Diageo converts premiumisation into cash
Around four years have passed since our last teasing story on Diageo, when we were broadly negative following a succession of unprofitable reported results. That hangover seems to be well…
Alcon valuation: $45 per share
Alcon will be listed on the SIX Swiss Exchange and the NYSE on 9 April 2019. All Novartis shareholders will get one Alcon share for the five Novartis shares held….
IAG unbeatable were it not for Brexit
Although the best-in-class airline group has beaten cost inflation (both fuel and non-fuel costs) and the stiffer competition that resulted in lower fares, the lingering unsolved Brexit threat has kept…
High gearing in negative rate context
More than two years ago when the 10y Bund had plunged below zero signalling deflation fears, we looked at the behaviour of highly geared corporates to conclude that extra cheap…
Offshore propelled Gamesa
Siemens Gamesa (SGRE) outlook appears brighter and presumably at sea as the industry is now offshore driven. Wind turbine manufacturers declined sharply in 2017 due to the introduction of the…
Firms with too-old-in-the-job board members
There are governance principles that make good sense: relying on independent board members and relying on reasonably young experts. Reality rarely meet principles however. We highlight below firms under the…
Amundi can pay the high price…
In the frame of formal talks between Commerzbank and Deutsche Bank, DWS might potentially be sold. DWS’s share price was up 10% yesterday on rumours that Allianz is interested in…
Governance risks
The French side of the EssilorLuxottica management seems to have discovered that there is a dominant shareholder, Mr del Vecchio, who wants to exercise his rights to decide with a…
Vallourec: Walking dead or Phoenix
After three disastrous years (FY15-17) and a rather disappointing FY18, shoots of life seem to be visible at last. Before jumping in, there are quite a few ifs: restored management…
MiFID2 is a gift for European research houses (1/2)
Euro IRP (of which we are a proud member) hosted a meeting with FCA’s boss Andrew Bailey who made a surprising comment: no shrinkage of equity research 14 months into…
State intervention is not limited to AF-KLM
The French government attempting to explain to the Dutch administration why the latter acted unfairly in daring to buy 14% of Air France-KLM is a disgrace. Not only is there…
Shorts reviewed
We looked at the largest short positions on stocks currently covered by AlphaValue and wondered to what extent we would agree. Here is the list as captured from European exchanges,…
AlphaValue brings together valuation and governance
Institutional investors are gradually unifying their financial and non-financial approaches, we now offer a unique and disciplined solution to support them. In Europe : the rate of independent directors per…
Getlink sees no channel fog
Getlink, 15.6% owned by Atlantia and 5% by Eiffage, may well have speculative appeal as the two companies indeed have a history of fully acquiring the corporates they invest in….
Barclays: An open letter to Mr Bramson
We do not know each other but I am taking the liberty of writing to you to wish you all the best in your attempt to boost Barclays’ valuation. Even…
Partner Re should tie the knot with Scor anyway
Scor needs scale. Internal discussions led to the obvious conclusion that Partner Re (100% owned by Exor) would be an ideal short-cut to size. This information was made public after…
Exor with Scor?
Exor is one of those large family-type holding companies that does not hesitate to poke its nose in the management of its key assets. Minorities enjoy the luxury of a…
Oslo Børs: Euronext still in a position of strength
Nasdaq AB (indirect subsidiary of Nasdaq Inc.) announced this morning it will make a public offer to acquire all of the issued shares of Oslo Bors VPS (OBV). The price…
CIB is dead, longlive commercial banking
JP Mustier (Unicredit) held a short conference about “the future of banking in Europe” organised by the Centre of Financial Professions. He did not draw a rosy portrait of this…
Aachen vs. Aix La Chapelle
With Angie on her way out and Emmanuel challenged at home, Germany and France had a low-key confirmation in Aachen of both countries’ willingness to get ever closer, if slowly….
Safran free to fly higher
The ramp-up risks induced by the LEAP and the Zodiac integration hiccups are something of the past. This matters a lot and frees up Safran to move on to the next…
Robots are not cup-cakes, even in China
Chinese-dominated KUKA has adjusted the already lowered FY 2018 guidance (sales: €3.3bn, adjusted EBIT margin: around 4.5%) once again. Management now expects sales of c.€3.2bn and an adjusted EBIT margin…
Prada, a brand made smaller by its owners
As the Luxury tide of last summer lifted all boats, Prada reached a three years’ high. Courtesy of trade war risks and an economic slow-down in China, the Prada share…
H1 2019: Downgrades
European equities trade at 12.4x their 2019 earnings. These are still seen up 10% … because 2018 earnings have been downgraded by c. 4% over the last 12 months. 2019…
2050 decarbonised Shell?
Shell thought its efforts to become greener were enough when it announced its ambition to reduce its relative Net Carbon Footprint (NCF) by 50% within three decades (2050). Activists pressed for…
ACS and its Abertis bet
The three-party acquisition of Abertis was a clever move from ACS and Atlantia, as it did away with the risk of overbidding for Abertis’ assets, allowed ACS partly to replicate…
EDF is more than a commodity call option
EDF is a complex story one could resume as a commodity call option in a sea of regulatory, technical and political uncertainties. The share price spent last year outperforming the…
Euronext, desperately looking for growth
Last time we wrote a teaser on Euronext was nearly four years ago in March 2015. At that time, we were very enthusiastic about Euronext as many stars were aligned for…
Natixis : Time to offload the banking licence
Recent events lead us to bet that Natixis is considering a move to become a financial services supplier rather than a bank and go for turbo charged returns. Keeping a…
Vestas : The best Green Chip stock
Very good perspectives delivered by Vestas at its Capital Market Day. The group is still the best-in-class in the industry, and its strong backlog provides visibility for the coming years….
Exor : the cash collector
We initiate coverage of Exor with a Buy recommendation (30.6% upside potential). Exor is a leading investment holding company controlled by the Agnelli/Elkann family, it is quite transparent as it…
Willian Demant’s dream run over
As we always say, a hearing aids stock is as good as the next product and William Demant Holding’s/WDH share price has clearly mirrored this. The launch of the ‘novel’ 2.4GHz…
Investors want better disclosure of potential conflicts of interests (survey)
We raised simple questions to asset managers, asset owners and listed companies about research integrity/potential conflicts of interests in a MiFID2 environment. Key findings • Overall Asset Managers (35%) and…
Altice : A call option with all the risks that this entails
The group is currently succeeding in acquiring new customers in France on both Fixed and Mobile, but at the expense of revenue and margins. We remain at Buy on Altice…
Time for Nissan to bid for Renault ?
Governance matters, more than ever and it has long been an issue at Renault. When a company, or in this instance a group of companies, is dominated by one individual,…
Can Covéa afford Scor ?
Since the announcement by Covéa ( a mutual insurer/”mutualist”) of its proposition to the board of Scor to acquire the reinsurer for €43/share, the latter has gained 23%. The offer…
Investor vs. GBL ? Go for Brussels
Over the last 10 years, 5 years or 6 months, Investor has left GBL for dead, performance-wise. This is worth exploring briefly as both firms share similar features: family control with an indisputable long-term…
Pharmas in October 2018
Pharmas were resilient amid the October cliff in the market, with the fear-driven interest being well supported by the steady earnings, especially by the “Biggies’ in Q3. This was also…
From Bolloré to Generali
The moving parts to a change of control of Generali seem about to fall in place. The trigger may well be Bolloré exiting Mediobanca. Generali can only benefit from a…
Unilever tripped by its owners
Unilever has been known for its shareholder-friendly attitudes and timely delivery on its plans. Step by step, task after task, the company has been fulfilling its strategic plan until the…
Debt above 5x EBITDA
The financial newspapers are making big titles about the private equity bubble. Bubble means that the average acquisition price is 10.2x EBITDA and gearing is 5.2x EBITDA. These are indeed…
Thomas Cook Group from stroke to call option
At 47p, a 54% retreat over the last 3 months, Thomas Cook sits firmly in call option territories. The trigger is a summer heat-wave that struck its business at the wrong…
Dip buying, again
The last few days’ storm has opened wide BUY opportunities. We contribute here a list concentrating on quality names, i.e. more of a growth profile and with stainless-steel balance sheets….
Natixis/Ingenico: We validate the move!
Natixis confirmed this morning its interest in the French company Ingenico. We mentioned this possibility in February 2018 as Natixis wants to push into the payments industry. This interest and…
Ofgem-restrained National Grid
Fully-regulated players have been left in the dust as integrated peers benefited from rising carbon and electricity prices, yet we like National Grid’s model as it offers a compelling mix of…
A bank’s cash flow statement: Remove it or amend it!
Although the cash flow statement is extensively used by the financial community in the analysis of non-financial companies, it is not at all when it comes to deposit banks as…
Atlantia is not Italian
Atlantia is your typical concession company, meaning a robust business model and recurrent cash flows. It diversified into Airport concessions in 2013 and two of its motorway concessions held by 88%-owned Autostrade were prolonged…
CASA would do well to emulate Natixis
Since the great financial crisis, Crédit Agricole SA (CASA)’s share price has had quite an atypical path with a performance in line with that of its peers followed by an outperformance…
Baader Bank and AlphaValue announce strategic cooperation
Unterschleißheim, Germany/Paris, France, 21 September 2018: Baader Helvea will be the exclusive distribution partner for the pan-European research product of AlphaValue, the leading provider of independent equity research based in…
Gambling on utilities
So a bunch of early-moving hedge funds and a handful of traders rediscover the carbon rights market and turn European utilities into a casino-type wager on spot power prices? This, in a…
Casino fights back – successfully
2018 has been a nightmare for Casino. Investors have dumped the stock en masse (its price touched 22-year lows just a few days ago) due to apprehensions about the health of the French…
Casino: Dare to think beyond three months?
This article is meant for investors with an inclination towards calculated but higher-risk investments, for a period beyond 3-6 months. Today, we present a ‘must-buy’ case for Groupe Casino Guichard,…
Go for a SCOR
Becoming a possible target in a rich industry contemplating consolidations is good news for shareholders and seemingly less so for Scor’s management. The insurer has a healthy in-force portfolio and…
SCOR: Under the microscope
Within two days, Scor has rejected Covéa’s friendly bid (€43/share) and denied rumours linking it to Partner Re. The French reinsurer confirmed, at its Investors Day, its targets for all…
Casino: Debt pressure is surmounting
Casino’s share price collapsed c.10% on Friday evening after the US short seller Muddy Waters said on Twitter that one of Casino’s subsidiaries (the finance unit of the retailer) had…
Rudderless Thyssenkrup best avoided still
What ThyssenKrupp’s management had long worked for, i.e. bringing Steel Europe into a joint-venture with Tata, has resulted in turmoil at the helm of ThyssenKrupp and a share price correction instead…
Euronext: Going into another dimension?
According to Bloomberg, Euronext is the leading bidder for the acquisition of MarkitServe, which is IHS Markit’s derivatives processing unit. The price would be above $1bn. The purchase of this…
Oerlikon: Gaining traction
We identified 11 companies able to go beyond Trump’s tweets and respect the following criteria : Good «Fundamental Strength » Market cap between €1.5bn and €20bn Singular business model (capital…
Will Monsanto axe Bayer?
Monsanto has been ordered to pay USD289m to Dewayne Johnson, a caretaker, who used a glyphosate-containing product (i.e. RoundUp) from Monsanto. Times are changing for Monsanto After the highest court…
Bolloré hidden behind the Vivendi cloak
Bolloré SA is probably the most complicated company we track, accounting-wise. Under family control through a chain of holding companies (see Worth Knowing section in the full research note), Bolloré…
Beyond Trump (3/11) : TELEPERFORMANCE
We identified 11 companies able to go beyond Trump’s tweets and respect the following criteria : Good «Fundamental Strength » Market cap between €1.5bn and €20bn Singular business model (capital…
Eramet: Long-term prospects remain promising despite short-term headwinds
The H1 18 results are OK, despite the fact cash costs have gone up mainly on energy costs. Aubert & Duval experienced a difficult H1 while forex also took its…
Enel rather than Iberdrola
We like Iberdrola but currently prefer Enel as the drivers behind the latter’s recent underperformance should progressively peter out. Stormy Italian politics combined with Eletropaulo’s pricey acquisition kept Enel’s share price under…
Beyond Trump (2/11) : ABB
We identified 11 companies able to go beyond Trump’s tweets and respect the following criteria : – Good «Fundamental Strength » – Market cap between €1.5bn and €20bn – Singular…
Beyond Trump (1/11) : GVC Holdings
We identified 11 companies able to go beyond Trump’s tweets and respect the following criteria : Good «Fundamental Strength » Market cap between €1.5bn and €20bn Singular business model (capital light,…
HHLA, Donald tweeted or wilhemshavened?
Being owned by a city-state, Hamburg, with preoccupations that go well beyond the profitable management of an essential German port, was never bound to be easy for HHLA (Hamburger Hafen &…
Pharmas in June 2018
Alphavalue’s pharma coverage outperformed the Stoxx 600 last month, returning 1.35% vs a decline suffered by the Stoxx 600. Shire, Sanofi, Roche, Vifor and Faes Farma were the best performers…
Allied Irish Bank: Back to the future
We are initiating coverage of AIB with a Sell recommendation. All the valuation approaches point to a stretched valuation, while the visibility on the group’s operating environment has reduced sharply,…
Gambling Operators: A consolidation Game
Increased M&A speculation, major sporting events and the opening of the US market create a significant upside for the sector over the next 12 months. Changes in customers’ habits restrain…
Apprentice sorcerers at work
Undoing world trade is about quick populist wins, subsequent massive pains, probably conficts and impossibly long and costly reconstruction. Once upon a time, apprentice sorcerers were bankers, both too imaginative…
NHH’s HNA minor swap
NH Hôtels has been all too long under the HNA fruitless spell with the stretched Chinese conglomerate unable to help its Spanish holding define a “better” strategy but effectively blocking…
MedTech surge
While the c. €1tn Pharma sector has been going essentially nowhere between failed phase III drugs and Trump-driven uncertainty, the €133bn MedTech sector has been flying over the last two months. MedTechs’ spring rediscovery…
Near term: Rosy & Trumped
Trump tweets daily raise the bar of the unknown, of course. Still so far the European earnings outlook for 2018 and 2019 is very robust with Ebitda margins substantially above…
Sampo’s dividend dancing with Nordea?
Last week, Saxo Bank, in which Sampo took a 19.9% stake for €265m in 2017, appointed a new Head of Operations, Oliver ZECEVIC. The new manager had spent his entire…
4 pair trades
We briefly comment on four pair trades with a strong momentum of their own. Long ArcelorMittal – Short Salzgitter The steel industry is on a roll (barring the Trump tariff…
Global warming is rentokil’s best friend
Rentokil’s 2017 strong momentum – led by its strong pest control business (contributes c.68% of the group’s profit), disposal of the ailing workwear business, increased focus on attractive Asian markets,…
Miners in May 2018
Similar to the previous month, brewing global geo-political uncertainties (including trade war tensions) seem to have again capped commodity price gains. Although, the global economic outlook remains promising. Below is…
Forever green
Rupert Murdoch is still a fixture of financial markets at 87. He no longer shows up in AlphaValue’s long list of chairmen of listed corporates having given the baton to…
French KHOL
Think of Kering, Hermes, l’Oreal and LVMH (khôl) as the French version of GAFAs. This is when one sector tips the market balance. Their 33% combined jump from late March to now is…
Accor’s delicate shareholder relations
After JinJiang internationals, Accor’s largest shareholder with 12.32%, HuaZhu Hotels Group (China Lodging Group Ltd, NASDAQ: HTHT) announced its strategic investment in AccorHotels during its Q1 18 release and also…
Has Food & Beverages lost its shine?
After years of outperformance, the F&B industry seems to be somewhat lost in an environment of accelerated changes and value chain fragmentation. The sector has suffered a major correction since…
P/Book subliminal messages
On the mathematically correct view that P/Books are a function of ROEs, the 30 sectors tracked by AlphaValue do a nice job of sitting on the regression line. 2018 P/Book…
Is current production output really meeting demand?
At a time of global strong traffic growth, the aerospace industry is about to reach the end of a painful and costly ramp-up phase that has weakened its cash flow…
Parmalat, a waiting game
Hopes that led Parmalat shares to jump by late 2016, presumably because Lactalis, its 89% shareholder, would pay a good price for a squeeze-out have been dashed. In late 2017,…
No attraction in weaker balance sheets
Every now and then we check whether “trash” as defined by a non-investment grade rating is a good investment theme. Not currently, it would seem. We defined non-investment grade issuers…
Rusal gets a lifeline?
Yesterday evening, in a surprise development, the US Treasury Department announced it was to extend the time limit (for the US and non-US citizens) to end business ties with Rusal…
Dear(er) Vifor Pharma
Our endorsement in August 2017 proved to be an ideal entry point for Vifor Pharma – the small-cap play has been the ace performer in the essentially lifeless Smaller Pharma…
William Hill’s suspended fate
Moving from underdog to favourite, William Hill spent the last month catching up with peers, helped by the restart of the sector consolidation following GVC’s bid on Ladbrokes and by the surprisingly-soft position…
Saint-Gobain / Sika : The case for a Pac-Man style offensive
It is clear that Sika is a better firm than Saint-Gobain (SGO). The invisible hand has been saying so ever since SGO tried in December 2014 to garner control of…
The conflict with Iberdrola has just started!
The AGM of Siemens Gamesa on Friday lasted only two hours. The major shareholder Iberdrola with a stake of 8% tried to strengthen the minority rights. Siemens, the majority shareholder…
Reflation Trade and Other Myths
Banks have over-performed the market over the past two years, recovering a portion of the ground lost during the first half of 2016 on overdone deflationary and political fears. Based…
Holding companies profiled
Holding companies tracked by AlphaValue trade at an average 8% discount to NAV/SOTP. This is on the verge of expensive if one holds the view that the average discount for…
Bigger fund managers eventually suicidal?
The asset management (and asset gathering as a whole including the Life insurance business) has been reshuffling at an exponential speed over the last few months. This may yet just…
Go for the Siemens’ Healthineers placing
The average target price according to our valuation should be around €40 per share. We recommend to subscribe. Attractive IPO price range between €26 and €31 per share. Placing volume…
Lloyds : Digital investments and dividend distribution
We believe concerns about the potential impacts of accelerated digital investments on dividends are misplaced. In our view, they are based on a misconception of banking where finance concepts developed…
Kantar says Sainsbury is the biggest loser
According to Kantar Worldpanel, UK grocery sales increased 3.2% in the 12 weeks to 25 February 2018, largely due to 2.9% price inflation. Among the Big Four supermarkets, Tesco and…
AXA is on the move and uniquely cheap
When AXA presented two years ago its “Ambition 2020” plan, it was considered as rather ambitious indeed, and, when a refreshed management team took the helm, reaching targets became even more…
pbb Deutsche Pfandbriefbank : Dividend pay-out ratio upgrade to at least 75% until FY2019
Deutsche Pfandbriefbank (pbb) has increased its pay-out ratio from 40% to 50% to a regular dividend of 50% plus a special dividend of 25%, up to 2019 inclusive. In addition,…
Saras oversold ?
Saras has slumped almost 20% since the opening of the year. The heavy fuel oil crack spread, a structural loss-making but minor side of the refining business, fell from a…
Bridgewater’s shorts screened, seriously bold
We could not resist screening the Bridgewater Dalio’s $22bn short bet on European equities as trumpeted in the media on 15 February. AlphaValue covers 51 of the 60 stocks or…
Looking for new dividends ? Go for Banks
The taste for dividends is largely a reflection on the (shifting) taste for risk but their quality as a safety-net cannot be challenged. Consider the following chart that plots the…
Stock Picking in European Power Utilities
The sector has been under pressure recently with the end of the QE program getting closer and a tightening of the credit market expected. Higher CO2 prices are finally…
A hard life for grocers
As the new (and young) boss of Carrefour is releasing his vision/strategy aimed at the French grocer becoming a tad more digital, it does not hurt to provide a sense of…
Position closed on Swisscom
The primarily domestic Swiss telco has been a remarkable performer whatever investors sentiment about the CHF, about Swiss growth, about Telcos at large and about the hard to decipher situation…
Novartis : Strong results, Entresto & Lutathera
Novartis reported yet another strong quarter, reflecting strong performance by Cosentyx, Entresto and Alcon, although Sandoz remains a worry. The guidance reiterates the same mood – strong pharma and Alcon…
Utilities get more attractive, slowly
Utilities have lost their shine since October 2017. This can easily be associated with firmer rates and a dash for cyclical/value stocks now that Europe is looking like a better…
Acs adds complexity
Hochtief (72% controlled by ACS) is expected to launch a takeover bid for Abertis. This ACS initiated move would be supported by the “relevant” geographical footprint of the combined company, the strong…
Decoding Anil Agarwal’s mission ‘Anglo American’
In 2017, Anil Agarwal (Vedanta Resources’ Chairman) via his family trust, Volcan Investments (Vedanta’s largest shareholder – c.69% stake), acquired a 19.4% stake in Anglo American. The stake was amassed…
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