Newsquawk Daily European Equity Opening News - 26th January 2023

26th January 2023

The Daily European Equity Opening News is uploaded at 0700GMT/0200EST recapping all of the overnight equity news.

From 0700GMT/0200EST all equity news will be covered in real-time over the audio and headline feed and the full audio rundown will be at 0715GMT/0215EST.

There will be an additional audio rundown at 0750GMT/0250EST recapping any company news which has hit the wires since 0715GMT/0215EST ahead of the European equity open

European equity coverage will only cover companies in the STOXX 600 or companies of systemic importance to particular sectors.

ASIA

Asia-Pac stocks traded somewhat mixed after the flat handover from Wall St where the major indices recouped most of their initial losses after the Bank of Canada’s dovish rate hike whereby it signalled a pause going forward which spurred hopes that its counterparts could follow suit. Nikkei 225 (-0.2%) was subdued amid a firmer currency and upside in yields, while the government also lowered its overall economic assessment for the first time in 11 months. KOSPI (+1.4%) gained despite the weaker-than-expected GDP data although the finance minister flagged the likelihood of a return to growth for the current quarter. Hang Seng (+2.2%) outperformed as participants in Hong Kong returned from the Lunar New Year holiday and were greeted by strength in tech, property and autos, although trade across the region remained relatively quiet owing to the closures in Australia, China, Taiwan, India and Vietnam.

Hyundai Motor (005380 KS) - Q4 (KRW) net 1.7tln (exp. 2.5tln), oper. profit 3.4tln (exp. 3.1tln) rev. 38.5tln (exp. 37.5tln), expects auto demand to drop due to negative economic outlook. (Newswires)

EUROPEAN CLOSES

CLOSES: EURO STOXX 50 -0.12% at 4,148, FTSE 100 -0.18% at 7,743, DAX 40 -0.08% at 15,0811, CAC 40 -0.09% at 7,043, FTSE MIB -0.03% at 25,875, IBEX 35 -0.11% at 8,957, SMI -0.07% at 11,398.

SECTORS: Utilities 0.43%, Healthcare 0.06%, Financials 0.00%, Materials -0.12%, Consumer Stpl -0.20%, Telecoms -0.24%, Consumer Disc -0.35%, IT -0.37%, Energy -0.64%, Industrials -0.77%

FTSE 100

OTHER UK COMPANIES

BROKER MOVES

BAE Systems (BA/ LN) upgraded to Buy from Hold at SocGen

Hiscox (HSX LN) upgraded to Neutral from Underweight at JPMorgan Chase

Rolls-Royce (RR/ LN) upgraded to Buy from Hold at Deutsche Bank

DAX

SAP (SAP GY) - Q4 2022 (EUR): Non-IFRS Revenue 8.44bln (exp. 8.49bln), Non-IFRS Cloud Revenue 3.39bln (exp. 3.37bln). Co. sees 2023 Non-IFRS operating profit EUR 8.8-9.1bln (exp 8.65bln). Current cloud backlog exceeds EUR 12bln billion, up 27% Y/Y. Operating Profit 1.71bln, +17%. Co. is to conduct a restructuring in which it is to cut 3k jobs, with around 2.5% of staff affected. Targeted restructuring in 2023 reflects focus on strategic growth areas and accelerated cloud transformation. Co. decided to explore a sale of their stake in Qualtrics. "Since the acquisition, Qualtrics has increased revenue by 3.5x to ~ $1.5 billion while delivering profitability, and has significantly expanded its offerings and enterprise customer adoption." 2023 outlook anticipates accelerating topline and double-digit non-IFRS operating profit growth. (Newswires/SAP) Co. holds an 8.4% weighting in the DAX 40.

OTHER GERMAN COMPANIES

Evotec (EVT GY) – Entered into a strategic collaboration and licence agreement with Janssen Biotech, a Johnson & Johnson (JNJ) Co. (Newswires)

BROKER MOVES

RWE (RWE GY) reiterated with Overweight at JPMorgan Chase

CAC

STMicroelectronics (STM FP) - Q4 2022 (EUR): Revenue 4.42bln (exp. 4.40bln). Gross margin 47.5% (exp. 47.3%). Co. guides Q1 Net Revenue at USD 4.20bln (exp. 3.81bln). Co. sees Q1 gross margin around 48% (exp. 45.2%). Co. says in Q4, STM delivered revenues and gross margin above the mid-point of the guidance. In the fourth quarter, Co. paid cash dividends to its stockholders totalling USD 54mln. (Newswires/ STMicroelectronics IR)

TotalEnergies (TTE FP) - Qatar is said to be in talks to join TotalEnergies' USD 27bln Iraqi energy project, according to Reuters sources. (Newswires)

OTHER FRENCH COMPANIES

Elior (ELIOR FP) – Q1 (EUR): Revenue 1.22bln, +11.7% YY. FY outlook confirmed, alongside 2024 ambitions. (Newswires)

Getlink (GET FP) – Q4 (EUR): Revenue 562mln (exp. 396mln), Eurotunnel revenue 248mln (prev. 191mln YY), passenger number 8.3mln, +407% YY. (Newswires)

BROKER MOVES

Airbus (AIR FP) downgraded to Hold from Buy at Deutsche Bank

PAN EUROPE

Auto Names - Tesla (TSLA) shares rose 5.5% after CEO Musk sounded bullish on demand in the earnings call.

Eni (ENI IM) - Libya's NOC is to sign offshore gas exploration and production deals with Italy's Eni on Saturday, according to NOC chief Bengdara in local press. (Newswires)

Sabadell (SAB SM) – Q4 (EUR): Net Income 155mln (exp. 109mln), NII 0.77bln (exp. 1.01bln), Net Profit 149mln. CET 1 12.54% (exp. 12.47%). In Q4, provisions increased due to greater loan loss provisions allocated following updates in the macro environment, rest of provisions are to remain broadly stable. (Newswires)

Tech Names - IBM (IBM) shares fell 2% aftermarket. Desks said news of the job cuts and free cash flow miss was behind the fall.

Tod's (TOD IM) - FY22 (EUR): Revenue 1.01bln (exp. 0.99bln). Revenue +11% Y/Y in constant currency. Co. said it booked a strong start to 2023. (Newswires)

BROKER MOVES

SMI

OTHER SWISS COMPANIES

BROKER MOVES

Novartis (NOVN SW) downgraded to Neutral from Buy at Citi

SCANDINAVIA

Essity (ESSITYB SS) – FY (SEK): Sales 156bln (exp. 156bln), adj. EBITA 13.05bln (exp. 13.2bln), Net Income 6bln, adj. EPS 12.28. Implemented significant price increase while volumes were higher for the year, continue to work with price increases to offset cost inflation. (Newswires)

Getinge (GETIB SS) - US FDA classified the recall of Getinge's heart devices as its most serious type since their use could lead to death. Co's unit Datascope recalled 4.5k therapeutic devices in December. (Newswires)

Nokia (NOKIA FH) - Q4 2022 (EUR): Revenue 7.45bln (exp. 7.13bln). Adj. EPS 0.16 (exp. 0.13). Co. sees 2023 adj. operating margin between 11.5% -14% (exp. 12.4%). Co. guides 2023 adj. net sales between 24.9-26.5bln (exp. 25.41bln). Co. says demand remains robust. Co. re-recognized deferred tax asset of EUR 2.5bn in Q4 which boosted reported net profit and EPS. Board proposes a dividend authorization of EUR 0.12/shr. Nokia's long-term targets remain unchanged from those introduced with its Q4 2021 financial results. (Newswires/ Nokia IR)

Volvo (VOLVB SS) - Q4 (SEK): Revenue 134.3bln (exp. 118.9bln), Operating Income 11.5bln, adj. Operating Income 12.1bln (exp. 12.5bln), EPS 3.26 (exp. 4.42). Proposes a dividend of 7/shr and an extra dividend of 7/shr. Truck market forecast is unchanged in all markets. Ex-China, construction industry activity has remained good in many regions. (Newswires)

BROKER MOVES

Subsea 7 (SUBC NO) downgraded to Underweight from Neutral at JPMorgan Chase

US

CLOSES: SPX -0.02% at 4,016, NDX -0.27% at 11,815, DJI +0.03% at 33,744, RUT +0.25% at 1,890.

SECTORS: Financials +0.74%, Consumer Discretionary +0.54%, Consumer Staples +0.28%, Materials +0.2%, Real Estate +0.11%, Health Care +0.01%, Energy -0.09%, Technology -0.26%, Communication Services -0.36%, Industrials -0.53%, Utilities -1.36%.

International Business Machines Corp (IBM) - Q4 operating EPS 3.60 (exp. 3.60), Q4 revenue USD 16.7bln (exp. 16.4bln). Q4 software revenue +8% at USD 7.288bln. FY22 cash flow USD 9.3bln (missing USD 10bln target), owing to higher-than-expected working capital needs. Announced workforce reduction of 3.9k jobs (around 1.5% of its staff); layoffs will result in a USD 300mln charge in the January-March quarter. Sees FY23 FCF around USD 10.5bln (exp. 9.48bln), and sees FY23 FXN revenue growth consistent with its mid-single digit model (exp. 8.3%). Shares fell 2% after hours.

Tesla (TSLA) - Tesla profits and revenues topped expectations, although operating margins fell to a five quarter low. Q4 2022 (USD): Adj. EPS 1.19 (exp. 1.13), Revenue 24.32bln (exp. 24.03bln); FCF -49% at 1.42bln (exp. 3.13bln). Adj. EBITDA 5.4bln (exp. 5.39bln). Automotive Gross margin 25.9% (exp. 28.4%). For 2023 it expects to remain ahead of long-term 50% CAGR with 1.8m cars. Cybertruck on track to begin production later this year. Co. did not release guidance. Co. said it has sufficient liquidity to fund our product roadmap, long-term capacity expansion plans and other expenses. In the near term, Co. will be accelerating cost reduction roadmap and driving towards higher production rates. Co. continues to execute on innovations to reduce the cost of manufacturing and operations. Over time, expects hardware-related profits to be accompanied with an acceleration of software-related profits. Since Shanghai factory is running near full capacity for several months, do not expect meaningful sequential volume increases in the near term. Continues to believe that operating margin will remain the highest among volume OEMs. Production and delivery challenges in 2022 were largely concentrated in China. Working to reduce percentage of vehicles delivered in 3rd month and smooth deliveries throughout the quarter. CEO Musk said thus far in January, seeing the strongest orders to date in our history with orders almost twice the rate of production. Musk said we will probably see a serious recession this year, and some investors may panic and sell off stocks to surprisingly low levels. Musk said the Co. is making small price increases due to demand outstripping production. (Newswires/Tesla IR) Separately, Elon Musk has been exploring selling up to USD 3bln in new Twitter shares to help repay some of the USD 13bln in debt that backed his takeover, according to WSJ sources. (WSJ) Shares rose 5.5% after hours.

26 Jan 2023 - 06:48- Research Sheet- Source: Newsquawk