So, whilst we are expecting for volatility in Latin American markets to increase, our favorite markets for investors to increase weightings in equities are: …… Continue reading
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Morning Market Commentary & Weekly Charts – Currency Wars Musings
We still see the current US$ temporary strength as a good opportunity for investors to increase equity holding in international companies. The current temporary strength of the US$ and its inverse impact on global commodities prices as a good opportunity for US institutional investors to increase their weightings in foreign equities and commodities, and particularly to those benefiting from a seasonality point of strength, we advise investors to add towards the following equity markets and sectors: …..
Morning Market Commentary – Time to go long on the EURO again
The Euro is in oversold territory. We expect the Euro to reverse it’s latest weakness, as the “Italian Job” damage is done, and investors will focus on the macro aspects which matter most at this stage.
The current temporary Euro-weakness has enabled European governments and corporates to initiate hedging positions for the next 18 months, which will ensure their global competitiveness, and so we are advising investors to buy the Euro at the current levels of 1.30. We maintain our 3 – 6 months price target for the Euro at EUR/US$ 1.38. The Euro typically enters a period of strength form April – July.
Morning Market Commentary March favorable for stocks; VE reiterate “buy”
Historically, the month of March has appositive seasonal bias for US and global equities’ indices. March has had the fourth best seasonal impact for US equities and particularly on the S&P 500, when looking back 50 years. The Dow’s and the fifth best performing month for the Dow Jones Industrial Average and the eighth best performing month for the NASDAQ Composite. Average gains per period were 1.1% for the S&P 500 Index and Dow Jones Industrial Average and 0.6% for the NASDAQ Composite. Most of the gains were recorded in the second half of the month.
We think that for 2013, March will be another strong month, ahead of the seasonal “Sell in May & Go Away” phenomenon.
Mystery Charts + EADS & Boeing
5 pictures worth more than 5 Million words.
We thought that today, we create value, not only on a serious note, but also by realistically looking at the “value added “ perception and reality of most of the “sell-side” content to institutional investors. Here we give clients a bit of guesswork to enjoy, which we think is fun, and explaining how that some deliver value, or alpha, and most do not. The majority of sell-side analysts have been bullish on one of these two securities.
We take an indepth look at EADS and Boeing.
SES SA Update and “Buy” Reiteration “The sky is not the limit”
SES SA 2012 results were on top of expectations, and the management is guiding expectations higher for 2013, particularly, due to declining Capex and increasing free cash flow, and that not only for 2013, but also for 2014 and 2015. The proposed increased dividend comes in at EUR 0.97 (versus EUR 0.88 in 2011) and is as expected, and will offer investors a high yield of 4.2% annually. This high yielding stock, combined with solid top-line growth ad earnings growth, and a visibly declining capital expenditure program for the next three years, makes SES shares attractive for investors in our opinion.
SES SA, the growing global industry leader in the global satellite and communications market is in our opinion a good investment for global institutional investors, looking to achieve an above average total return with minimal investment risk, and with limited management execution risk. Our 12-month price target for SES SA shares is EUR 30.
Morning Market Commentary & Weekly Charts Bullish on Oil, Gold,
Weekly Investment Conclusion: The current, and shallow correction between now and the end of March will provide investors with an opportunity to accumulate sectors on weakness that have a history of seasonal outperformance until the traditional “Sell in May & Go Away” period, which may start this year, again like in 2012, ahead of its usual acclaimed season. Last year, we did forecast the “Sell in May & Go Away” equities peak correctly as of April 2nd.
Global Automotive Demand Atlas – February edition
In January, the global light vehicle markets grew 12.0% yoy, after having advanced 1.3% yoy in December and 5.2% to 80.89m in FY12, according to LMC Automotive. The SAAR (seasonally adjusted annualised rate) of sales hit a record level of 85.91m units/year in January, 4.4% higher than December’s 82.31m. In FY13E, the global LVs markets are expected to decelerate sharply and grow just 2.7% to 83.0m, in line with our previous forecast. (See GADA January 2013 edition of January 23rd, 2013.)
Morning Market Commentary US$, US Market Charts, SSES, Italy, Greece
European Economic Outlook for 2013. Clearly, …………………………………………………more mixed macro news ahead.
We see technical evidence for the long-term bullish trend to remain intact until there are greater odds of a looming recession. Or until stocks become overvalued. Neither is a real concern right now. Not even with the government cost cuts from the sequester going through post March 1st.
So, we are recommending to add towards Asian, and European equities if, and when the correction increases in velocity.
Morning Market Commentary EUR/USE;US$/YESN;SSEC;AAPL
Apple stock continues to look for a lower price. The gap down from January is a major sign of more selling volume to possibly join the carnage in the once biggest stock in the world. Shares of Apple have not moved above its 50-day moving average since September of last year, precisely when the new iPhone and iPad were launched.
We maintain our “Sell/Short” recommendation on AAPL, with our 3 – 6 months price target of US$ 320.
Morning Market Commentary – No sell signals yet NDX;AAPL;Currency Musings;Global Automakers
We continue to see one good investment solution to the problem of global currency wars: Investors should continue to buy Gold.
We have been recommending for 3 years to “sell/short” the French OEM’s and also Fiat, in Italy, which in retrospect clearly was an alpha generating call for investors over the entire time period.
Given recent macro-dynamic changes, in monetary policies, impacting currency markets around the world, namely the Yen weakening substantially versus most currencies, particularly the US$, the EURO, but also mostly against the Korean Won, we have become bullish in September 2012 on Japanese stocks, calling for a major rise in the Nikkei, and implicitly seeing a bullish case in favor of Japanese car companies.
APPL Update reiterating our “sell/short”
The attached report is an update on APPL stock, following our original “Sell/Short” note from October 3rd, 2012 to our clients.
After a report by James Stewart, NYTimes this past Friday Feb. 8th, 2013 in his “Common Sense” Column, “Following a Herd of Bulls on Apple”http://www.nytimes.com/2013/02/09/business/following-a-herd-of-bulls-on-apples-stock.html?pagewanted=2&_r=0&ref=business, we are reiterating our “Sell/Short” recommendation on APPL with a short-medium term (3-9 months) price target of US$ 320/share.
Morning Market Commentary & Weekly Charts-Currency Manipulation vs Gold
As we have written in the past years, most countries are artificially pushing down their exchange rates in an attempt to obtaining competitive advantages at the expense of others. And if they all manipulate their own currencies, all sides will end up losing out. At the EURO summit, as well at other Central Banker policy meetings as of late, we have heard over and over that currency wars are impacting policies and inherent competitiveness issues.
Daimler Valuation (EUR 45.45) – BUY
At EUR 45.45, Daimler shares are currently valued at 9.6x prospective 2013E earnings and 7.7x prospective 2014E earnings; the latter is at a 27% discount to the 5-year average historic valuation of 10.5x and at a 14% discount to the 10-year low historic valuation of 8.9x. This is inconsistent with the implication that our estimates for 2014E EPS (EUR 5.91) are 44% above the 5-year average of EUR 4.11 and 63% above the 10-year average of EUR 3.62.
A valuation in line with the 5-year average historic valuation of 10.5x implies a share price of EUR 61.90 at year-end 2014E and time-discounted (yield of 10-year Bund) a target price of EUR 60.91 at year-end 2013E, which is 34% above the current share price. (See our latest company report ‘Daimler: 4Q/FY12A operational results in line. 2013 set to be yet another ‘year of transition’ of February 11th.)
Daimler 4Q-FY12A results, FY13E-FY14E fine-tuned
Daimler shares – our view: At EUR 45.45, Daimler shares are currently valued at 9.6x prospective 2013E earnings and 7.7x prospective 2014E earnings; the latter is at a 27% discount to the 5-year average historic valuation of 10.5x and at a 14% discount to the 10-year low historic valuation of 8.9x. This is inconsistent with the implication that our estimates for 2014E EPS (EUR 5.91) are 44% above the 5-year average of EUR 4.11 and 63% above the 10-year average of EUR 3.62. (See pp. 24-25.)
Global Markets Strategy & Equities Outlook – Bullish on Japan & China
As you know we turned very bullish on Japan and China in September 2012, and have been advising to overweight allocations towards the Nikkei and the Shanghai Indices, as we recognized major turning points in those markets due to changes in government leadership and implicitly new and improved stimulus policies going into effect as of Q4 2012.
Morning Market Commentary & Weekly Charts
History shows that US equity markets in the year after a Presidential election move higher into the first week in February in conjunction with fourth quarter reports, weaken thereafter until the end of March and moves higher thereafter. Given political events scheduled in the US during the next two months, history is repeating. Continue reading
FORD: Slippery slope Europe
A more import factor, in our view, is the polarisation in demand into premium and discount brands and product that has been intact for the past 20 years and accentuated during the crisis. Driving forces have been the downsizing on the part of the premium brands and an improvement in quality of discount brands. As a result the mainstream brands such as GM’s Opel/Vauxhall, Ford and local champions such as Peugeot, Citroën and Fiat have lost ground.
See also our monthly publication ‘Global Automotive Demand Atlas’ p.8. We published the January edition on January 23rd. Continue reading
Morning Market Commentary & Weekly Charts
Global Equity Markets, what next? Overheated? Or much more to go? While funds continue to flow into stocks, as we were forecasting since mid-December, money continues to move away from the bond market; particularly treasuries that have seen yields spike almost 400 basis points since the start of December.
Treasury yields have broken firmly above a long-term declining trend line that had remained intact for almost two years, diverging from the positive trend of equity markets over the same period.
Market Commentary LTRO, EUR, GOLD & SILVER
We see the LTRO repayments likely to boost money-market rates, leading to more EUR/US$ strength in the near term. The EURO extended a gain versus the US$ to trade as high as EUR/US$1.3464, extending an 11-month high set earlier in the session. We maintain our Q1 price target of EUR/US$ 1.3850. Continue reading
Morning Market Commentary AAPL, SPX, SSEC, N-225, DAX, CAC, FTSE
APPLE (NASDAQ AAPL US$ 469 pre-open ind.) We maintain our 3 – 6 months price target for AAPL at US$ 380.
We had a few interesting phone calls over the past 2 months from some clients, but also news reporters, and other critics, who used to receive our research, and/or download it from Bloomberg, but who do not pay us for our services, however, have put a lot of emphasis on taking the time and read and battle our forecasts and research, particularly as of late related to Apple and our call on October 2nd, to “sell/short” the beloved stock.
Let’s look at the facts, since then, we correctly predicted AAPL to fall from then US$ 685 to US$ 520, based initially on chart technical outlook changing. Then, when AAPL hit our price target of US$ 520, we wrote in several daily reports, besides updates on Apple, that we were expecting AAPL to recover back towards US$ 585, which it subsequently did within the ten days after our US$ 585 target call.
On December 5th, we reiterated our initial call, which was based in part on chart technical traditional Fibonacci basics, but also complementing the chart technical aspects with market research and looking at the dynamics that existed for AAPL’s most direct competitors, Nokia, Samsung, Sony, and considering all of our combined research, and logical sense, that AAPL’s investors euphoria had been fading.
Global Automotive Demand Atlas January 2013 edition
In December, the global light vehicle markets grew 1.3% yoy, after having advanced 4.3% in November, resulting in a 5.2% increase to 80.89m in FY12, according to LMC Automotive. The SAAR (seasonally adjusted annualised rate) of sales declined somewhat to 82.31m units/year in December, from 83.03m units/year in November, though was better than in October and September. In 2013E, the global LVs markets are expected to decelerate sharply and grow just 2.3% to 82.73m, in line with our previous forecast. (See GADA December 2012 edition of December 19th, 2012.) Continue reading
Morning Market Commentary – SPX, DJIA, N-225, SSEC, FTSE, DAX, SI, CAC, GAS
Time for a pause for global equities? The S&P 500 has posted gains in each of the past five sessions, pushing the large cap index well into overbought territory. Being overbought doesn’t necessarily conclude the positive trend, particularly on a longer-term time scale, but it does increase the probability of buyer exhaustion, leading into a retracement of some magnitude to follow. The S&P 500 Index is presently testing the upper limit of the rising trend channel that has been in place since the mid-November low. Relative Strength Index for the S&P 500 is now surpassing 70. Continue reading
FORD Commentary “BUY”
FORD (NYSE: F US$ 10.80) BUY – 6 Months Price Target US$14
Between 2008 and 2012, revenues fell from $143.6 billion in 2008 to an estimated $130 billion this year. The company took $14.8 billion in losses in 2008, but has been profitable ever since. Ford’s performance of its different operations is rapidly diverging. US quarterly profits and operating margins hit the highest level since 2000. Ford’s operating margins of 12.0% during the quarter were very strong. Strength in Ford’s core business was offset by weakness in Latin America and continuing problems in Europe.
Morning Market Commentary & Weekly Charts
Two unexpected events last week triggered a surprising upside move in equity markets last week, China’s $150 billion fiscal stimulus package announced on Thursday night and the ADP report showing a gain in US private employment in August instead of a loss. Gains were muted on Friday when the less than expected US employment report was released.
Morning Market Commentary – Bull or Bear?
Bull or Bear? and European Nuclear Power Plant Problems
The weekly chart below of the Dow Jones Industrial Average over the past few years shows a massive rising wedge formation, which has severe bearish implications should the price action break below the lower limit of this pattern. Given the easy money policy in the US and other parts of the world, a certain amount of skepticism of the bearish implications is warranted. However, the merit of this pattern is supported by a negative momentum divergence over the same period.
Morning Market Commentary & Weekly Charts
End of Q3
Now will there be a final spurt in Q4 2012?
We had the privilege to visit with some of Germany’s top corporate managements last week in Munich, plus get a glimpse at the Oktoberfest, where we were on a fact-finding mission with clients to assess the state of mind of the German corporate executives and that of the overall German consumer.
Global Automotive Valuations – September 2012 Edition
– Europe, US, Japan, Korea & India OEMs Valuations
– Global Truck Manufactures Valuations
Morning Market Commentary & Weekly Charts – No Inflation?
Inflation adjusted gasoline prices in the US have soared in the past four months. The inflation-adjusted price for a gallon of unleaded is up over $0.50 since the end of June and has rarely been higher than current levels.
- Middle East crises are often associated with major swings in the price of gasoline.
- Gasoline price spikes also have often occurred prior to an economic downturn.
Middle East instability (e.g. Arab spring) and Middle East tensions (e.g. Iran) are ongoing. Continue reading
Morning Market Commentary -Technical Market Observations
Technical Market Observations & Babbage
The weakest 3-week period of the year for North American equity markets is from September 16th to October 9th. The S&P 500 has dropped an average of 2.5% during this period. The TSE Composite Index has dropped an average of 4.0% per period. The weakness is related to negative guidance (earnings confession season) and analyst estimate reductions/downgrades during this period prior to release of third quarter results.
2012 so far:……
Global Automotive Demand Atlas – September 2012 edition
- US LV Sales
- Western Europe Car Market – Germany, France, Italy, Spain, UK
- Japan pc market
- China LV market
- Brazil pc market
- Russia LV market
- Demand trend for trucks – US, Europe, Japan
Morning Market Commentary – European Mega Banks “Big Split”
Discussions have been going on for some time, in Berlin and, most of all, Brussels, to proceed to split up “Mega-Banks”. The European Commissioner for Internal Market and Services, Michel Barnier, a former French cabinet minister with snow-white hair, is the most feared of the Brussels commissioners in European financial centers. He is already responsible for more than 30 EU regulations decreeing how banks and other financial market players are to do business in the future.
Morning Market Commentary & Weekly Charts
The Federal Reserve’s decision on Thursday to proceed with QE3 + was not a surprise to us, albeit for most of the market participants, and equity markets responded accordingly. Volume gains on Thursday and Friday were impressive. Additional follow through early this week is likely. However, news from the Fed came at a time when equity markets already were significantly overbought based on short and intermediate technical indicators. Technical action on Friday was an interesting “tell”. Equity markets moved higher at the open, dropped close to break-even just before the close and closed strong on end-of-day buy orders. Not an impressive follow through!
The weakest three week period of the year starts this week. The period is related to pre-third quarter earnings report news. The next three-week period historically is when negative guidance is most frequently released by corporations and when analysts reduce estimates and recommendations. The frequency of negative guidance since release of second quarter results has been unusually high this year. We see evidence of history to repeat during the next three weeks.
Morning Market Commentary – Temporary Euro Relief
“Saved by the bell” “Temporary Euro Relief”
The Federal Constitutional Court has rejected a petition to stop the ratification of the permanent euro rescue fund, the European Stability Mechanism. The decision clears the way for the ESM to go into effect. In a historically significant signal for the Euro rescue, the German Federal Constitutional Court on Wednesday ruled there are no grounds to stop the country from ratifying the European Stability Mechanism, the permanent euro bailout fund. However, the justices expressed some reservations.
Morning Market Commentary & Weekly Charts – Russia’s “Nukes of Hazard”
Weekly Investment Conclusion:
Downside risk exceeds upside potential in equity markets during the next six weeks.The breakout by the S&P 500 Index last week implies that depth of the downside risk is less than previous. Selected seasonal trades continue on the upside (gold, energy, software) and downside (transportation). However, many of these seasonal trades reach the end of their period of seasonal strength this month. September is a month of transition.
Morning Market Commentary & Weekly Charts
So Mr. Bernanke, Ready for a run down Corbett’s Couloir?
Following on from last week’s peak of the Federal Reserve Chairman Ben Bernanke’s closely watched speech at the Jackson Hole symposium, markets widely believe that further quantitative easing (QE) is now on the cards for the central bank’s next meeting on September 13th and 14th.
Daimler in the fast lane: 3Q10 results & FY10E-12E
Mercedes-Benz Cars keeps driving earnings upgrade FY10E-12E. Earnings upgrade for FY10E. Our view: At EUR 48.40, Daimler shares are currently valued at 7.9x prospective 2012E earnings, which is at a 32% discount to the 5-year (2004-08) low historic valuation of 11.7x and a 21% discount to the 10-year (1999-2008) low historic valuation of 10.0x. This is inconsistent with the implication that our estimates for 2012E EPS (EUR 6.12), which we do not expect to be peak earnings, are 60% above 2007’s pre- crisis EUR 3.83 and the 10-year average of EUR 3.84 and 98% above the 5-year average of EUR 3.08. (See pp. 24-25 for details.)
Daimler earnings recovery is gaining even more traction
Our view: At EUR 44.60, Daimler shares are currently valued at 7.4x prospective 2012E earnings, which is at a 37% discount to the 5-year (2004-08) low historic valuation of 11.7x and a 26% discount to the 10-year (1999-2008) low historic valuation of 10.0x. This is inconsistent with the implication that our estimates for 2012E EPS (EUR 6.04), which we do not expect to be peak earnings, are 57% above 2007’s pre- crisis EUR 3.83 and the 10-year average of EUR 3.84 and 96% above the 5-year average of EUR 3.08. (See pp. 25-26 for details.) Our indepth report…
Paris Motor Show 2010 – Preview
We are previewing 34 cars and concepts, including concepts for electric scooters by Smart and Mini ␣ There is still a lot of fun and glamour in the industry, with a number of premium products and performance cars on show both as concept and production cars.
BMW zooming off in the fast lane!
Management under CEO Reithofer have taken a highly pro-active business approach and introduced a modular production & development strategy for future products, are accelerating the model momentum and efficiently hedging currency. This has put BMW in a position to better take advantage of external factors such as a strong global recovery in demand and pricing of premium cars, and increased volatility in the currency markets.
Daimler Valuation
A valuation in line with the 10-year low historic valuation of 10.0x implies a share price of EUR 56.71 at year-end 2012E and time-discounted (yield of 10-year Bund) a target price of EUR 53.72 at year-end 2010E, which is 23.3% above the current share price. See our latest company report on Daimler of July 26th.
Global Industrial Manufacturing: Flat Cycle in 2010
Disappointing order trends in 2010 indicate a flat recovery.
BMW 1Q10E preview and tables
Our view: Following a sharp 32% increase from a 2010-low of EUR 28.75 (on February 15th) the BMW share price hit a two-year high of almost EUR 38 on April 26th. The current BMW share price of EUR 36.69 values BMW shares at 11.8x 2011E earnings, which is at a 21% premium to the 5-year average pre-crisis historic valuation of 9.8x. This is inconsistent with the implication that our 2011E EPS (EUR 3.11) are 35% below 2007’s EUR 4.78 and 17% below the pre-crisis 5-year average of EUR 3.74. (See pp.10-11 for details.)
BMW Valuation
Even a valuation in line with the 5-year average pre-crisis historic valuation of 9.8x implies a share price of EUR 30.36 at year-end 2011E and time-discounted (yield of 10-year Bund), a target price of EUR 29.46 at year-end 2010E, which is 19.7% below the current share price and 10% above the previous target price of EUR 26.77. See our latest company report on BMW of April 29th.
Daimler prel 1Q10 results & upgrade estimates and tables
Daimler’s preliminary 1Q10 results: stellar performance at M-B Cars and Daimler Trucks busting FY10 guidance. Management doubled their FY10 outlook for M-B Cars to EUR 2.5-3.0bn and trebled that for Trucks to EUR 0.5-0.7bn. We raised our EPS estimates by 64% to EUR 2.74 in FY10E and by 20% to EUR 3.75 in FY11E. (Final 1Q10 results are due Tuesday, April 27th.)
2Q10 US Equities Strategy
Included in this report is our 2010 Macro Outlook and Beyond, GDP Commodity Price Forecasts, Equities Indices Targets covering Currency Forecasts, Global Equities Sector Outlook, Global Equities Outlook per Country and Global Equities Indices Targets.
VW Capital Increase
VW announced that it plans to offer up to 65m new preferred non-voting shares, with the sale price, subscription ratio and the offer volume to be decided by March 26. VW intends to raise ‘around EUR 4bn’ in order to fund the Porsche takeover and preserve its credit rating of A- (S&P) and A3 (Moody’s). The issuance of 65m preferred shares would raise around EUR 4.5bn (based on the share price of EUR 68.65 at close March 23rd) and increase the existing number of shares (295m ordinary and 105.24m preferred) by 16%.
Morning Market Commentary
Market Commentary covering US Economic Concerns, US unemployment, European Economic Concerns, Currencies Commentary and Outlook.
Veolia Environnment FY09 results
We are reiterating our “Buy” recommendation on Veolia Environnement at a current price of EUR 24.38. Our 3 – 6 months VE price target is EUR 30 per share.
BMW 4Q/FY09E preview and tables
FY09E earnings at EUR 151m/EUR 0.24 per share. We expect that in FY09E, an already announced 4.7% decline in group revenue to EUR 50.68bn resulted in declines of 26% in pre-tax profit to EUR 259m/0.5% and of 53% in net profit to EUR 151m/0.3% or EUR 0.24 per share. We estimate that this was the result of an EBIT of EUR 393m/0.8% and a net financial charge of EUR -134m. (See pp.2, 4-6 for details.)
VW 4Q09/FY09 results comment and 2010E-11E estimates
Our view: The current VW preferred share price of EUR 59.93 is in line with the YE09 price and values VW preferred shares at 8x prospective 2011E earnings which is at a 15% discount to the 5-year average historic valuation of 9.4x. This is inconsistent with the implication that our 2011 EPS (EUR 7.52) estimates are 15% above the 5-year average of EUR 6.55. (See pp.6-7 for details.)
Global Markets Technical Outlook
We see the current EURO weakness, and implicit US$ strength as a tremendous opportunity to add towards EU quality assets, and inversely, to reducing US assets, as we expect the US$ weakness to resume later in 2010. Please read our in-depth report on the US Economy , Chinese Economy, Japan’s Economy, European Economies, Emerging Economies, Currencies, Global Equity Markets and Commodities.
Daimler Earning Update 2010E-11E
Daimler’s 4Q/FY09 results: M-B Cars and Vans surprised on the upside. We confirm our view of an EPS recovery to EUR 1.67 in FY10E and EUR 3.38 in FY11E.
Daimler 4Q/FY09 provisional results comment & tables
Daimler 4Q/FY09 provisional results comment: Group EBIT slightly down qoq despite greater than expected margin improvement at M-B Cars and M-B Vans. Decision to pay no dividend for 2009 does not reflect on FY10 outlook and is actually shareholder friendly, according to management. M-B Cars generated a 4Q09 EBIT of EUR 608m and a 5.3% margin. Management guidance for FY10 is a group EBIT in excess of EUR 2.3bn driven by M-B cars and Trucks. Conservative assumptions regarding market developments, in particular at trucks, point towards the guidance being a floor, in our view.
Daimler 4Q/FY09E preview
We expect that Daimler which turned profitable again in 3Q09, will report further improvements in group profits at all levels in 4Q09E; a 18.5% qoq improvement in EBIT to EUR 557m/2.5% (from EUR 470m/2.4% in 3Q09), a 37% qoq increase in pre-tax profit to EUR 393m/1.8% and a net income of EUR 350m.
BMW 4Q/FY09 preliminary results
The current BMW share price of EUR 32.19 is 11% down from its 2009 peak of EUR 36.14 (October 23rd) and up 12% from a 2010-low of EUR 28.75 (on February 15th). This values BMW shares at 11.4x 2011E earnings, which is at a 17% premium to the 5-year average pre-crisis historic valuation of 9.8x. This is inconsistent with the implication that our 2011E EPS (EUR 2.85) are 40.5% below 2007’s EUR 4.78 and 23.9% below the pre-crisis 5-year average of EUR 3.74.
Renault 2H/FY09 results tables and guidance
Renault – 2H/FY09 results highlight competitive weakness and excellence in cost-cutting: Group net loss narrowed in 2H09, but worse than consensus. Auto division close to break-even in 2H09, as stringent cost cuts and efficiency gains accompany a recovery in sales. Mix and price remain a worry. Efficiency gains in WC management were crucial for increasing FCF in 2H09. No earnings guidance for 2010, but commitment to positive FCF.
Peugeot 2H09/FY09E preview & results table and guidance
PSA – 2H09/FY09 results uninspiring: Auto division reported a reduced EUR 353m operating loss in 2H09, worse than our expectation. Positives factors, higher volumes (production and sales) and cost cuts were outdone by negative pricing, mix and currency. Group net loss/share is EUR 5.12 for FY09, vs. our estimate of EUR 4.71. Management declined to give an earning guidance for FY10, and committed only to a positive group recurring operating result for 1H10.
ArcelorMittal 2009 results commentary
ArcelorMittal swung to a fourth-quarter profit from a year-earlier loss on 16% lower sales. ArcelorMittal said it earned $1.07 billion after losing $2.63 billion in the prior-year quarter, when it took a $4.4 billion hit from writing down inventory and raw-material- supply contracts as well as provisions for workforce-reduction litigation.
Greek Myth(s)ology?
Mr. Trichet has an opportunity to help Greece to join the Modern Era. As we have been warning investors since November 2009 about the “Sovereign Risks” that would impact currencies, bonds and equities in 2010, we believe that now the risks seem to be fully taken into valuation accounts for the three asset classes.
Toyota Motor Commentary
We do believe that the problems for Toyota will continue to get worse, and in fact are deeper than what has surfaced to date. We are reiterating our Sell Recommendation on Toyota Motors Corp.
BMW FY09 & Management Update
Management expect a positive pre-tax result for 2009. Decline in group revenue led by the Auto division. We confirm our FY10E- FY11E estimates: recovery in sales and earnings.
Daimler strong car sales in 4Q09 are just the beginning of an earnings recovery
The Daimler share price doubled from a LT low a year ago, to EUR 36.24 currently, valuing Daimler shares at 11.1x 2011E earnings, which is at a 31% discount to the 5-year average historic valuation. Our estimates imply that 2011E EPS (EUR 3.28) are 14.7% below 2007’s pre-crisis 2007’s EUR 3.83 and 6.2% above the 5-year average of EUR 3.08
BMW set for sales recovery, after 10.4% decline in FY09
We confirm our FY09E estimates of a group EBIT of EUR 393m/0.8% and earnings of EUR 0.24 per share. The Auto division is set to exit a dismal 2009 with a strong EUR 140m/1.1% in 4Q09E, leading to a negative EBIT of EUR -218m in FY09E. Higher sales, a further ramp-up in production and improving model momentum should drive the EUR 216m qoq earnings improvement in 4Q09E.
CGI 2010 Global Markets Strategy & Equities Outlook and 50 Recommended Portfolio
The Year of Capital Preservation?
BMW praying for a weaker euro
BMW group remains at the mercy of currency, the US dollar in particular.
Porsche-VW Merger Progresses
VW’s extraordinary general meeting (Dec. 3rd) prepared the ground for two important steps in the two-year multi-stage merger with Porsche SE: VW’s acquisition of 49.9% of Porsche AG for EUR 3.9bn cash (that took place on Dec. 7th) and a EUR 4bn capital increase in VW preferred share capital in 1H10.
BMW 3Q09E preview & results table, comment and guidance
BMW – 3Q09 comment. Auto division incurred deeper 3Q09 EBIT loss as de- stocking continued. Underlying FCF remained positive. Financial Services: financial risk marginally receded in 3Q09. Management confirmed its FY09 guidance of a group profit and a sales decline by 10-15%.
Diamler 3Q09 final results
Our estimates imply that 2011E EPS (EUR 3.01) are 21.5% below 2007’s EUR 3.83, whereas the prospective multiple 2011E of 12.2x is 8% below the historic 2007 average valuation of 13.3x.
Albeit not cheap for a stock in a sector with many more troubles ahead, Daimler is in our opinion the best car stock in Europe, and we advise to add to positions at current prices, and particularly on a pullback in the markets…
BMW 2Q/1H09E preview & results table and guidance
Our view: 2010E outlook: BMW should remain unaffected from a post-incentive hang- over in 2010 and be able to benefit from any recovery in demand globally and the US specifically. We expect that this, together with an improving model momentum (introduction of the 5-Series in 2Q10E) should lead to an EBIT of EUR 1.2bn/2.9%. However, as the dependence on FS is expected to continue to grow, BMW is becoming potentially more vulnerable to any future shocks to the global financial system.
VW 2Q/1H09E preview & results table and guidance
We expect a EUR 365m group operating profit/1.3% margin, considerably better than 1Q09’s EUR 313m, that included EUR 600m capital gains.
Renault 1H09E preview & results table and guidance
The group failed to increase market share in Europe and even lost share in France, despite an accelerating model momentum and the roll-out of several new versions of the C segment Mégane. We also detect deterioration in mix as the discount brand Dacia benefited most from government incentive schemes and saw its European sales triple in 2Q09.
Daimler – 2Q/1H09E preview & results tables and guidance
After an expected EUR 2.48 loss/share in FY09E, we expect Daimler to return to profit in 2010E (EUR 0.84 EPS): MBC’s return to profitability should not be affected by the expiry of incentive programmes and trucks should benefit from restructuring as demand stabilises at low level. At price revenue of 0.39x (2009E) Daimler shares are valued at a 20% discount to the average 10-year high (0.44x) and a 55% premium to the average 10-year low (0.25x). (See pp.5-7.)
Fiat – Earnings 2Q/1H09E preview & results tables
Management update on Chrysler and FY09 guidance. Our 2009E estimate is more cautious: a EUR 734m group trading profit
implies a net loss of EUR 644m or EUR 0.52 per share, a negative EUR 0.4bn industrial FCF and a net debt of EUR 6.65bn by YE09E.
Peugeot – 1H09E preview
We have upgraded our FY09 estimate to a EUR 1.59bn group operating loss (vs. EUR 1.71bn previously) following the new guidance for Faurecia. We confirm our estimate that the auto division will incur a EUR 1.75bn operating loss on a 11.5% decline in sales (fully cons. comps.). At price revenue of 0.10x (2009E), Peugeot shares are valued at a 27% discount to the avg. 10-year low. (See pp 4-5.)
Renault– 1H09: no cash burn despite 16.5% sales slump
Renault announced a ‘significantly positive FCF’ for 1H09, despite an expected loss. European performance remains greatly disappointing. 1H09 sales decline -16.5%; rate of decline halved qoq to 11.0% in 2Q09.
Western Europe passenger car market– July 2009 update
Car market is set for an extended V-shaped recession. Our baseline scenario of an 11.7% correction to 11.68m in 2010 is based on the assumption that the schemes in Italy and France will be extended into part of 2010, the German scheme will expire at year-end as planned, and that car manufacturers will continue to aggressively discount.
Peugeot and Fiat-Chrysler possible Merger
Peugeot – looking for a suitable partner. Industrial logic of three-way merger Fiat-Chrysler-PSA has more negatives than positives.
BMW 4Q08E preview & results table and guidance
Group headline results worse than expected: BMW incurred a EUR 1.2bn pre-tax loss in 4Q08 and reported a EUR 351m profit (0.7% margin) in FY08.
Daimler 4Q08E preview & results table and guidance
Chrysler losses depress group EBIT and earnings. Mercedes-Benz Cars incurs 4Q08 loss from operations.