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Markets Live: Thursday, 16th March, 2017

Summary:
11:01 am PM11:01amMorning A. M. Morning all. blankcanvas Yay!!! PM11:01amWelcome to Markets Live Binocular salut Twattington-Burbage Morning all Arlington Morning PM11:01amWhere American money costs just a little more than it did last time we chatted Soundbuy Morgen 11:01 am PM11:01amNow... PM11:02amI'd stopped sharing Trump tweets on here Twattington-Burbage Morning @Arlington PM11:02amSpared you Mouselet Good morning, on the first day for a while when I've felt vague European optimism

Topics:
Paul Murphy considers the following as important:

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Bryce Elder writes Markets Live: Tuesday, 25th April, 2017

FT Alphaville writes Snap AV: Your Trump Trade reversals, charted

Simon Wren-lewis writes Economic Competence Revisited

Siona Jenkins writes FT Opening Quote: Whitbread brews up sales but misses profits

PM11:01am

Morning

A. M. Morning all.
blankcanvas Yay!!!
PM11:01am

Welcome to Markets Live

Binocular salut
Twattington-Burbage Morning all
Arlington Morning
PM11:01am

Where American money costs just a little more than it did last time we chatted

Soundbuy Morgen
PM11:01am

Now...

PM11:02am

I'd stopped sharing Trump tweets on here

Twattington-Burbage Morning @Arlington
PM11:02am

Spared you

Mouselet Good morning, on the first day for a while when I've felt vague European optimism
PM11:02am

But this overnight has to be oggled at

Alchemy30 Morning, Great piece by Kadhim
PM11:02am

Click it

A. M. @Alchemy: indeed, great read.
Twattington-Burbage @Mouselet Very true
PM11:02am

It's just extraordinary

PM11:03am

Does he decorate his mantle piece with pictures of himself?

Arlington Anyone else unable to play the clip?
A. M. @PM/BE: the left-hand panel in my screen has got the shakes.
PM11:03am

Best go to markets

PM11:03am

Cos one or two things to talk about

PM11:03am

Bull market back on

PM11:03am

Reflation trade etc

Gladys I wish I hadn't been able to play the clip.
PM11:04am

Footsie up 72 points currently

Michael Milkem @A.M. I also had the same.. thought it was me at first
A. M. (and, every comment I make is doubly-posted, or at least tries to get doubly-posted)
PM11:04am

7440

Alchemy30 Such a humble guy :-)
Lemmy Clip works. Change the tune and costumes and flags it's straight out of North Korea
PM11:04am

And with that we should go to Anglo American...

PM11:04am

Rocket

Mouselet lemmy: admittedly the same is true for the last scene of Star Wars
Golly Galoshes KJU has better taste in hagiographic music I reckon
Anglo American PLC (AAL:LSE): Last: 1,300, up 105 (+8.79%), High: 1,330, Low: 1,281, Volume: 6.94m
A. M. @Lemmy: having re-watched "Jeeves & Wooster" recently, Trump reminds me of one, R. Spode.
GBKrona Hola
PM11:05am

Thats on the back of this story late yesterday of course

BE11:05am

Yep. So Agarwal is taking up to £2bn worth of exchangeable bonds

PM11:05am


Indian billionaire Anil Agarwal on Wednesday launched an audacious raid to buy as much as 12 per cent of Anglo American, the London-listed miner which is a larger rival to his Vedanta Resources.

Working with bankers at JPMorgan, Mr Agarwal’s family trust was attempting to acquire as much as £2bn worth of Anglo shares from investors, which he plans to fund through a convertible bond.

“This is an attractive investment for our family trust,” said Mr Agarwal in a statement issued after the close of London trading. “I am delighted to become a shareholder in Anglo American.”

Mouselet diversifying from Vedenta into Anglo-American seems rather a timid kind of diversifaction
BE11:06am

In a JP Morgan deal that I don't understand, no matter how many times I read about it.

BE11:06am

So, the bonds will convert into a 12% stake if they go to term.

Arlington @A.M. https://56packardman.files.wordpress.com/2016/03/spodetrump.png?w=1440
Mouselet yes, platinum is distinct from iron ore, but isn't, say, Facebook or an S&P500 tracker more substantially and more usefully distinct from iron ore?
Lemmy AM: haven't watched or read it but can now imagine who Spode might be
markopolo @ BE me neither. seems like he's going both short an long at the same time
RiverStyx Where was Mr. Agarwal at 215P last year? Not so brilliant at £13.
BE11:07am

Agarwal pledging 21.7% of Vedanta shares to JPMorgan as collateral....

BE11:07am

And $123m of Vedanta bonds.

BE11:07am

Want Spangel to try and explain what's happening?

BE11:07am

As we understand it:
We understand the convertible bond is sold as a SWAP whereby a hedge fund or convertible desk agrees to hand over a proportion of Anglo shares in return for taking the bond. In this case we believe JP Morgan requires the delta which we reckon is 0.8 of the shares required to back the issue. So if 180m shares are needed to back the bond, the investors are required to hand back around 145m shares with JP Morgan buying the rest in the market to make up the shortfall.
JP Morgan will then buy the remaining shares either today or over the next 15 days to back the convertible bond.
The fund or desk is likely to borrow the stock from the market. This is not a problem for Anglo stock which is ‘GC’ General Collateral and is cheap to borrow.
The interesting part is that the bond is effectively backed by borrowed stock. This gives Volcan the voting rights and will give Volcan the full stock at the end of the bond period.
The convertible pays a coupon of 3.75-4%.
This is a devious and creative way to acquire stock in our view and is a bit like using a poacher to catch your game for you and we wonder what would happen if the cost of borrowing stock in the market were to rise materially.

GBKrona So - Agrawal sayng sell Vedanta, buy AAL? I think the market would very much support that...
BE11:08am

Creative, certainly. Devious seems pejorative.

Otter Hello Online Friends
BE11:08am

But does it put Anglo in play?

Arlington Morning Otter
PM11:09am

Well, in play or on the road to some sort of break up

PM11:09am

Nice Spangel line -- bit like using a poacher to catch your game for you

Golly Galoshes Well done indeed Kadhim - that's kind of journalism that makes a sub worth paying.
Soundbuy Oi Otter
BE11:09am

I thought the breakup idea was sidelined a bit by last year's rebound.

Mouselet yes, definitely a good piece of work from Kadhim
BE11:10am

Is there any convincing argument that AAL's worth less than the sum of its parts?

BE11:10am

Perhaps there is. RBC seems to think so.

BE11:10am

Anglo American has screened as the most compelling value opportunity amongst the diversified miners, and today's move by the Agarwal family should help the shares to begin their re-rating. The strategic 12% stake will provide a powerful position in regards to the future evolution of Anglo American. At this point the full intentions of Vulcan Investments are uncertain and whether this relates to any Vedanta specific strategy, however we would expect the market will see this as adding an element of future potential corporate activity premium into the shares. On the flip side, the stake, alongside the number one holder the South African PIC, could potentially block any other corporate activity. For now, the transaction will add to the volatility in Anglo American as convertible buyers hedge their shares following this convertible launch and this will add to the complexity of the Anglo American investment case. All of this said, much like the move today from Anil Agarwal, we find there is significant value in Anglo American and we would look through the noise on a 1 year view. Anglo American is trading on our forecasts in 2017 on 3.2x EV/EBITDA, 29.4% free cash yield and should end the year at 0.3x ND/EBITDA, well below the sector ex-Anglo on 4.3x EV/EBITDA and a 15% FCFY.

markopolo but if the bond is a mandatory convertible, isnt the borrowed stock just returned at maturity?
PM11:10am

Dunno

PM11:11am

Investec reckons this simply recognises deep value

PM11:11am

We hold the view that Anglo American offers the deepest value amongst the Major Diversified mining companies and that view appears to be shared by the founder of Vedanta (VED LN, N/R), who announced last night an intention to acquire £2bn (potentially 13%) of AAL stock. We have been rapidly approaching the M&A stage of the current resources cycle, particularly given the current high cash generation, but this is the first clear signal that corporates are seeing value that the market is not.

PM11:11am

garwal is, in our view, recognising the deep value in Anglo, the reason we upgraded in early February to Buy. Looking at our NAV for the Anglo assets - based on NPV for unlisted assets and the latest share prices for Kumba and Anglo American Platinum – we see the rump value (i.e. unlisted assets) valued at c.38% of what we estimate as fair value for these assets (see attached table), a discount that we believe is too low. Indeed, at various stages in the past month, as the value of the listed assets appreciated, this discount has been as deep as 50%. While Agarwal has stated that he sees his new shareholding in Anglo as an investment, we note his reported comments at Davos in January where he indicated that he had previously sought a merger of the two groups.

PM11:11am

We're gonna have to watch this tho

PM11:12am

Reputation wise Agarwal, was completely on the ropes not too long ago

BE11:13am

We should note, if only in passing, that Vedanta's bound by a Takeover Code rule 2.8 now.

BE11:13am

As a related party to Volcan.

WEB could have bought nearly all of it for that much last year
BE11:13am

So can't make any kind of offer (outside the usual whitewash stuff) within the next six months.

PM11:14am

The statement is here btw http://www.investe...1703151738296103Z/

BE11:14am

You'll remember the reports last year that Agarwal had sounded out Anglo about a merger. Though clearly, a lot's changed since then. Valuations in particular.

Twattington-Burbage Is this at all similar with what Glencore did with Katanga Mining back in 2008?
BE11:14am

Quick line from Morgan Stanley, Anglo's house broker.

BE11:15am

On our base case commodity prices we see limited upside with our price target of GBp1,140 per share. In our bull case scenario where we assume De Beers is valued at the price that Anglo American paid for an additional 40% equity stake and the copper assets at take-out multiples (including the Quellaveco project in Peru) we see upside to GBp1,500 per share or 26%.

Lefevre @PM, re Reflation trade - what is Michael Hartnett's (or B of A) "view of where we are now on the "Sell bonds/buy commodities" theme? I do like punchy advice you could fit on a t shirt slogan...
BE11:15am

In metal and mining, operational synergies from combining multi asset diversified companies is in general quite limited. Synergies can be achieved by combining neighboring properties where ore has been left in the ground between properties or where processing capacity is under-utilised. There are no such assets between Anglo American and Vedanta Resources Plc. The latter has its operating assets in India and Zambia. Anglo American has no presence in these countries.

PM11:15am

(Lefevre -- havent seen Hartnett in a while, but will keep a look out)

PM11:16am

Think JPM are behind the move in Kaz Minerals as well

PM11:16am

But havent seen the note yet

Kaz Minerals PLC (KAZ:LSE): Last: 521.00, up 39.9 (+8.29%), High: 560.50, Low: 510.00, Volume: 2.54m
BE11:16am

Hang on, I'll grab.

PM11:16am

Kaz has been extraorindary last couple of months

BE11:17am

Sector piece, on the back of .... Monday's, was it? .... sector piece.

BE11:17am

No shortage of miner stuff this week.

BE11:17am

KAZ balance sheet and project risks diminishing, upgrade to OW: We have been cautious on KAZ given risks around construction of development projects and balance sheet vulnerability in the event of a commodity price downturn. However, operational/project performance has exceeded expectations, while commodity prices have reduced balance sheet risk. Given those factors, coupled with an almost 20% pullback in the shares since mid- Feb, we now see an attractive entry point and upgrade to OW, with a revised Dec’17 PT of £5.80/sh implying 20% upside even with our conservative operating assumptions.

BE11:18am

... otherwise in the UK ......

BE11:18am

Randgold and Acacia remain our top picks in the precious metals sector: RRS (OW) is optically expensive (10/9x EV/EBITDA on spot), but is also net cash. Management has strict thresholds for M&A / project development and has outlined plans to return cash above $500m to shareholders (JPMe ~$800m by YE’17). ACA (OW) trades on ~5.0x spot EV/EBITDA for FY'17-18E and generates FCF yield of ~7-8% on JPMe, the highest amongst the UK precious peers, which provides strategic flexibility, although we acknowledge near-term risks regarding the Tanzanian concentrate export directive. Elsewhere, FRES (N) offers attractive production growth (~15% pa CAGR silver production over the next three years) but trades at a ~20% premium to RRS, trades in line with its historical average multiple and elevated levels of capex in 2017/18 will likely mean shareholder returns remain inhibited. HOC (N) is a leveraged play on precious metal price appreciation, but revised JPM forecasts imply spot less than 5% vs. our 2017 avg, and spot multiples are in-line with historical levels.

Randgold Resources Ltd (RRS:LSE): Last: 7,270, up 310.39 (+4.46%), High: 7,390, Low: 7,180, Volume: 427.05k
Flaneur "Does he decorate his mantle piece with pictures of himself?" - viewed a house recently where the walls were covered with pictures of the overweight, middle-aged owner in various 'glam' shots - lighting makeup etc. Remarkable narcissism.
Acacia Mining PLC (ACA:LSE): Last: 482.70, up 17.7 (+3.81%), High: 493.80, Low: 477.40, Volume: 502.78k
BE11:19am

Brave on Acacia given recent protectionist stuff in Tanzania

PM11:19am

hmm

BE11:20am

Petra Diamonds remains top diamonds pick: PDL (OW) remains our top pick within our diamond coverage. We expect the stock to re-rate over the medium term based on: (i) solid production growth & improving product mix, which drive top-line expansion; (ii) margin expansion as the proportion of undiluted ore increases; and (iii) naturally moderating capex profile as key projects are commissioned. The net impact is FCF yields greater than 20% by FY’19E, which we expect will provide increasing capital allocation flexibility. GEMD is cheap at a more than 30% discount to NPV, but the recent life of mine update could reduce mining flexibility over the medium term, whilst a recovery in Letseng prices also remains uncertain.

Petra Diamonds Ltd (PDL:LSE): Last: 130.80, down 0.2 (-0.15%), High: 132.30, Low: 130.40, Volume: 661.57k
Gemfields PLC (GEM:LSE): Last: 41.94, down 0.0625 (-0.15%), Volume: 16.75k
BE11:20am

So, there we have it. Enough miners.

PM11:20am

Just going round the internal mail...

FATDAZ Not the first time we have seen covered exchangeable bonds (Newscorp/ Pearson for example) but dont recall the collateral being borrowed before of course disclosure rules are much tighter to day than back in the day ....
PM11:21am

CITY Jaeger - EDINBURGH WOOLLEN MILL IS 'FRONT RUNNER IN DEAL TO BUY STRUGGLING JAEGER'
Press Association 2017
CITY Jaeger
Edinburgh Woollen Mill, the retail group run by the billionaire Philip Day, has emerged as the front runner to acquire struggling high street chain Jaeger.
The Press Association understands that Mr Day's outfit, which owns an array of high street brands, is slugging it out with a group of bidders also thought to include Mike Ashley's Sports Direct and Jaeger's former owner Harold Tillman.
Sources close to the deal believe that Edinburgh Woollen Mill is in pole position to buy the group from its current owner, the private equity firm Better Capital.

PM11:21am

Harold Tillman still with us??!

PM11:21am

He has some form

Lefevre Is there any evidence Trump has ever actually read a book - as in more than 140 characters? We know he didn't write Art of the Deal
PM11:21am

Dave Shappard chips in (being scottish)...

PM11:21am

That's four of Scotland's 25 biggest companies currently involved in M&A

Standard Life
Aberdeen Asset Management
Wood Group
Edinburgh Woolen Mill

PM11:22am

And it's noted that AG Barr could be in play soon

Arlington @Lefevre he's read lots of books, some would even say all the books, I think he's one of the best readers - possibly ever
BE11:22am

.......... could it?

PM11:22am

No

BE11:22am

Thumbs up

BE11:23am

Still on the M&A theme ...... Kind of..................

FATDAZ @Twattington-Burbage no that was all about raising cash to support Xstrata rights issue and to avoid dilution as a result this looks more like a punt on Anglo out performance ie total return on stake > cost of bond coupon stock loan financing and fees to JPM etc
PM11:23am

(FATDAZ -- Pearson/Murdoch? That's going back a while...)

Flaneur Isnt EdinWoolMill just an upmarket tourist trap?
BE11:24am

Fascinating, not entirely out of leftfield, but slightly curious story overnight from The Register .....

BE11:24am

Exclusive A corporate tie up between Vodafone UK and Liberty Global is back on the negotiating table, multiple sources have told The Register.

BE11:24am

Yep, that one again.

BE11:24am

The fourth floor of Voda’s Newbury HQ has been sealed off with access only granted to execs from both firms, insiders claimed. Andrea Salvato, SVP and chief development officer at Liberty Global, is leading discussions for his company, a source added.

"Only certain high-level members of staff are permitted access. Visitors are permitted but only from Liberty Global," a company insider told us.

BE11:25am

Now ..............

BE11:25am

........ we spent quite a lot of Wednesday afternoon debating whether Vodafone's Newbury HQ even has a fourth floor.

BE11:25am

It's a surprisingly difficult question to answer.

FATDAZ @flanneur maybe but if you get foot fall and sales as a result does it matter ? FWIW I hope Mr Tillamn wins the day as have plenty of jaeger in my wardrobe and he knows biz v well
PM11:25am

Ive never visited

Stateless Its upmarket?
BE11:26am

Ditto. So the discussion eventually required me to go to West Berkshire Council planning portal .....

BE11:26am

And .... yes!

BE11:26am

Markets Live: Thursday, 16th March, 2017

PM11:26am

hehehehe

BE11:26am

As you can see from that plan, a couple of the seven Vodafone campus buildings have a fourth floor.

FATDAZ @flanneur re house hope you bid down on that basis
Pseudonym Is that a yurt?
BE11:27am

Oh! hang on, that was the wrong screen grab. That's the standard three-floor job.

PM11:27am

hehehehe

PM11:27am

Pull yourself together Bryce

BE11:27am

What you want is the one with the cafeteria at the bottom.

Stateless from the website ....If there is something you specifically want to find, press the CTRL and F keys on your keyboard simultaneously. This will give you a search box at the top left of your screen where you can enter a keyword to search with and find the relevant document(s).
BE11:27am

But sources familiar with the Newbury layout say that building's full of techies

Soundbuy Glamping at Voda.....
BE11:27am

Management's elsewhere.

doeswalk just need a drone with a power mike to listen in
Stateless i use chrome, my search box is top right - am i entitled to compensation?
BE11:27am

So ............... dunno. Jury's out.

Flaneur @fatdaz - gotcha. But sceptical about clothing retailers who rely on location rather than internet or brand. Experience counts though, as you say.
BE11:28am

What we can say is that people familiar with stuff weren't particularly bothered by the Reg's report.

BE11:28am

Noting that Vitorio has very recently said there are no talks on at the moment.

FATDAZ @flannuer Jaeger have run outlet shops successfully I believe so perhaps Woolen mills sees some synergy there ?
CommentGoesHere Anything on this IMF Paris explosion?
Lefevre Amazed at Sturgeon having to retreat so quickly, failing to realise that many of her Nationalists voted for Brexit - she could end up like Quebec, with people getting bored to death of constant talk of leaving...
BE11:29am

UK would be a tiny deal in the grand scheme of Vodafone though, so I doubt there would be any regulatory push to clarify when talks might restart, if they ever do.

BE11:30am

RBC disagrees.

BE11:30am

Given the explicit nature of the article, we believe the UK Takeover Panel may intervene if there is a significant price movement in Vodafone. If it does intervene it will ask Vodafone if there are any talks ongoing. If so, Vodafone would have to release a RNS statement to that effect.

BE11:30am

Vodafone and Liberty Global have recently concluded the merger of their Netherlands business, but overlap in a further six countries. A combination makes strategic sense but the differences in relative growth rates and capital structures have proved difficult to resolve in the previous rounds of negotiation over the last couple of years.
A combination of assets and the operating company level or a combination of the whole companies is likely to be very good for both stocks given the operational, strategic and substantial synergy benefits that could accrue to both sides.

BE11:31am

And Morgan Stanley ......

BE11:31am

Churning all the usual arguments.

BE11:32am

We believe a tie between Vodafone UK and Virgin would be
plausible, for several reasons: 1. Synergy realisation, from cost reduction, network consolidation, MVNO savings (Virgin could port their mobile subscriber base to Vodafone network), cross-sell (convergent Telco products), combination of retail/marketing efforts. 2. Both players would become fully convergent – Vodafone has a large UK mobile arm, but a small fixed-line business (its recent foray into broadband and TV has enjoyed limited success). Liberty, on the other hand, has a significant broadband and TV business in the UK, but a limited wireless presence (via its Virgin Mobile MVNO). A combination of Vodafone UK and Virgin would potentially create a fully-convergent UK Telco, that could rival BT (the No1 fixed and mobile operator in the UK). 3. Network benefits could include Vodafone connecting its wireless sites to Virgin's cable network (bringing fibre - rather than microwave - backhaul). 4. Vodafone's large UK Enterprise business could seek to cross-sell fixed-line products on Virgin's fixed-line network to corporates - while Virgin could cross-sell mobile services to its largely-residential residential base.

BE11:32am

But a potential deal would face many challenges: First, the two parties would need to agree a transaction price. We note that Vodafone and Liberty were negotiating on potential asset swaps between May and September 2015, without concluding a transaction. Second, regulatory approval would be a potential hurdle. Third, a potential transaction could involve significant integration risk culture, technology etc). Fourth, synergy realisation could be delayed or disappoint (eg we note a quicker realisation of synergies at SFR/Numericable, but slower synergy delivery at Vodafone/KDG).

DutchBrat @CommentGoesHere - 1 person slightly injured when they opened the letter, would not be surprised if it was sent by the same Greeks that sent the letter to Germany yesterday
BE11:33am

And Jefferies!

BE11:33am

Since late 2014, we have repeatedly argued in our research that a deal makes strategic sense due to a strong industrial logic and a large synergy potential [... In this context, we consider the present (admittedly vague) media reports 'smoke' that might well indicate the presence of a rekindled 'fire'.

BE11:34am

Synergy potential. In 2015, we had indicatively argued for a synergy potential of around $25bn for a full merger. Given changes to estimates since and the formation of the Dutch JV (which already implements some of these synergies), we revisit this question in this short note. Based on historical precedent, we argue that the total synergy potential of a full merger could amount to about $21bn (including revenue synergies, or $14bn just opex/capex synergies), of which about $14bn ($9bn opex/capex only) from the UK and $6bn ($4bn opex/capex only) from Germany. We have at this time not revisited our merger model published in 2015 and therefore do not further comment on potential deal structures and the associated value implications.
Regulatory risk. We also reiterate our view that any deal structure involving country assets (as compared to larger parts of the respective business portfolios) faces a grave regulatory threat, in the form of the long-standing opposition of the German Federal Cartel Office (FCO) to cable-cable consolidation. Further country deals (whether a UK jv or a UK-Germany asset swap) would risk that either now or eventually LBTY and VOD would face a review by the FCO, which would likely look to impose tough merger remedies in our view, based on historical precedent. In contrast, a 'larger' deal involving all or substantial parts of the respective business portfolios would fall into the remit of the EC antitrust authority. The EC has proven rather supportive of cable-mobile deals in the past (e.g. Vodafone-Kabel Deutschland in Germany, Telenet-BASE in Belgium, or Ziggo-Vodafone in the Netherlands), and does not seem to share the FCO's concerns over cable-cable consolidation. In other words, we believe the deal scenarios mentioned in the present media reports may not be the most logical ones from a regulatory perspective.

Twattington-Burbage @DutchBrat (if you are dutch) you must be feeling very chipper today
BE11:34am

And Merrill!

BE11:35am

Markets Live: Thursday, 16th March, 2017

PM11:35am

What a comprehensive service you offer, Bryce

BE11:35am

Well, it's the sellside really. They're the ones who've been over this particular theory every two weeks for two years, so have the analysis already in the can.

BE11:36am

We just have to add architectural sketches from planning permission applications.

BE11:36am

That's our value add here.

PM11:36am

Thumbs up

PM11:37am

See Rocket Internet bounced a bit this morning

PM11:37am

But it's been under pressure

PM11:37am

Very stick like

Patience Easyjet up 9% since 23rd Feb - any rumours?
PM11:37am

Hit a new low yesterday, holding just above 16 euros

PM11:37am

I haven't seen any fresh news

PM11:37am

Although there's a short Deutsche update

PM11:38am

On the Delivery Hero side

PM11:38am

Here's a par of that, albeit a long one

PM11:38am

Takeaway.com’s aggressive marketing spending in Germany likely to continue
Takeaway.com (TKWY, not covered, EUR34.14) reported full year FY16 results and we summarize our cross-reads to Delivery Hero (DH), in which Rocket Internet (RI) holds a 37% stake and which accounts for ~25% of our SOTP- based valuation of RI. TKWY’s Lieferando competes with DH’s Lieferheld and Pizza.de platforms in Germany. While we believe DH’s combined platforms remain the market leader in Germany, according to TKWY, Lieferando is now as large as Lieferheld and Pizza.de combined in terms of orders (+48% to 17m in 2016). This was backed by heavy marketing campaigns to drive customer growth (up 28% in 2016 to 3.9m) with TKWY spending EUR51m in marketing efforts in Germany in 2016 alone (mostly TV and outdoor). TKWY mgmt reiterated its commitment to continue its marketing investments in Germany which denotes intensifying competition for DH. While RI has not released any detailed numbers for DH, we estimate that Germany accounts for just ~10% of total group sales (DBe EUR330m in 16E), especially after the acquisition of Foodpanda which has a much higher exposure to emerging markets. In recent interviews (Bloomberg), DH’s CEO made clear that Germany is core but that it will not join any potential marketing war to acquire unprofitable customers. While we clearly welcome this approach, we will have to closely watch the evolution of market shares in Germany as the takeaway industry – just as any other online classifieds industry – exhibits clear winner takes it all dynamics.

JuB this SKY stuff as expected isnt it ?
PM11:38am

Deutsche have a target of 30 euros on Rocket

PM11:38am

Bless

PM11:39am

Benjamin Kohnke the lead analyst

littleclenches not a flicker from the SKY share price
BE11:39am

*U.K. CULTURE SEC. ASKS OFCOM REGULATOR TO REVIEW FOX-SKY DEAL

BE11:39am

Yep, that's expected.

BE11:39am

Already flagged, trailed and signposted.

PM11:39am

Pretty much automatic id have thought

Arlington @Patience maybe the detrimental Brexit effects are wearing off?
FATDAZ @patience some that might be oil prices I guess
BE11:40am

The assumption among .... well, everyone really ... is that it'd take another scandal of phone-hacking proportions to put completion of the deal at risk.

Sky PLC (SKY:LSE): Last: 987.00, up 1.5 (+0.15%), High: 989.00, Low: 985.50, Volume: 599.03k
Pseudonym @Lefevre Missed that. Does that mean no Scexit?
BE11:41am

"I have issued a European Intervention Notice on the grounds of media plurality and commitment to broadcasting standards" says Karan Bradley in the House. So, that's a 40 day evaluation.

BE11:41am

There's also the Ofcom fit-and-proper test

Patience @FATDAZ - inclined to agree - ICAG up 10% since 23 Feb also.
pfd SKY must have underperformed the market a lump since they popped up?
Patience @FATDAZ - Brent down 8% since then also.
PM11:43am

As expected again

FATDAZ @patience Nymex Crude off 9% YTD as of last night so a certain symmetry here real or imagined
Lemmy Surprised at Sky's price trading consistently at such a discount to the offer
PM11:43am

Just in passing, here's the link to the US budget request

PM11:43am

Lots more money for the military, less so for the environment

LongandWrong Fox should not be allowed to buy Sky
PM11:44am

Get the sense they still use typewriters in the White House

PM11:44am

And in Congress

Binocular shrewdette anyone?
LongandWrong Terrible governance, a company run by the murdochs for the murdochs. Dont give a hoot about shareholders
BE11:44am

(@Patience: as the ROTR have said, it looks like oil. Also, plausibly, some trackers hedging on anticipation of FTSE ejection and then having to cover. Though we probably overstate the impact of these things.)

Patience @FATDAZ - would make sense for Delta or South-West to diversify into Europe perhaps?
PM11:45am

Cheltenham quickly

PM11:45am

Much much better day from The Shrewdette yesterday

PM11:45am

Sadly I din't have any money on, Omg smile

PM11:45am

Let's see what day three looks like

PM11:45am

What a fun day yesterday - 1st & 2nd race winners and 2 winning forecasts to boot put me well ahead. Hope the luck continues today.

1:30 JLT Novice Chase. This will probably be when Mullins/Walsh get off the mark this Festival with Yorkhill but I am betting against that and going with the tenacious little TOP NOTCH 7/2 W. Also have a tiny each-way on FLYING ANGEL 14/1 EW - been backed in from 20s. Remember SkyBet’s Money Back on losers offer, so worth a punt.

2:10 Pertemps H’cap Hurdle. 24 runners - most paying 5 places with Bet365 & Victor going quarter place odds, but SkyBet paying 6 at 1/5th - so worth a few flutters … 3 each-way bets .. ROCKLANDER - always on the board and will favour this good ground, 20/1 EW. TOBEFAIR real success story this season 4 on the bounce 8/1 EW. GAYEBURY proven stamina but only raced on soft/heavy so ground might go against him 22/1 EW.

2:50 Ryanair Chase. Michael O’Leary could finally win his eponymous race, has 2 excellent chances in Empire of Dirt 5/2 but I favour his vastly improved SUB LIEUTENANT 15/2 EW. Also a tiny wager on UXIZANDRE 4/1 winner of this race in 2015 returning after lengthy absence.

3:30 Stayers Hurdle. UNOWHATIMEANHARRY 11/8 W won 8-8 for this yard and a Festival winner last year on good ground. Could have a JP McManus forecast with the classy JEZKI 15/2 EW, and I’ve had a small each way on LIL ROCKERFELLER 33/1 likeable consistent front-running performer.

4:10 Plate H’cap Chase. The well handicapped son of Sea The Stars STARCHITECT 7/1 EW, the delightfully named bottom weight THOMAS CRAPPER 9/1 EW, and an off-the-wall tiny each way for a bit of fun on MAD JACK MYTTON 25/1 EW.

4:50 Mares Hurdle. This looks like going the way of Ireland and the favourite LET’S DANCE 13/8 but I’ve also got LA BAGUE AU ROI for the home team, has a perfect record over hurdles 9/1 EW.

5:30 Kim Muir Amateur Riders Chase. (Yesterday’s hero Cause of Causes won this last year!) Wide open race with 4 places generally on offer but 365 & Sky paying 5. I’ve gone with PREMIER BOND 14/1 EW lightly raced novice chaser won last two and has Sam Waley-Cohen aboard. And a tiny each way wager on the old boy ALVARADO 28/1 EW 4th in the National 2 years running but a bit of a tricky customer.

PM11:46am

Good luck everyone with those

titleist 3 @patience you seem to be desperately trying to create a story ...stale bull by any chance ?
FATDAZ @patience perhaps but the history oif transatlantic airline ventures is littered with failures
BE11:46am

(@LongandWrong: I'm not sure I follow the path of that argument. Don't shareholders have the option to sell, and also to reject the offer if they're happy with their lot?)

PM11:46am

And Albert has dropped...

PM11:46am

So finally the Fed has got its ‘a’ into ‘g’ and raised rates. Although this will be the first of many rate rises in a move to normalise rates, the Fed’s lack of verbal assertiveness means the market still cannot bring itself to believe the Fed’s own projections for interest rate hikes. Talking about dovish central banks, I’m heading to Japan at the weekend. One thing that surprises me is how resolute investors are at not re-rating the Japanese profits story – especially when compared to the US.

pfd 7% under performance since 9th Dec
PM11:46am

Contact SocGen for the rest

BE11:47am

This is very bitty all of a sudden. Though there's not a lot of corporate around that's interesting.

Golly Galoshes Fox should very definitely not be allowed to buy Sky unless the UK is prepared for "FoxNewsUK hosted by Nigel Farage and Katie Hopkins"The UK is not, in my view, prepared for that.
BE11:47am

Sainsbury's dull.

Patience @titleist3 - admit I was over-weight until 15 mins ago. One of my core divi sources.
J Sainsbury PLC (SBRY:LSE): Last: 269.79, down 1.61 (-0.59%), High: 272.50, Low: 263.00, Volume: 3.29m
BE11:48am

Q4 sales slightly weak, but it's mostly a timing issue by the looks of things.

PM11:48am

Argos still seems to be going well tho

BE11:48am

Yup. And the miss is due to analysts not having access to a calendar.

BE11:49am

Somehow, Mother's Day and Easter weren't in the consensus.

titleist 3 @patience fair enough fella ...good luck with that
BE11:49am

I hadn't realised they were price-sensitive data. But I guess, in these paranoid times, it's best to err on the side of caution.

BE11:50am

Here's Barclays.

BE11:50am

First impressions:

· These sales figures seem broadly in-line with expectations when adjusted for the timing issues.

· The company does not comment on consensus PBT, suggesting they are not unhappy with the £578m PBT number it collected and circulated last week.

· Sainsbury comments that it moved from deflation into inflation this quarter, but gives no more detail. This compared with deflation of -0.5% in 3Q.

· Argos sales continue to look strong, but are still being driven by technology sales (usually quite low margin).

· The company is focused on improving service and availability at Argos, developing the website and app.

· Groceries on line achieved 7% sales growth (over 9% in 3Q) and convenience saw nearly 7% sales growth (vs over 6% in 3Q).

· General merchandise sales were down -4% in the quarter, but this was likely heavily impacted by the timing impacts of Mother’s Day and Easter.

· The company notes that Sainsbury’s Bank continued to deliver good growth driven by competitive personal loan offers.

LongandWrong Not really if its in an Index
BE11:50am

Well, yes. Sainsbury’s Bank would be doing okay.

BE11:50am

.... because it'd giving away free money.

LongandWrong Trackers/ETFs dont have that option
BE11:51am

Markets Live: Thursday, 16th March, 2017

BE11:52am

Unsecured debt at 0% for 28 months and no balance transfer fee.

Lemmy Golly Galoshes: that can't happen in the UK given the broadcaster impartiality rules
PM11:52am

hmm -- that is interesting

BE11:52am

By far the lowest offer out there, according to the personal finance types.

doeswalk Can one balance transfer directly into one's Plus500 account?
Soundbuy 40 months around for about 3.5% fee, 28 months at 0% not hard to find.....
FATDAZ thanks for heads up on that BE/PM
BE11:53am

Lots of banks doing 0% for extended periods -- Halifax I think is about two years -- but with a balance transfer tariff. One assumes Sainsbury knows what it's doing.

Pseudonym @Golly Or worse, Piers Moron and Susanna Reid?
Lefevre Has there ever been a better time to be a borrower?
PM11:53am

Its charging a transfer fee but then refunding it. Very odd

Soundbuy @doeswalk - bank payment cards offer similar, then just transfer
Forester These are crazy times indeed - what the hell do they teach about the Time Value of Money in economics lessons these days?
Boncoeur BofE non event?
titleist 3 @bryce thats we thought about Lehman
BE11:55am

Jefferies.

FATDAZ @forester agreed i keep reading about Denmark where certain mortgagees are being paid to borrow money all be it peanuts
BE11:55am

Conclusion: An in-line update for supermarkets (Argos beat) will do little to change the investment debate. SBRY's ability to out-trade peers in grocery has been put to the test recently, and is set to continue to prove volatile (with TSCO's response to slowing relative LFL a risk). Argos' momentum remains healthy, but still vulnerable to a more cautious consumer if inflationary headwinds continue to build. Valuation remains a helpful backstop (cal 2018 FCY 7%) but earnings risks are still a concern.

PM11:55am

What else

alewis2005 @PM to me that seems like a tech workaround: 'we can't change our systems to not charge a fee, so we'll just issue a refund after the fact'
PM11:55am

These purplebricks insiders taken £24m off the table

doeswalk To encourage you to pay interest on the fee presumabley
PM11:56am

Business done at 300p

Purplebricks Group PLC (PURP:LSE): Last: 307.38, up 3.63 (+1.19%), High: 308.00, Low: 294.75, Volume: 8.45m
erlkin what was the summary of mrs yeller's comments yest.?
Golly Galoshes Lemmy - I admire your faith in UK Govt standing up to the Australian in the interests of impartiality.
PM11:56am

Almost half of that down to Michael Bruce, the ceo

PM11:56am

We can just note that and move on, I guess

erlkin sorry to join in late just back from the slopes of vermont
BE11:57am

That's no discount whatsoever, really. Only 1.2%.

BE11:57am

And looking at the chart, you can understand why they might be tempted to take a bit of profit.

BE11:57am

Had an absurd rally around that share issue to fund US expansion

pfd AAPL heading for $1000 px (taking the 7 for 1 stock split into account). just 1% to go.
PM11:57am

Oh yeah, forgot about that

VV75 Any thoughts on an Asos takeover possibility, with the main shareholder now holding over 29%?
SoS I think Purplebricks directors bought at about 70p not that long ago
BE11:58am

Which was done at 220p was it? Still a bit surprised investors signed that off without much of a fight.

Boncoeur City jobs down.
BE11:59am

@VV75: on Asos, one would assume no.

BE11:59am

This is Bestseller buying 1m shares to raise itself to just below 30%.

FATDAZ I would sceptical about how well the model works in USA I have always though that was a very personalised market with local realtors
Boncoeur BOE unch
ASOS PLC (ASC:LSE): Last: 5,848, up 82 (+1.42%), High: 5,862, Low: 5,774, Volume: 81.78k
Boncoeur 8-1
Lemmy Golly Galoshes: it's just the law at the moment, TV shows have a duty to impartiality. Of course legislation can change but in meantime the Murdochs already control Sky, don't see what buying the remaining 60% changes.
SoS 78p Jan 2016. (purple)
blankcanvas Time to saddle up as I riding in the 12.50 at Cheltenham. Thanks again for everything. :)
BE12:01pm

The possibilities are that Bestseller takes private -- why? -- or is going long ahead of a bid from someone else, in which case they'd be going to jail.

PM12:01pm

MPC stuff out

BE12:01pm

8-1

erlkin best bet us savings bonds
PM12:01pm

But the BoE site is down

VV75 ta
DutchBrat Kristin Forbes lone dissenter voted for 0.25% hike
FATDAZ @ PM a perfect metaphor no
PM12:02pm

Or rather -- the site's not working properly so they have thrown their twitter feed up on the home page

Lefevre @erlkin - bit more detail? which ones
SoS Is MPC a horse at cheltenham 8-1 ?
BE12:02pm

Kirstin Forbes voted for a hike.

PM12:02pm

Krona gone ex-Krona, a bit

FATDAZ did you hear about that £500k bet yesterday that went south.... ouch
PM12:02pm

1.2310 on my screen

erlkin that's just a line from a sign at monmouth racetrack.....slange
PM12:03pm

UP from 1.2260 earlier

BE12:03pm

I'm sorry! Kristin Forbes, not Kirstin. She's leaving isn't she?

BE12:03pm

Done three years and is out.

Patience Cheers all, and thanks.
BE12:04pm

I'd confirm that if the BOE site was working, but of course it's not.

Lefevre Oh sorry - just part of my investigation of all possible investments outside the UK for next couple of years!
FATDAZ have a good afternoon all
BE12:04pm

Markets Live: Thursday, 16th March, 2017

BE12:04pm

Thumbs up

PM12:04pm

I think we are done

PM12:05pm

Thanks for joining us on the right

Binocular mine's working :)
PM12:05pm

And cheers Bryce

PM12:05pm

Back tomorrow at 11am

PM12:05pm

Bye

Binocular good lunch all
erlkin fuse.10k!
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Paul Murphy
Paul Murphy is the founding editor of FT Alphaville and an associate editor of the Financial Times. He joined the FT in London in 2006 as development editor of FT.com, concentrating on the expansion of the online business. Prior to that, he served as the Guardian’s financial editor for seven years. He has also held senior positions in business journalism at the Sunday Business newspaper and the Daily Telegraph. Murphy is a graduate of the London School of Economics.

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