All in all better than expected Q3 results and another share buyback program, which underlines Allianz’s capital strength and the willingness to return excess capital to shareholders. We raise our TP (3 – 12 months) from EUR 220 to EUR 250/share.
Category Archives: Company
TSLA Update Sell
Today, we are re-iterating our Sell/Short recommendation on TSLA at current levels 0f $321/share maintain our target price for TSLA shares of $215 over the next 6 – 9 months.
General Electric & Co. (NYSE-GE $21.58) Update & Charts Update
However, looking at the total picture for GE shares, It appears to us that investors
might get a good chance to buy GE shares under $20 in the coming weeks until
November 14th, possibly even under $18/share.
102017 CGI General Electric & Co. (NYSE-GE $21.58) Update & Charts Update BUY 12 MO TP $28
Morning Market Commentary
Positive seasonal tendencies for the parts manufacturers can stretch
into the summer, however, with the US consumer toppling, we are expecting for
the period of seasonal strength for the Auto & components Industry to come to
an end earlier this year, hence why we are advising investors to sell/reduce all
stocks on the sector and wait for -10% to -20% lower prices by mid summer
before re-entering full allocations.
BMW Buy Reiteration
Muted 1Q16 EBIT results are EUR 1.76bn/9.4% for the Automotive segment and EUR 2.46bn/11.8% for the group. In 2016E-18E, we expect EPS to grow at a CAGR of 3.1% and reach EUR 10.63 in FY18E. Our YE16 target price of EUR 93 implies a 26% upside potential for BMW shares.
AAPL SELL Update
The short-term technical outlook for AAPL is negative, RSI and MACD are negative, and so are the 14-day, 50-day and 200-day moving averages. The head-and-shoulders topping pattern that became confirmed upon the break below the neckline around $107 had a first downside target of around $83, however, inherently increasing risks are for AAPL to test support at the open gap charted two years ago of $71.
APPLE SELL Commentary & Charts
AAPL shares fell more than -8% after the close in NY yesterday, to about $96 this morning in Frankfurt, and below our January 27th “Sell” on APL at $ 99.99. We reiterate our “Sell” on AAPL at the current price of $96/share.
Daimler 1Q16E preview
Investment opinion – BUY: Based on historic P/E valuation, we calculate a target price of EUR 81 for YE2016E, implying a 23% upside from the current share price. The new TP is 3.2% above our previous TP (of EUR 79) of February 2nd. The chart- technical outlook for Daimler shares is negative. (See pp.14-15.)
Daimler 4Q FY15E Preview
Investment opinion – BUY: Based on historic P/E valuation, we calculate a target
price of EUR 79 for YE2016E, implying a 23% upside from the current share price.
The new TP is 25% below our previous TP (of EUR 105) of October 23rd, reflecting
the collapse in the global equity markets seen since the beginning of the year. The
chart-technical outlook for Daimler share is negative.
Apple (NYSE: AAPL $99.99) SELL
Apple’s Q4 results which were announced after the market close yesterday were disappointing, and forward guidance by Tim Cook is confirming our past long term views, that Apple’s business & product innovation, its industry lead and business strategy has peaked in 2013. Apple did not grow unit sales y-o-y in any of its major product categories during the crucial Q4 holiday sales. The number of iPhones sold was basically flat from a year ago, Mac unit sales declined -4% y-o-y, and iPad unit sales plunged -25%.
Global Automotive Demand Atlas November 2015 edition
In October, global light vehicle sales increased 5.1% yoy to 7.62m, after 2.9% in September, resulting in a 1.5% increase to 73.26m YTD. LMC Automotive (LMCA) calculate that underlying demand continued to strengthen in October, with a SAAR (seasonally adjusted annualised rate) of 92.4m units/year, up 4.0% from 88.8m in September, resulting in a YTD SAAR of 88.2m, up less than 1% from FY14’s 87.4m. The recovery of the October SAAR to levels last seen in December (92.1m) and January (89.4m), is due to a strong recovery in China, supported by continuing strong performances in the US and Western Europe.
BMW (EUR 92) BUY – 3Q15A results & FY15E-17E preview
BUY: Based on historic P/E valuation, we calculate a target price of EUR 112 for YE16E. This implies a 21% upside potential from the current share price. The chart technical outlook is positive and the next levels of minor resistance around EUR 93 and EUR 96 should not prevent BMW shares to test their 200-day moving average around EUR 98. (See pp.16-17.)
BMW 3Q15E preview
BUY: Based on historic P/E valuation, we calculate a target price of EUR 110 for YE16E. This implies a 19% upside potential from the current share price. The chart technical outlook is positive and the next levels of minor resistance around EUR 93 and EUR 96 should not prevent BMW shares to test their 200-day moving average around EUR 98. (See pp.15-16.)
Daimler (EUR 78.73) BUY 3Q15A Results & FY15E-17E Preview
BUY: Based on historic P/E valuation, we calculate a target price of EUR 105 for YE16. This implies a 33% upside from the current share price of EUR 78.73. Daimler shares are in a positive short- and medium-term upside momentum. (See pp.15-16.)
Daimler (EUR 72.33) BUY 3Q15E Preview
BUY: Based on historic P/E valuation, we calculate a target price of EUR 103 for YE16. This implies a 43% upside from the current share price of EUR 72.33. (See p.14.)
Morning Market Commentary
US inflation continues to run below the Fed’s 2% target, which policymakers view as a “temporary result of the strong US$ pressuring commodity prices”. However, maybe the FED should rethink their definition of “temporary” for the US$ strength, and the inherent tremendously negative impacts on the US economy, the negative impacts on competitiveness of US companies, and negative impact on imports, exports, negative impacts on US inflation, or better, the lack thereof. We just cannot see the rational for the FED to raise interest rates, when macroeconomic momentum, and the negative impacts of a strong US$ are already at unsustainable levels, nevertheless with risks of a rate hike going to exacerbate and make things much worse.
Daimler 2Q15E Preview
Daimler shares’ long-term positive trend is intact. Daimler shares are in a short- term correction. The short-term technicals are still negative with RSI and MACD both negative. Daimler shares have downside risk towards the 50-day moving average of around EUR 75 a share. We are advising to accumulate Daimler shares at current levels. Our medium- term price target for Daimler shares is EUR 110.
Daimler (EUR 84.99) BUY 2Q15E Preview
BUY: Based on historic P/E valuation, we calculate a target price of EUR 103 for YE15. This implies a 21.3% upside from the current share price of EUR 85. The chart technical long-term trend remains positive, though Daimler shares are in a short- term correction. (See pp.14-15.)
June 2015 Global Automotive Demand Atlas
In May, global light vehicle sales declined 1.4% yoy to 7.33m, after a 1.6% increase in April, resulting in a 1.1% increase to 36.79m YTD. LMC Automotive (LMCA) calculate that in May the SAAR (seasonally adjusted annualized rate) was 87.0m, units/year, down from 88.4m in April and well below January’s 89.4m, and 88.0m YTD.
The global LV sales that have been stable so far during 2015 are considerably weaker than a surprisingly strong December SAAR of 92.1m/year, confirming the suspicion that the latter was due to year-end marketing pushes in key markets.
For FY15E, we expect a global LV market of 89.0m, implying an increase by 1.7% or 1.5m. This is a downgrade from the previous forecast of 89.2m and an implied increase by 1.9% or 1.7m. The growth rate is thus expected to more than halve in 2015E, from 3.7% in FY14 and 4.0% in FY13.
FCA and GM – A Marriage Made in Heaven or Hell?
Another year, another merger rumour surrounding FCA! Only this time it is more than a rumour. We believe that FCA’s CEO Marchionne looks for a tie-up with the epicentre in NAFTA. Mr. Marchionne has repeatedly said that there was a need for more consolidation in the auto industry to spread the costs of developing new models, efficient engines and clean-emissions technologies. We do not believe that mega mergers are the answer.
Continue reading
Global Automotive Demand Atlas, May 2015 edition
For FY15E, we expect a global LV market of 89.2m, implying an increase by 1.9% or 1.7m. The growth rate is thus expected to almost halve in 2015E, from 3.7% in FY14 and 4.0% in FY13.
BMW (EUR 102) – BUY
Solid 1Q15 auto results reflect ‘normalisation’ in China to single-digit growth rates and profit margins. In 2015E-17E, we expect EPS to grow at a CAGR of 8.1% and reach EUR 11.15 in FY17E. Our new YE15 target price of EUR 125 implies a 22% upside potential for BMW shares.
Daimler (EUR 88.00) – BUY
A strong 1Q15 bodes well for FY15E as Mercedes-Benz is set to grow EBIT and margin to EUR 7.99bn/9.6%. In 2015E-17E, we expect EPS to grow at a CAGR of 14.3% and reach EUR 9.70 in FY17E. Our YE15 new target price of EUR 103 implies a 17.5% upside potential for Daimler shares.
Morning Market Commentary & Weekly Charts
If the current slow GDP trend continues, and all signs we see point to this, then the level of earnings for the S&P 500 could be the lowest seen in two years. Q1. We are convinced by the initial data that this year’s Q2 will not be nearly as strong; we maintain our 2015 forecast for +2.2% GDP growth. It is time to make a few portfolio adjustments.
020415: Daimler FY14 Preview
02 04 2015 Daimler – 4Q-FY14E preview
Auto Analyst Sabine Blumel’s preview of Daimler’s 2014 results due Feb 5th.
011415 – CGI Global Automotive Demand Atlas
01 14 2015 CGI – GADA – January 2015 edition
Automotive Analyst Sabine Blumel reviews global automotive demand by country.
112414 – CGI November Global Automotive Demand Atlas
11 24 2014 CGI – GADA – November edition
Senior Automotive Analyst Sabine Blumel analyzes Global Automotive Demand.
Daimler 3Q14 Results Commentary
10 28 2014 CGI – Daimler – 3Q14A results commen
Automotive Analyst Sabine Blumel’s comments on Daimler’s Q3 results.
080114 – CGI Global Automotive Demand Atlas August/September
09 01 2014 CGI – GADA – August-September edition
Automotive Analyst Sabine Blumel analyzes global automotive demand trends.
072814 – Daimler (Eur 63) – 2Q Results, Buy – PT Eur 80
07 28 2014 CGI – Daimler – 2Q14A results comment
Auto Analyst Sabine Blumel discusses Daimler Q2 results and Buy recommendation
072814 – Ford ($17.62)Q2 Results – Buy, PT $22
07 28 2014 CGI – Ford – 2Q14A results comment
Auto Analyst Sabine Blumel discusses Ford Q2 results.
061114 – Global Automotive Demand – Emerging Markets
06 11 2014 CGI – GADA – Emerging Markets – June 2014
Auto Analyst Sabine Blumel reviews the outlook for automotive demand in the Emerging Markets.
053014 – CGI Global Automotive Demand Atlas, May
05 30 2014 CGI – GADA – May 2014 edition
Analyst Sabine Blumel reviews Global Automotive Demand by major market globally. SAAR revised down slightly due to the worsening outlook in a number of emerging markets,the FY14E forecast is a 3.5% increase to some 87.3m; this implies a deceleration from last year’s restated +3.9% growth to 84.36m.
050714 – BMW 1Q14 Results Commentary – BUY
05 06 2014 CGI – BMW – 1Q14A results comment
1Q14A group results in line with 1Q14E. Strong result at Automotive segment, despite front-loaded costs. We keep FY14E estimates virtually unchanged and confirm those for 2015E-16E. Our 2016E EPS is EUR 10.34 and our YE14 target price of EUR 110.00 implies a 25% upside potential for BMW shares.
The short term technical outlook for BMW shares is neutral/negative. The risks of BMW shares not holding support at that level are high, and we expect for BMW shares to test the next support level at the 200-day moving average at EUR 82. The long term positive outlook for BMW shares remains positive.
0505 2014 -BMW (EUR 89.10) – BUY 2014E-16E outlook – EPS growth at CAGR of 8.5%
BMW (EUR 89.10) – BUY
2014E-16E outlook – EPS growth at CAGR of 8.5%
Our 2016E EPS is EUR 10.34; our YE14 target price of EUR 110.00 implies a 24% upside potential for BMW shares
05052015 – BMW 1Q 2014 Results Preview
05 05 2014 CGI – BMW – 1Q14E preview
Automotive Analyst Sabine Blumel presents 1Q 2014 Results preview.
Our 1Q14E EBIT estimates are EUR 1.67bn/9.7% for the Automotive segment and EUR 2.10bn/11.2% for the group.
Our 2016E EPS is EUR 10.34 and our YE14 target price of EUR 110.00 implies a 24% upside potential for BMW shares.
1Q14E group: we expect that a 6.9% yoy increase in revenue to EUR 18.76bn generated yoy increases of 3.0% in EBIT to EUR 2.10bn/11.2% and 5.0% in net profit to EUR 1.37bn. We thus expect that BMW management will confirm their bullish guidance for FY14 of a ‘significant increase in its group’s pre-tax profit’, driven by ‘a significant increase in sales’.
At the dominant Automotive segment, we expect that in 1Q14E a reported a 8.7% increase in retail sales to 487.0k units (that include 108.0k sales in China, 62.5k of which were sold by a JV) generated a 9.3% increase in PBT to EUR 1.66bn/9.6%. We expect that a reported 4.8% yoy increase in fully consolidated retail sales to 424.5k units (incl. 45.5k cars imported to China) generated increases of 8.0% in revenue to EUR 17.18bn and of 5.3% in EBIT to EUR 1.67bn/9.7%, from a strong EUR 1.58bn/9.9% in 1Q13. We see the expected EUR 1.27bn yoy EBIT increase driven by positives such as volume and a better mix; expected headwinds include launch costs, costs related to Strategy Number one and forex. (See pp.5-7)
0501 2014 – Daimler 1Q14 Results Commentary
05 01 2014 CGI – Daimler – 1Q14 results review
Automotive Analyst Sabine Blumel comments on Daimler 1q 2014 results: 1Q14A EBIT in line with 1Q14E: EUR 2.07bn for the group & EUR 1.18bn at M-B Cars. Some disappointment: at M-B Cars, a lower than expected 7.0% margin and at Trucks, lower than expected EBIT (EUR 0.35bn/4.9%) due to country-mix. We fine-tuned our FY14E EPS to a 19% increase to EUR 5.93. Our YE14 TP of EUR 82.00 implies a 24% upside potential for Daimler shares.
042814 – Ford Results Quick Response
Quick Response: 1Q14 EPS miss blamed on ‘accumulation of unusual factors’ that understate the underlying strength of business. Confirmation of FY14 guidance implies 1) stronger 2-4Q14 results; 2) upgrade for FY14 Asia & Pacific and Europe; downgrade for FY14 South America outlook.
We consider management’s FY14 guidance and the underlying market assumptions realistic and also conservative enough for the company to surprise on the upside in the next quarters. More importantly, we are of the opinion that Ford is well on track implementing its global growth strategy and should be able to resume earnings growth from 2015 onwards. We consider Ford a ‘fundamental’ buy with a medium-term target price of USD 20, but short-term technical headwinds for the sector, inclusively Ford should give investors renewed opportunity to buy into Ford at lower prices. (See p.3.)
042814 – CGI Morning Market Commentary: Alstom/GE or Alstom/Siemens?
We see better medium to long-term value creation in the Siemens proposal than in the GE possibility, both for Alstom, and also for either of the other two possible winners. This proposal is an unique opportunity to create two strong European Champions with global leadership aspiration in the fields of energy and transport, providing for a compelling industrial story while protecting the interests of both groups’ shareholders, employees, respective home countries France and Germany and ultimately the European interests as well. We do believe that Siemens is the most suited partner for Alstom, and clearly the favorite over GE, if any, however, there will be serious “antitrust” issues affecting any potential transaction, and we are advising for investors to rather focus on Siemens as an investment opportunity, rather than on any potential merger benefits, as we see little likelihood of neither takeover bids materializing.
Morning Market Commentary – DAX, German surplus
We are expecting for the DAX 30 equities’ outperformance to extend through 2015. EPS expectations should stabilize alongside global GDP growth. We are forecasting DAX EPS FY 2014 to rise by 16% yoy to 760. (Vs. consensus 729).
In the past 30 years that we have been active in the global equities capital markets arena, Germany has been focusing like no other nation and its corporate sector in re-inventing and restructuring and repositioning itself and its economy by constantly upgrading through technological, intellectual value-added, and by high capital expenditure driven innovative research and development. This has lead to the point that the majority of German companies to-date are world class leaders, second to none.
Morning Market Commentary – SPX & DOW in seasonal correction AAPL “Sell/short” note
US equity markets have entered their annual period of seasonal weakness. Seasonal tendencies for stocks turn firmly negative on September 16; average loss for the S&P 500 Index over the three weeks to follow is -2.5%. The DJIA has more often underperformed during the May to October time frame with a brief counter-trend rally occurring in July. September remains clearly the worst calendar month for stock market performance.
AAPL Apple Sell Recommendation
Apple (AAPL), the biggest company still by market capitalization in the US, didn’t have the sort of effect it was hoping for with the launch of two new smart phones: its share price fell sharply as analysts expressed their disappointment with the latest gadgets: the iPhone 5S and iPhone 5C.
Apple, once the technological and applications leader has become an innovation follower, and it proves our point more and more, as the company management is struggling with its corporate vision and business plan and original strategy. Recent product announcements, like the iWatch, and “cheaper” iPhones are confirming our 2012 concerns, which we published in our leading “Sell/short” AAPL report on October 3rd 2012 (AAPL US$ 685). Apple’s business model has run out of momentum, growth is declining, and AAPL is forced by market and consumer trend dynamics to test smaller, cheaper, and lower value added gimmicks, which are going to be having a negative affect on AAPL’s margins, which we identified as unsustainable, in our last years original report.
Daimler 2Q13 Earnings, Models & Valuation
Daimler: A sharp improvement in 2Q13 results points towards strong earnings recovery in 2H13E & 2014E-15E.
Daimler (EUR 54.21) – BUY Target price: EUR 72.94; potential +35%
Previous target price: EUR 51.97 (April 16th).
Morning Market Commentary & Weekly Charts – Summer breeze to continue for global equities?
It’s time to take trading profits in equity index based investments. Sectors with traditional positive seasonality are the exceptions. Gold, gold equities, biotech and utilities are bucking the trend by moving higher as well as outperforming equity indices.
We continue recommending to “buy” EADS shares at the current price of EUR 44.34, and still continue to prefer EADS over Boeing, as we have for the past 6 years, since inclusion of EADS in the CGI Global 50. Our 12 months price target for EADS shares is EUR 54.
Morning Market Commentary Sell in May, AAPL reiterating sell/short; Gold & Silver to go higher
The period for seasonal strength in equity markets concludes on May 5th, after which a trendless market is the average. Economic events over the next few days, including central bank announcements and employment report releases, are likely to set the tone for the month ahead. The technical backdrop of equity markets has shown deterioration over recent months, particularly pertaining to momentum, and the likelihood is increasing that a market correction is near based on recent warning signals that have become prominent in April. Stocks have been up 6 months in a row. And April finished at a historic high of 1597.57.
Each May is different. And there have been some very profitable summers in years past. So it’s never wise to just take this saying at face value and truly walk away from the markets. The resilience of stocks to be pressing all-time highs after 3 straight weeks of soft economic reports (including a scary showing for Chicago PMI in contraction territory) is making it hard to say what exactly would make stocks go lower at this stage. Meaning that investors seem quite comfortable with the ebb and flow of muddle through economic growth. And as long as the Fed is on the side of investors, with all that QE, then there is no reason to walk away?
BMW 1Q13E preview & FY13E and Valuation
BMW (EUR 70.25) – BUY – Target price (YE 2013E): EUR 86.99; potential +24%
A valuation in line with the 10-year average historic valuation of 10.2x implies a share price of EUR 88.05 at year-end 2014E and time-discounted (yield of 10-year Bund), a target price of EUR 86.99 at year-end 2013E, which is 23.8% above the current share price (EUR 70.25) and in line with our previous target price of EUR 87.24 (March 18th). (See our latest company reports ‘BMW – 1Q13E preview’ of April 30th.)
Morning Market Commentary – Global/US equities sell off confirmed, Energy, Metals entering negative seasonal trend, EADS “buy”
Currently the number of US companies that have reported sales above estimates are at a mere 44.1% based on results released for the first quarter, thus far. The current quarterly revenue beat rate is the third lowest in over 10 years, beaten only by the fourth quarter of 2008 and the first quarter of 2009, just as the recession was beginning.
We believe that the actual data, whether it relate to the broad economy, to actual negative currency impacts, or to earnings, fail to catch up to expectations, a correction in forecasts may be in order, the result of which would likely lead to a correction of stock prices as well.
Again, we see more evidence in increasing metrics for investors to brace themselves for a 6% to 10% pullback in major global equities markets, and surely also for the US markets.
Morning Market Commentary – Currency impact on corporate earnings and equities pricing, AAPL Sell/Short reiteration
Just as an update on a major subject, which most sell side economists, strategists and analysts have grossly overlooked still so far yet, the impact of a temporary strengthening US$ against major currencies like the Yen, the Euro on US exports/imports, current account, and on corporate revenues and earnings. We had started to point to this significant subject in our Q 2 Global Strategy Outlook, and already do we see impacts of this highly overlooked and underestimated subject on earnings releases for major US companies, like Caterpillar, Coca Cola, AAPL, JBL, BA, to name just a few.
Global Automotive Demand Atlas – April edition
In March, the global light vehicle markets declined 1.5% yoy to 7.96m units, after having declined 6.2% yoy in February, resulting in a 1.6% yoy increase in YTD, according to LMC Automotive. The SAAR (seasonally adjusted annualised rate) of sales was 81.26m units/year, 2.0% higher than February’s 79.68m and 5.4% down from a record 85.91m in January. YTD, the SAAR was 82.83m, 2.3% higher than FY12’s 81.00m. In FY13E, the global LVs markets are expected to grow 2.8% to 83.2m, which implies a considerable deceleration from last year’s 5.3% and is in line with our previous forecast. (See GADA March 2013 edition of April 1st, 2013.) From 2014 onwards, the markets are expected to accelerate again and to grow by almost 7% p.a. in 2014E and 2015E.
Morning Market Commentary – AAPL “Sell/Short” reiteration, SPX Sell signals clear
Apple stock traded below US$ 400 for the first time since 2011, just prior to the exuberant and parabolic rise to US$ 705 in 1H 2012. Yesterday APPL fell 5.50% following a weak sales outlook from key chip supplier to Apple, Cirrus Logic. Shares of AAPL are down around 42% since the stock peaked in September of last year, when we put a “Sell/short” recommendation on AAPL at US$ 685, this amidst concerns that Apple is losing its market dominance.
Daimler 1Q13 Valuation & Preview
Daimler (EUR 39.44) – BUY – Target price: EUR 51.97; potential +32%
At EUR 39.44, Daimler shares are currently valued at 7.2x prospective 2013E earnings and 6.7x prospective 2014E earnings; the latter is at a 36% discount to the 5-year average historic valuation of 10.5x and at a 25% 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 10-year low historic valuation of 8.9x implies a share price of EUR 52.63 at year-end 2014E and time-discounted (yield of 10-year Bund) a target price of EUR 51.97 at year-end 2013E, which is 32% above the current share price and 15% below our previous target price of EUR 60.91 (February 11th). (See our latest company report ‘Daimler: 1Q13E preview’ of April 16th.)
Morning Market Commentary – US$ impact on stocks & Sector rotation, into cyclicals, materials, mining
The Euro has realized rather pronounced declines since the start of February, but recently momentum indicators have diverged from the short-term price action, indicating that selling pressures were abating. The intermediate trend is noted to have changed, but a continuation of this short-term rebound is reasonable as the currency corrects an oversold condition. A retest of the 50-day moving average around 1.32, and even up to 1.3450 is increasingly probable as the currency exits a period of seasonal weakness that concluded at the end of March.
Euro strength has generally coincided with US$ index weakness, often seen as a positive catalyst for equity and commodity prices.
The US$ index is showing signs of rolling over from its recent positive trend. The US$ index is pushing towards its 50-day average as seasonal weakness in the month of April pressures the currency lower.
Morning Market Commentary – BDI, NDX, AAPL
When stocks began to peak from a substantial seasonal run that began in October of that year, the Baltic Dry index is rising as cyclicals, such as energy and materials, are weakening. The BDI provides an assessment of the price of moving the major raw materials by sea. The diverging activity of the price of shipping materials versus the price of companies valued based upon materials they produce is made without conclusion, other than the fact that underlying fundamental influences that typically drive these cyclical sectors higher at this time of year are still occurring. Manufacturing and industrial production typically increase into the Spring, driving the BDI higher as more goods are shipped, and customarily giving strength to Materials and Energy. However, the fading relative performance of these cyclical sectors suggests that investor demand to hold these stocks is clearly absent, despite the positive fundamental influences. Once again, warning signs are beginning to emerge. With AAPL still commanding a large percentage of the Nasdaq 100 , the short trade is in AAPL. Now after it completed it’s 10 % recovery from its lows of US$418, we are advising to short AAPL, with our next price target being US$ 380, then over the 9 – 12 months time period, we stick to our AAPL price target of US$ 320.
BMW (EUR 70.00)-BUY
A valuation in line with the 10-year average historic valuation of 10.3x implies a share price of EUR 88.52 at year-end 2014E and time-discounted (yield of 10-year Bund), a target price of EUR 87.24 at year-end 2013E, which is 24.6% above the current share price (EUR 70.00) and 2.7% below our previous target price of EUR 89.69 (March 12th). (See our latest company reports ‘BMW – 4Q/FY12A prel. results comment’ of March 18th and ‘BMW – 4Q/FY12E preview’ of March 12th.)
BMW: 4Q/FY12 Preliminary Results Comment & Model
BMW shares – our view: The current BMW share price of EUR 70.00 values BMW at 8.7x 2013E prospective earnings and at 8.1x prospective 2014E earnings; the latter is a 21% discount to the 10-year average historic valuation of 10.3x. This is inconsistent with the implication that our 2014E EPS estimates (EUR 8.63) are 11% above FY12’s record EUR 7.77 and 100% higher than the 10-yr average (EUR 4.31). (See pp.11-12.) Continue reading
BMW: 4Q/FY12E Preview
BMW shares – our view: The current BMW share price of EUR 72.65 values BMW shares at 9.0x 2013E prospective earnings and at 8.4x prospective 2014E earnings; the latter is a 20% discount to the 10-year average historic valuation of 10.5x. This is inconsistent with the implication that our 2014E EPS estimates of EUR 8.63 are 16% above 2011’s record EUR 7.45, 74% higher than the 5-year average of EUR 4.97 and 123% higher than the 10-year average of EUR 3.87. (See pp. 21-22.)
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.
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.
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.
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 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.
Global Automotive Valuations – September 2012 Edition
– Europe, US, Japan, Korea & India OEMs Valuations
– Global Truck Manufactures Valuations
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 & 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.
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…
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.
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.)
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%.
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.)
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.
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.