Newsquawk Daily European Equity Opening News - 27th February 2023

27th February 2023

ASIA

Asia-Pac stocks began the week cautiously heading into month-end and a slew of upcoming releases including Chinese PMI data, with headwinds also from last Friday’s losses stateside where firmer-than-expected Core PCE data spurred hawkish terminal rate bets. ASX 200 (-1.1%) was negative as participants digested a deluge of earnings and with the mining industry leading the retreat seen across nearly all sectors aside from energy which benefitted from a jump in Woodside Energy’s profits. Nikkei 225 (-0.1%) price action contained by a lack of pertinent macro drivers and with BoJ Governor nominee Ueda’s largely reiterated prior comments at the upper house confirmation hearing. Hang Seng (-0.7%) and Shanghai Comp. (-0.4%) were choppy with initial pressure amid geopolitical frictions after the G20 finance ministers meeting failed to agree on a Communique due to opposition from Russia and China, while National Security Adviser Sullivan also warned there will be a real cost if China provides military assistance to Russia for the Ukraine war. However, Chinese stocks gradually recovered from the early weakness and briefly turned positive with sentiment helped by a continued liquidity injection and after China drafted guidelines to regulate financial support in the housing rental market, although the gains proved to be short-lived.

EUROPEAN CLOSES

CLOSES: EURO STOXX 50 -1.86% at 4,178, FTSE 100 -0.37% at 7,878, DAX 40 -1.72% at 15,209, CAC 40 -1.78% at 7,187, FTSE MIB -1.07% at 26,986, IBEX 35 -0.33% at 9,201, SMI -0.74% at 11,164.

SECTORS: Energy -0.30%, Utilities -0.36%, Financials -0.43%, Consumer Stpl -0.51%, Telecoms -0.51%, Healthcare -0.87%, Industrials -1.14%, IT -2.06%, Materials -2.23%, Consumer Disc -2.65%

FTSE 100

BP (BP/ LN) - CEO Looney, as part of a potential three year share award plan, could be paid a bonus of up to GBP 11.4mln. However, the Co. has reportedly been consulting investors ahead of the AGM on whether the size of the bonus for top execs. should be curbed. (Sunday Times)

BT (BT/ LN) - Deutsche Telekom (DTE GY) CEO said the biggest mistake he has ever made was taking a stake in BT, in the context of the GBP 5.6bln 2015 deal. Adding, that “it was too early” and he “didn’t understand all of the obstacles” around BT. (FT)

Haleon (HLN LN)/GSK (GSK LN) - Haleon is reportedly exploring a USD 600mln sale of its ChapStick lip balm brand and talks are at an early stage, according to sources cited by Bloomberg. (Newswires)

Energy Names - Ofgem is expected to announce a price cap fall of circa. GBP 1k to GBP 3295, via Cornwall Insight; however, the energy price guarantee only partially covers this from April and as such average customer bills will effectively increase by 20%. An increase that occurs before the end of the energy rebate scheme is accounted for. (Sky News)

Standard Chartered (STAN LN) - Co. is said to be in talks to provide lending to support Credit Suisse's (CSGN SW) investment banking spinoff CSFB, according to Bloomberg sources. Standard Charted reportedly would not invest in CSFB's leveraged-finance business as part of any proposed deal, according to sources. The transaction structure could still change, and a deal is not guaranteed. (Newswires)

Tobacco Names – UK ministers are considering proposals which could impose a new tax on vaping products, according to Politico. Proposals being considered also include regulations on packaging, marketing and flavorings. (Politico)

OTHER UK COMPANIES

BROKER MOVES

Shell (SHEL LN) upgraded to Buy from Neutral at Goldman Sachs

DAX

Bayer (BAYN GY) - Activist Ubben is joining an independent sustainability board, though this may not satisfy the activist given the position is informal, via FT citing sources. (FT)

Fresenius Medical Care (FME GY) - S&P cuts Co's rating to "BBB-" from "BBB", outlook negative. (Newswires)

SAP (SAP GY) - Activist Investor Starboard Value wants Salesforce (CRM) to hit over 30% profit margins, closer to Oracle and Microsoft, and CRM is working on it, according to Business Insider citing leaked documents. (Business Insider)

OTHER GERMAN COMPANIES

BROKER MOVES

BASF (BAS GY) reiterated with Overweight at JPMorgan Chase

BMW (BMW GY) downgraded to Hold from Buy at Jyske Bank

Deutsche Post (DPW GY) downgraded to Hold from Buy at HSBC

CAC

Airbus (AIR FP) - Co. expects the Pacific region to take deliveries of 920 planes over the next two decades amid a bounce in air travel. (Newswires)

Thales (HO FP) - Co. is to hire some 12k new workers this year (after adding 11.5k new hires last year) amid higher demand driven by the Russia-Ukraine war, according to Bloomberg. (Newswires)

OTHER FRENCH COMPANIES

Elior (ELIOR FP) - Co. updated the terms and conditions of its share buyback programme: "Maximum proportion of the Company’s capital: the shares purchased under the buyback program may not represent more than 10% of the Company’s capital, determined based on the number of shares making up the Company’s capital at the date on which the authorization is used. Future corporate actions that may be carried out by the Company shall not result in owning, directly or indirectly through its affiliates, more than 10% of the Company’s capital." (Elior)

SES (SESG FP) - FY22 (EUR): Revenue 1.94bln (prev. 1.78bln Y/Y). Adj. EBITDA 1.11bln (prev. 1.09bln). Net 189mln (prev. 323mln). Adj. EBITDA margin 57.2% (prev. 61.2%). (Newswires)

BROKER MOVES

PAN EUROPE

Fluidra (FDR SM) - FY22 (EUR): Revenue 2.39bln (exp. 2.41bln). EBITDA 469.8mln (exp. 506.1mln). EBITDA margin 25.1% (prev. 21.4% Y/Y). Co. expects H1 to be impacted by a correction of inventory in the channel. (Newswires)

Pharma Names - Pfizer (PFE) is in talks to acquire Seagen (SGEN) in a deal likely to be valued at more than USD 30bln, WSJ reports. Talks are at an early stage, and there is no guarantee there will be a deal; a number of hurdles would need to be overcome, including a potential antitrust review. (WSJ)

PostNL (PNL NA) - Q4 2022 (EUR): Revenue 883mln (exp. 894mln). EBIT 60mln (exp. 58mln). Co. is to delay the second tranche of its share buyback programme until a further recovery of the business occurs. (Newswires)

Schneider Electric (SU FP)/Neste (Neste FH) - Barron's noted clean energy names are attracting billions in investments, identifying the following five stocks as the key players, noting that they have found true niches or have a head start in specific areas: Corning (GLW), Enphase Energy (ENPH), Freyr (FREY), Neste (Neste FH/NTOIY), Schneider Electric (SU FP/SBGSY). (Barron's)

Telecom Italia (TIT IM) - KKR is ready to cooperate with Telecom Italia's board, according to a spokesman. (Newswires)

UniCredit (UCG IM) - Gadhia, head of the remuneration committee, has resigned following unsubstantiated allegations of leaking from the board, allegations which have reportedly been withdrawn, via FT citing sources. (FT)

BROKER MOVES

Austrian Post (POST AV) downgraded to Hold from Buy at Erste Group

Mediaset Espana (TL5 SM) downgraded to Neutral from Outperform at Oddo Securities

SMI

OTHER SWISS COMPANIES

BROKER MOVES

SCANDINAVIA

Nokia (NOKIA FH) - Co. announced an updated company and technology strategy, and unveiled a refreshed brand, as part of its long-term strategic transformation. "Nokia continues to execute against its three-phased strategy to deliver sustainable, profitable growth. Having completed the reset phase, Nokia will continue to accelerate while laying the foundation for the scale phase as an undisputed technology leader and having broadened its customer base. [The] announcement supports Nokia’s long-term financial targets which were re-iterated with Q4 2022 financial results." (Nokia)

BROKER MOVES

Royal Unibrew (RBREW DC) downgraded to Hold from Buy at Handelsbanken

Outukumpu (OUT1V FH) downgraded to Reduce from Hold at Kepler

US

CLOSES: SPX -1.05% at 3,970, NDX -1.73% at 11,969, DJI -1.02% at 32,817, RUT -0.92% at 1,890.

SECTORS: Real Estate -1.82%, Technology -1.77%, Consumer Discretionary -1.56%, Communication Services -1.43%, Health -1.27%, Consumer Staples -0.59%, Industrials -0.58%, Utilities -0.02%, Energy unch., Financials +0.1%, Materials +0.65%.

Berkshire Hathaway Inc. (BRK.B) - The financial conglomerate reported investment losses of USD 22.8bln in 2022, as FX losses and rising rates weighed on earnings in Q4. Net earnings in Q4 -54% Y/Y at USD 18.16bln, Q4 EPS USD 12,412 (vs 26,690 Y/Y), which reflected a sharp drop in investment and derivative gains (-65% Y/Y to USD 11.46bln in 2022). Operating earnings -7.9% to USD 6.71bln. But chief Warren Buffet said the figure was "100% misleading" since the figures include gains and losses on investments that Berkshire has not yet sold, and said investors should focus on the overall health of the company; Berkshire reported record annual operating profits of USD 30.8bln. Spent USD 2.6bln in share repurchases in Q4; Buffett defended its stock buybacks, stating that "when you are told that all repurchases are harmful to shareholders or to the country, or particularly beneficial to CEOs, you are listening to either an economic illiterate or a silver-tongued demagogue." Berkshire's cash levels stood at USD 128.6bln at year-end after it sold around USD 16.3bln of stocks in Q4. Meanwhile, Q4 insurance underwriting operating net profit -34% Y/Y at USD 244mln. Q4 insurance-investment income USD 2.0bln (vs 1.2bln Y/Y), Q4 earnings from utilities and energy USD 739mln (vs 598mln Y/Y), Q4 railroad earnings USD 1.47bln (vs 1.69bln Y/Y).

Clean Energy - Clean energy names are attracting billions in investments, Barron's notes, identifying the following five stocks as the key players, noting that they have found true niches or have a head start in specific areas: Corning (GLW), Enphase Energy (ENPH), Freyr (FREY), Neste (NTOIY), Schneider Electric (SBGSY).

Pfizer (PFE)/ Seagen (SGEN) -Pfizer (PFE) is in talks to acquire Seagen (SGEN) in a deal likely to be valued at more than USD 30bln, WSJ reports. Talks are at an early stage, and there is no guarantee there will be a deal; a number of hurdles would need to be overcome, including a potential antitrust review. Seagen was in talks last year to be acquired by Merck, in a deal that would have been worth USD 40bln+, WSJ reminds us, but the two sides failed to reach an agreement. (WSJ)

27 Feb 2023 - 06:45- Research Sheet- Source: Newsquawk