancellations. Today rolling out paid sharing to almost all of remaining countries.Sees revenue growth to accelerate in H2 ’23 as it starts to see full benefits of paid sharing and continued steady growth in ad-supported plan. Sees revenue growth to accelerate more substantially in Q4. Confident that over time it can develop advertising into multi-billion dollar incremental revenue stream. Anticipate at least 5bln in FCF for 2023 (prev. at least 3.5bln). Currently running a bit above targeted minimum cash level and expect to increase stock repurchase activity in H2 2023. Executive said the crackdown on shared passwords will have a gradual financial impact and most revenue growth this year is from new members and the Co. will raise prices in the future. (PR Newswire) Shares fell 8.1% after market.

Tesla Inc (TSLA) - Q2 2023 (USD): Adj. EPS 0.91 (exp. 0.82), Revenue 24.93bln (exp. 24.48bln). HIGHLIGHTS: Co. is focusing on cost reduction, new product development. Co. expects to remain ahead of the long-term 50% CAGR with around 1.8mln million for FY23. Challenges of these uncertain times are not over. Cybertruck remains on track to begin initial production later this year at Gigafactory Texas. Quarterly profitability negatively impacted by increase in operating expenses driven by Cybertruck, AI and other large projects. Quarterly profitability negatively impacted by reduced asp due to mix and pricing. Quarterly profitability positively impacted by growth in vehicle deliveries. Quarterly profitability positively impacted by lower cost per vehicle, which includes lower raw material costs and IRA credit. Quarterly profitability positively impacted by gross profit growth in energy business as well as services & other. Do not expect a meaningful increase in weekly production run rate in Shanghai factory. CONFERENCE CALL: CEO Musk stated that there will be a slight decrease in production for the third quarter. The company plans to utilise both Nvidia (NVDA) and its proprietary AI training system, Dojo. Furthermore, Tesla is open to licensing its full self-driving software and is in the early stages of discussions with a major Original Equipment Manufacturer (OEM). Musk also mentioned that Tesla will be increasing its investment in Artificial Intelligence. Additionally, he reported that Tesla has boosted the production of its 4680 battery cells in Texas by 80% in the second quarter compared to the first. The company is noting an improvement in commodity costs and has benefited from investment tax credits, ranging between 150 million to 250 million dollars, in the second quarter. Tesla's demand has been generally matching its production rate. Regarding the Nvidia hardware, Musk assured that Tesla will accept the deliveries as quickly as Nvidia can send them. Finally, Musk highlighted that if macroeconomic conditions do not remain stable, Tesla would need to consider lowering its vehicle prices. (Tesla IR/Newswires) Shares fell 4.2% after market.

United Airlines Holdings Inc (UAL) - Q2 2023 (USD): Adj. EPS 5.03 (exp. 4.04), Revenue 14.18bln (exp. 13.91bln). Raises FY adj EPS guidance to USD 11.00-12.00 from 10.00-12.00 (exp. 9.80) (PR Newswire) Shares rose 3.3% after market.

20 Jul 2023 - 06:44- Data- Source: Newsquawk