EQUITY UPDATE: 24 AUGUST 2012

ASIA

Qantas – Australian airliner reported a loss of AUD 244 m (USD 256 m) for the FY11-12 period ended 30 June vs profit of AUD 250 m a year ago. The co. has also cancelled its USD 8.5 b order of 35 Boeing Dreamliner aircrafts citing lower demand and restructuring. The delivery date for additional 50 planes has also been postponed to 2016. Rising fuel costs, intense competition from other firms on the international route and other charges affected the firm. (Financial Times)

Hyundai Motors – Co.’s operations are affected by the possibility of an all-out strike by workers at its plants in South Korea. The co. has seen its exports decline 25 percent in July on a m/m basis to 94,576 units as the co. suffers losses of USD 1 b or 60,000 units. (Financial Times)

INDIA

According to domestic rating agency ICRA, revised its GDP forecast to 5.7 per cent from its previous estimate of 6.2-6.4 per cent in June. The rating agency cited sluggish investment sentiment, weaker monsoon and likely rise in inflation. ICRA also expects that the lack of monsoon’s to increase the fiscal deficit target of 5 per cent to 5.7 – 6 per cent.  Government borrowing target of INR 2000b to overshoot by INR 600b to INR 900b; current account deficit to improve to 3.7 per cent from 4.3 per cent, the rating agency said. ICRA revised headline inflation to 7.5 to 7.7 per cent from earlier 7 to 7.5 per cent. (Money Control/PTI)

FII’s made gross purchases of INR 2,473cr and sale of INR 2,161.93cr. DII’s made gross purchases of INR 929.59cr and gross sales of INR 1,090.69cr. (Business Standard)

Cochin Shipyard – Co. plans to launch an IPO to fund its INR 1500 cr expansion of a ship construction project. The majority state-owned co. expects a divestment programme in which the proceeds would be used to construct a ship building and repair centre at Cochin. (Business Standard)

Reliance Life – Co. is talks with banks to offload a 5 percent stake in the firm. (Business Standard)

Tata Steel – Co. plans to arrange a USD 5 b loan from a consortium to fund its expansion plans in India. Expansion of its plant in Jamshedpur, addition of a plant in Odisha is the main purpose of its expansion plans. (Business Standard)

Wockhardt – Macquarie maintained a ‘outperform’ rating on co., with price target increased to INR 1,575. Citing 20 per cent expected growth in FY 13 and a strong product pipeline. (Economic Times)

GVK Power and Infrastructure – Co. secured federal environmental clearance for its Alpha Mine and Rail Project in Queensland, Australia. (MoneyControl)

EUROPE

According to a source, the European Central Bank of considering setting a yield target on purchases of new bond – buying plan, without making the levels public. (Reuters/ CNBC)

Kazakhmys PLC – Mining firm saw lower copper prices coupled with rise in inventory levels affect its 1HY12 earnings. Revenues declined 17 percent y/y to USD 1.5 b on lower volumes. Rising wages and input costs saw operating costs rise 20 percent to USD 966 m. Copper sales declined to 118,000 tonnes a year from 136,000 tonnes a year ago. (Financial Times)

NORTH AMERICA

U.S Initial jobless claims rose by 4000 to a seasonally adjusted 372,000 applications for week ending 18 August vs forecasts of 365,000. The lack of a pickup in the labour markets could hasten the process of a stimulus or a QE stimulus to prop up the economy. The four-week moving average rose by 3750 applicants to 368,000 for first time claims. No. of people filing for benefits came in at 3.32 m while the 4 week moving average rose to 3.31 m. (Reuters/IBT)

Sales on new homes in the U.S rose 3.6 percent to 372,000 units on a seasonally adjusted rate for July vs 359,000 in June vs exp sales of 365,000 units. But median homes prices declined 2.5 percent on a y/y basis to USD 225,000 a home. New home inventory declined 0.7 percent to 142,000 units, leading to record lows. (Reuters)

ISS, a shareholder organization followed by institutional investors in the U.S has disapproved the merger of Glencore and Xstrata. Valuation of the firms and compensation packages granted to the executives were the downside of the deal while a rise in output was viewed as a favourable event for the deal. (Financial Times)

HP – Co. reported a 2Q12 loss at USD 8.9 b, on an USD 8 b writedown it took on its services business. Revenues declined 5 percent y/y on lower sales of printers and computers. Sales clocked in at USD 29.7 vs expectations of USD 30.1 b. The co. alongwith Dell, is losing out on market share to Asian firms such as Asus, Lenovo and Acer. FY12 EPS forecasts came in at USD 4.05 – 4.07 a share ,below expectations of USD 4.08 a share. The firm plans to reduce its workforce by 8 percent, leading to 27,000 job cuts by 2014. (Financial Times)

General Motors – Co. is to downsize on its operations at two plants in Germany on lower sales. GM’s Opel division will halt production for 20 days in the last four months of 2012 on lower demand for vehicles on account of the crisis in Europe. (Reuters)

 

EQUITY UPDATE: 16 AUGUST 2012

ASIA

According to the vice chairman Zheng Xinli of China Centre for International Economic Exchanges (CCIEE), China risks missing the annual growth target of 7.5 per cent, if pro growth policies were not taken over the coming three months. (Economic Times/Reuters)

INDIA

Indian PM Manmohan Singh expects GDP growth in the current fiscal to be little higher than 6.5 per cent. The Indian economy had registered a growth of 6.5 per cent in the last fiscal. (The Hindu Business Line/PTI)

Indian engineering exports for July12 stood at USD 4.23b versus previous July11 at USD 5.04b. Decline was due to sluggish demand from US and Europe. April-July 2012-13 exports stood at USD 18.6b versus April-July 2011-12 exports at USD 59b. (Business Standard/PTI)

Indian Steel imports during April-July 2012-13 stood at 2.5m tons versus previous April-July 2012-2013 imports at 1.88m tons. (The Hindu Business Line)

Gail India Ltd – Co. looking to acquire stake in Gazporm’s 10m ton LNG plant at Vladivostok. (Financial Express)

Cement Co.’s – According to ACC Ltd’s management, cement demand in the country may grow at 10 per cent in 2012. However the company also said that, subdued capacity utilisation and costlier raw material to keep prices under pressure. India’s total installed capacity of cement stood at 320 million tonnes per annum, with the addition of 30 mtpa fresh capacity during 2011. New capacity around 25 mtpa is set to be added in 2012. (Financial Express)

Suzlon – According to co.’s CFO, co.’s plans to cut costs by 20 per cent in the current fiscal. (Economic Times)

EUROPE

The European Central Bank allotted USD 13.75b of two dollar-swap operations. This included USD 9.26b at a weekly seven-day operation at a fixed rate of 0.64 per cent and USD 4.49b at a monthly 84-day operation with 0.64 per cent fixed rate. (Fox Business)

Nokia – Standard & Poor’s ratings downgraded to co.’s long term credit rating to BB- from BB+, citing the likelihood of co.’s deteriorating profitability. In other news, according to co.’s CEO, co. to unveil a new smartphone using Microsoft’s Windows 8 software. (Business Standard/Reuters/The Hindu Business Line/PTI)

NORTH AMERICAN EARNINGS

Target – Co. reported 2Q12 profit at USD 704m, EPS at USD 1.06 per share vs. estimated USD 1.01 per share vs. previous 2Q11 at USD 1.03 per share. Co. expects 3Q EPS at USD 69 cents to USD 79 cents versus estimate of USD 76 cents. For FY12 co. expects EPS between USD 4.20 to USD 4.40 per share versus its previous forecast of USD 4.10 to USD 4.30 per share versus estimate of USD 4.32 per share. (CNBC)

Deere – Co. reported 3Q net income at USD 788m versus previous USD 712.3m. EPS at USD 1.98 per share versus previous USD 1.69 per share versus estimated USD 2.31 per share. Revenue at USD 9.59b versus estimated USD 9.53b. Co. expects 13 per cent jump in sales for the current fiscal versus previous forecasted 15 per cent. (Cnbc)

 

WEEKEND EQUITY UPDATE: 4 AUGUST 2012 TO 5 AUGUST 2012

INDIA

FII’s investing through the Mauritius route has exited their holdings in about 24 Indian companies in FY12 on a YTD basis. Co.’s such as Yes Bank, Axis Bank, Bajaj Hindustan all saw selling pressure from the FII’s who have exited their positions from these companies. The total value of the sale of shares is about INR 3000 cr. (NDTV Profit)

According to the Centre for Monitoring Indian Economy (CMIE), an economic research organization, profits of Indian firms are expected to rise by around 25 percent in the FY13 period on lower commodity prices and stable interest rates. FY12 saw profits decline by 0.6 percent. The organization also stated that firms would have incorporated the impact of the fluctuation in the Rupee as well as compared to the previous fiscal. (NDTV Profit)

Indian foreign exchange reserves increased by USD 1.3b to USD 288b over the week ended 27 July. Foreign currency assets at USD 256b, gold reserves 25.7b, drawing at USD 4.3b and reserve position at the IMF at USD 2.1b. (Business Standard)

The top eight companies on the Sensex saw their market capitalization rise by INR 35,882 cr for week ended 3 August 2012. NTPC gained the most by adding INR 10,926 cr with Reliance Industries following the firm. SBI, Infosys, ONGC also rose but Coal India and Bharti Airtel saw a decline in their values. (Economic Times)

Coal India Ltd – Co. has entered into a fuel supply agreement with 29 power plants in India to supply these firms with fuels for power generation, based on a directive from the Indian Government. The co. will also import around 20 m tonnes of coal to meet the supply shortage gap. (Economic Times)

Jindal Steel and Power – Co. is in advanced talks to plan an investment of INR 100,000 cr to expand output at its plants in Raigarh and construct new plants in Odisha and Jharkhand in India. The total expected output by 2020 is about 20 m tonnes per annum, as stated by Chairman Navin Jindal. (Economic Times)

Emami – FMCG firm has voiced concerns that rising costs of raw materials and a higher inflation could affect the firm in FY12-13 period. However, the co. plans to implement certain cost efficient measures and strengthen its distributor network to overcome these challenges. (Economic Times)

NTPC – India’s power producer would conduct capital expenditures of INR 138,000 cr on various power projects to increase its power output to 27,000 megawatts. A total of INR 95,965 cr would be funded from issuing debt securities. (Economic Times)

Maruti Suzuki – According to Haryana Chief Minister Bupinder Singh Hooda, expected co.’s Manesar plant to resume production shortly. However he did not provide a time-line for the plant to resume its activities. (Financial Express)

Jet Airways – FII holdings in co. increased from 6.70 per cent to 7.12 per cent during the 1Q12-13. (Economic Times/PTI)

Kingfisher Airlines – FII holdings in co. increased from 0.34 per cent to 0.98 per cent during the 1Q12-13. In others news, Airport Authority of India (AAI) has refused aircraft lessors to take back their aircrafts leased to co., as co. owes INR 300cr to AAI.  (Economic Times/PTI/The Hindu Business Line))

SpiceJet – FII holdings in co. increased from 2.61 per cent to 3.59 per cent during the 1Q12-13. (Economic Times/PTI)

EUROPE

According to Italian Prime Minister Mario Monti, the Italian Government did not require German cash to recover from its current situation. (Reuters)

The Spanish finance minister Luis de Guindos, the Spain had covered 70 per cent of its 2012 financing need and will wait for clearer guidelines from ECB, before requesting for aid. (FoxBusiness DowJones Newswire)

Yields on Spanish two-year notes declined 1.35 percent to 3.96 percent and 10 yr bonds fell below 7 percent on speculative news of the ECB buying short-term bonds to calm the bond markets. Spain’s bonds returned -6.3 percent while German debt provided returns of 4.5 percent and Italy with 6.5 percent. (Bloomberg)

According to the inspectors from IMF, the European Commission and the European Central Bank said that, Greece had made some progress in finding budget cuts needed to continue its bailout programme. However the international inspectors said that, not all work had been done and inspectors will return early September for a final verdict. Greece has a EUR 3.2b bond maturing in August. (The Telegraph UK)

Standard and Poor’s downgraded Slovenia’s long term credit rating to ‘A’ from ‘A+’; short term rating affirmed at ‘A-1’. Outlook: negative. (Economic Times/AFP)

Marks & Spencer – According to an Sunday Times reports, Bank of America Merrill Lynch have been assessing possibilities of providing debt financing for a speculative bid for co. Co. is been viewed as a GBP 6b bid target, as shares in co. have tumbled 50 per cent since 2007. (FoxBusiness/Sunday Times)

NORTH AMERICA

U.S Trade Deficit for June is expected to have lowered as the nation imported less oil  and slower growth reduced demand for U.S made goods abroad. Data due on 9 August forecasts deficit to come in at USD 47.5 b vs USD 48.7 b in May. Lower outlay on imports are due to lower prices of crude oil and lower exports due to slowing economies in Asia and Europe exhibiting lower demand for U.S made goods. (Bloomberg)

Boeing Co. – Airplane manufacturer secured orders to conduct the sale of 94 single-aisle 737 airplanes to Asian airline firms including 54 jet deal with Singapore Airlines Ltd. The deals are expected to touch USD 8.4 b. (Bloomberg)

 

 

EQUITY UPDATE: 3 AUGUST 2012

INDIA

The Indian Meteorological Department (IMD) stated that India will face a drought, its first in three years as rainfall over the June-Sept period has declined more than 90 percent of its long-term seasonal averages. The news could push commodity prices higher, while its biggest effect would be seen of prices of foodgrains. (Economic Times)

Foreign institutional investors (FIIs) were net buyers on Thursday of INR 140.13 cr on a provisional basis on gross purchases of INR 1653.63 cr and gross sales of INR 1513.50 cr. Domestic institutional investors (DIIs) were net sellers in trade for a total of INR 66.48 cr on purchases of INR 838.34 cr and gross sales totalling INR 904.82 cr. (Business Standard)

Ashok Leyland – Co. saw its commercial vehicle sales rise 24.9 percent in July to 9785 units vs 7384 a year ago. Sales excl. Dost, a commercial vehicle, declined 11 percent m/m to 6982 units. (Economic Times)

Yes Bank – Co. raised a total of INR 1181 cr worth of dual currency loan facility having maturity of 1 year. (Economic Times)

Hero MotoCorp – Co. invests USD 20m in Erik Buell of United States. Co. has been looking to boost its R&D efforts to modify its existing product line. (The Hindu Business Line)

INDIAN EARNINGS

Mahindra Satyam – Co. 1Q12-13 net profit at INR 352cr vs. previous INR 225cr in 1Q11-12. Revenue at INR 1,880cr vs. previous INR 1,434cr. (Yahoo/IANS)

Glenmark – Co. reported 1Q12 net profit at INR 78.27cr vs. previous 1Q11 at INR 208.58cr. Revenue at INR 1,040.40cr vs. previous INR 868.25cr. (Business Standard/PTI)

EUROPE

The European Central Bank (ECB) President Mario Draghi kept benchmark rates unchanged at 0.75 percent but stated that it would intervene in the sovereign bond market to lower cost of borrowing. His objectives were that bond purchases could take place directly through open market operations. He also affirmed that national governments should first borrow through the eurozone bailout funds the European Financial Stability Facility rather than the ECB as it could not handle the task entrusted to the governments of the applicant countries. The rescue funds for the eurozone would not get its banking license, a move which was objected to earlier by Germany. Draghi also affirmed that EURO was irreversible and promised to intervene in the bond markets to bring down Spanish and Italian borrowing costs. (Financial Times/PTI/MoneyControl)

Standard and Poor’s warned that non-financial companies relying on longs, will find it difficult to secure funds in the coming years, as bank in the euro zone continue to restrict lending to boost their own core capital. According to Thomson Reuters LPC data, Syndicated lending in the EMEA region slumped 34 per cent to USD 343bn in the first six months of 2012 to 2003 levels. (Economic Times/ Reuters)

The rating agency Standard and Poor’s has affirmed Portugal long term sovereign credit rating at BB, with outlook negative. Ratings reflected significant structural reforms taken by the Portuguese government over the past 12 months and rapidly narrowing current account deficit. However negative outlook was attributed due to euro zone debt crisis and close trade and financial links with Spain. (Reuters)

Standard and Poor’s lowerED Cyprus’s long-term rating to BB and puts the country on negative watch. (Economic Times/AFP)

BHP Billiton – Co. is delaying its planned USD 20 b expansion of its plants in the Pilbara region of Australia. Rising costs and declining commodity prices made the co. undertake this decision. The said mine expansion would see output of iron ore rise to 240 m tonnes from 160 m currently. (Financial Times)

ArcelorMittal – Standard and Poor’s cut co.’s long and short term ratings to BB+/B from BBB-/A-3, citing European GDP forecast and growing likelihood of a global slowdown. (Fox Business)

RBS – Co. is expected to reveal a charge of GBP 300m in its 1H12 results due to its role in the industry’s mis-selling scandal and its recent IT meltdown. (FoxBuisness/SkyNews)

Vivendi – French media and telecom firm has not yet firmly committed to the sale of its stake in Activision Blizzard, a video game designer valued at around USD 8 b. Lack of adequate interest in the stake divestment and its subsequent IPO made the co. postpone the transaction. (Financial Times)

EUROPEAN EARNINGS

BNP Paribas – Co. reported 2Q12 profits at EUR 1.85 b with revenues lower by 8 percent y/y to EUR 10.1 b. 1HY12 profit came in at EUR 4.7 b which was lower 0.6 percent on a y/y basis. Tier I capital ratio came in at 8.9 percent. Its investment banking unit performed lower than expected as it saw a 13 percent decline in revenues. (Financial Times)

Generali – Italian insurance firm saw its 2Q12 profit rose 44 percent to EUR 274 m vs EUR 190 m a year ago on rising premiums and lower writedowns of its Greek holdings. Operating profits declined to EUR 1.1 b on natural disasters resulting in higher payouts. The co. stated it will report FY12 operating earnings at EUR 3.9 – 4.5 b. (Financial Times)

NORTH AMERICA

U.S Factory Goods orders declined 0.5 percent in June vs exp of 0.7 percent rise, on declining corporate spending affecting demand for non-durable goods in more than three years. This result combined with yesterday’s ISM manufacturing data suggest that a slowdown in this sector could affect the recovery of the U.S economy as it accounts for almost 12 percent of GDP. Orders for durable goods in June rose 1.3 percent. Orders for petrol and coal fell 2.9 percent. (Financial Times)

U.S Initial jobless claims, which indicate layoffs, rose by 8000 applications in July to a seasonally adjusted 365,000 for period ended 28 July 2012 vs prv week’s 357,000. Expectations came in at 370,000 claims. The data saw its four-week moving average, a less volatile number, decline to 365,000 applications, a decline of 2750 over the previous period. Temporary layoffs in the industry may have altered the data which is part of the season. No. of people on continued unemployment benefits decrease by 19,000 to 3.272 m for week ended 21 July. (WallStreetJournal)

U.S Retail Sales, a measure of consumer spending behavior, saw a 4.6 percent y/y rise exceeding expectations of 3.1 percent. The data excludes sales at medical stores and could also factor in discounts offered by retailers and not necessarily attributed to consumer spending alone. (Reuters)

Monsanto – Co. won USD 1b lawsuit against DuPont, concerning its genetically modified seed patent. (Reuters)

Facebook Inc – Social media firm saw its share price tumble to record lows of USD 19.91 in trade since the launch of its IPO price at USD 38 a share. Doubts on its growth prospects and departures of various executives were some of the reasons investors dumped the shares of the firm. New of around 83 m of its total of 955 m account users belonging to dubious sources ranging from spammers to pets cast further doubts on the co. (Economic Times/Reuters)

The Knight Capital Group saw some erroneous trades cost the co. a total of USD 440 m in pre-tax losses which occurred on the NYSE. A software error caused many stocks prices to fluctuate wildly in trade during the first 45 minutes of trading in the previous trading session. Knight is one of the biggest providers of liquidity to the NYSE has suffered many more such losses namely in Facebook IPO. (Financial Times)

NORTH AMERICAN EARNINGS

General Motors – Co.’s reported its 2Q12 net income at USD 1.85 b vs USD 3 b a year ago. EPS came in at 90 cents vs USD 1.54 a share a year ago but came above expectations of 75 cents. Revenues declined to USD 37.6 b vs USD 39.4 b previously. The turnaround of the European division to profit of USD 102 m vs loss of USD 361 m saw it beat expectations. The co. is in the midst of unwinding its struggling units in Europe and South America. Chinese operations also slowed to USD 557 m. (Financial Times)

Kellogg – Co. reported 2Q12 net profit at USD 301m vs. previous 2Q11 net profit at USD 343m. EPS at 84 cents vs. estimated 84 cents vs. previous 94 cents per share. Sales at USD 3.48b vs. estimated 3.38b. (FoxBusiness/ Dow Jones Newswires)

 

 

 

EQUITY UPDATE – 21 JULY 2012

ASIA

Citic Securities Co. – Chinese brokerage firm will acquire Credit Agricole’s Asian CLSA unit for USD 1.25 b. Citic will purchase a 19 percent state in the brokerage unit for USD 310 m and the remaining 80.1 percent stake in CLSA for USD 941.7 m. (Bloomberg)

De Beers – Diamond jewelry maker’s 1HY12 profits before charges and tax declined to USD 502 b vs USD 1 b a year ago on declining demand for diamonds and financing difficulties. Slowdown in the economy, unemployment and suboptimal economic recovery has impacted consumer’s discretionary spending patterns, which affected De Beers. (Financial Times)

INDIA

FII’s made gross purchases of INR 1,691.17cr and sales of INR 1,513.06cr. DII’s made gross purchases of INR 804.38cr and sales of INR 868.78cr. (Business Standard)

Madras Fertilizer Ltd – Co. aims to achieve profits of INR 180 cr in FY2012-13 with a sales target of INR 3000 cr. The co. plans to import around 100,000 tonnes of Diammonium phosphate and potash based fertilizers for the same period. The co. is also on the lookout for partners for a power plant construction project and a container freight station in Ennore, India. (Economic Times)

Reliance Communications – Co. has put the initial public offering of its subsidiary Flag Telecom on hold on account of adverse market conditions. The USD 1 b IPO was to be listed on the Singapore Stock Exchange. (Economic Times)

Tata Power – Co. signed a coal supply agreement with Indonesian firm PT Antang Gunung Meratus. The agreement spanning the next 5 years would help Tata procure its supply of coal for its thermal power plants. (Economic Times)

Tata Group – Co. plans to hold negotiations with the Vietnamese government to set up a steel factory for USD 5 b. (Economic Times)

INDIAN EARNINGS

Reliance Industries – Co. posted its 1Q12 results which declined for the third consecutive quarter but exceeded estimates. Refining margins of the co. fell less than expected and treasury gains on its cash boosted profits. Net earnings came in at INR 4473 cr vs INR 5661 cr on a y/y basis vs expectations of INR 4250 cr. Sales rose 13 percent to touch INR 91875 cr vs INR 81081 cr on a y/y basis. Petrochemical and refining revenues came in at INR 21839 cr and INR 85383 cr respectively. Gross refining margins came in at USD 7.6 a barrel vs USD 7.2 a barrel. Cash and cash equivalents came in INR 707.32 b (USD 12.7 b) vs INR 705.52 b in the previous quarter. (Economic Times)

Ultratech – Co. reported 1Q12-13 net profit at INR 778cr vs. previous INR 683cr. Net sales at INR 5,075cr vs. previous INR 4352cr. (MoneyControl)

EUROPE

Yields on Spanish bonds rose to almost touch record highs on investor’s concern about the cuntry’s deteriorating economy.  10 yr bond yields rose to 7.284 percent, falling short of the euro area high of 7.285 percent. Yields on the 5 yr bond rose sharply to 5.76 percent while 3 yr debt yielded at 6.54 percent, all record highs. Credit default swaps which insure against a default on Spanish debt also rose by 6.10 percent, a record high. (Financial Times)

European Central Bank to stop accepting Greek bonds and other collateral used by Greek banks to tap funding, if Greece did not adhere to the bailout conditions set up by EU/IMF. (MoneyControl)

Scania – Swedish truckmaker’s order book declined lower than expected which saw a rise in the stock price. Stock price rose 5.5 percent to SKr 121.90 in trade after its order book declined 14 percent in the 1Q12 period vs expectations of a decline of 21 percent. (Financial Times)

RWE – German power generating firm was saw its stock price decline 4 percent as it was downgraded by UBS. Stock price traded at EUR 32.57 a share. Since a rise in demand for solar and wind power in Central Europe, UBS projectsthat traditional power co’s using lignite coal and nuclear fuel could see a slowdown in operations when compared to other forms of power generating sources. (Financial Times)

Nokia – Fitch downgraded co.’s long term rating to ‘BB-‘ from ‘BB+’ and outlook to negative. The rating agency was concerned about co.’s ability to stabilize its revenue decline and being able to generate single digit operating margin in its Devices and Services division. (Economic Times/AFP)

NORTH AMERICA

Morgan Stanley – Co. in talks with Qatar sovereign wealth fund to acquire a minority stake in co.’s trading division. (MoneyControl)

NORHT AMERICAN EARNINGS

Xerox Inc – Co. reported 2Q12 earnings at USD 309 m vs USD 319 m previously on a y/y basis. EPS came in at 22 cents and EPS excl. items came in at 26 cents, in line with expectations. The co. however cut its earnings forecast for FY12 as slowdown in the economy weighed on demand for its products. Net profit would come at USD 1.07 – 1.12 a share, down 5 percent from its previous forecast of USD 1.12 to USD 1.18 a share. Analysts estimate a per share measure at USD  1.11 a share. (Financial Times)

Schlumberger – Co. reported 2Q12 net income at USD 1.4b (USD 1.05 per share) vs.  (estimated USD 1 per share) vs.  previous 2Q11 net income at USD 1.34m (USD 98 cents per share). Revenue at USD 10.45b vs. estimated USD 10.47 vs. previous USD 9b. (CNBC)

 

 

EQUITY UPDATE – 17 JULY 2012

ASIA

China’s FDI inflows declined 3 percent in the Jan-June 2012 period on a y/y basis. Slowing global economy lowered the inflow of capital into China. FDI data came in at USD 59.1 b for the said period. FDI in June came in at USD 12 b, a 7 percent decline on a y/y basis. (Reuters)

IMF warned that Chinese economy could still be destined for a ‘hard landing’, cut China’s growth forecast by 0.2 per cent to 8 per cent.  The global think-tank cited slowing down of investment spending due to overcapacity in some industries. (Economic Times/AP)

ZTE Corp – Shares of the co. declined 17 percent in trade to three year lows on lower profit forecast given by the co. The co. announced that profits would decline 80 percent on a y/y basis. Lower investment income, exchange rates and lower domestic revenues were the causes for the declining profit margin. (Financial Times)

INDIA

Rating agency Fitch stated that India’s infrastructure sector would see a slowdown in activity on delays, regulatory problems and sector specific challenges. Infra co.’s will be constrained by capital raising issues, higher interest rates, depreciation of the rupee and other fuel constraints. (Business Standard)

According to a report by Deutsche Bank India, India’s GDP for FY12 period is expected at 6.3 percent on consistent pressure from inflation which hampered policy measures. (Economic Times)

FII made gross purchases of INR 1639.72cr, and sales of INR 1382.55cr. DII’s made gross purchases of INR 683.29cr, sales of INR 723.88cr. (Business Standard)

IMF lowers India’s growth forecast by 0.7 per cent to 6.1 per cent for 2012; FY13 forecast cut to 6.5 per cent, citing deteriorating of global economic situation. (Economic Times/PTI)

State own oil firms hiked the prices of aviation turbine fuels by 1.7 percent to keep in line with global rates. (Economic Times)

Rashtriya Ispat Nigam Ltd – Co.’s initial public offering of INR 2500 cr has been deferred by the Indian government on account of weaker market conditions which saw a weaker response to the issue. (Economic Times)

Reliance Industries – Co. repurchased 3.51 cr shares totalling INR 2515 cr. The programme is part of the INR 10,440 cr buyback until January 2013. (Economic Times)

Lupin – Citi raises price target for co. to INR 640 from INR 570, maintaining a ‘buy’ rating. However FY13-14 EPS lowered by around 5 per cent due to higher effective tax rate assumptions. (Financial Express)

Gujarat Pipavav Port – Co. raised INR 350 cr through a qualified private placement and preferential share issue. Co. raised INR 199.5 cr through 3.41 cr of share sale and INR 152.52 cr of sale of 2.58 cr of preferred shares. (Business Standard)

INDIAN EARNINGS

Tata Coffee – Co. reported 1Q12-13 net profit at INR 31.84cr vs. previous 1Q11-12 net profit at INR 13.59cr. Consolidated total income from operations at INR 413.73cr vs. INR 334.82cr previously. (Financial Express)

DCB – Co. reported 1Q12-13 net profit at INR 18.9cr vs. previous 1Q11-12 net profit at INR 8.8cr. Income at INR 92cr vs. previously INR 76cr. NII at INR 64cr vs. previous INR 52cr. (Business Standard/PTI)

MindTree – Co. reported 1Q12-13 net profit at INR 89cr vs. previously INR 34.6cr in 1Q11-12. Revenue at INR 563cr vs. previous INR 413.1cr. (Financial Express)

Exide Industries – Co. reported 1Q12-13 net profit at INR 152.03crcr vs. previously INR 163.26cr in 1Q11-12. Revenue at INR 1551.08cr vs. previous INR 1243.28cr. (Business Standard)

EUROPE

European Central Bank President Mario Draghi declined to make a statement on reporting losses on holders of debt issued by Spanish banks severely affected by the crisis in Europe. (Reuters)

The Chairman of the European banking Authority Andrea Enria stated that banks would have to meet stringent capital requirements to prevent them from stalling on lending, to stop the crisis from spreading. The capital adequacy ratio, which was temporarily set to 9 percent, would be made a permanent requirement for banks. He stressed on conservation of capital for banks as a top priority. (Financial Times)

According to a recent IMF forecast Spanish economy is expected to contract 1.5 per cent in the current years and another 0.6 per cent in 2013 versus a previous expansion in 2013, citing lack of confidence in the Spanish economy despite the EU banking bailout and continued outflow of private-capital. (Economic Times)

GlaxoSmithKline – Co. is set to acquire Human Genome Sciences for around USD 2.8 b. The three-month hostile pursuit by GSK would come to an end as the co. rose its offer from USD 13 a share to USD 14 a share.  GSK would access the rights to market Benylsta, a drug treating immune system related diseases and other medicines related to heart disease treatment. (Reuters)

Nokia Oyj – Shares of the co. declined over 3 percent on the co. reducing the price of its Lumia 900 phone by 50 percent in the US for the weekend. With the co. also set to announce its 2Q12 results, investors exercised caution over the co.’s stock purchase. Shares of the firm neared its 16 yr lows at EUR 1.434 a share. (Reuters)

PostNL – Co. shares declined more than 5 percent after TNT Express announced that UPS would delay its EUR 5.15 b takeover of TNT until the fourth quarter 2012. PostNL owned a 29.9 percent stake in TNT Express. (Financial Times)

NORTH AMERICA

Citigroup Inc – Co.s second quarter profit declined on slowing economy. Net earnings came in at USD 2.9 b on a y/y basis, a 12 percent decline. Earnings excl partial stake sale of Akbank, declined to USD 1 a share vs expectations of 89 cents. Citi reduced its positions in troubled euro zone countries from USD 50.5 b to USD 20.1 b. Revenues declined 10 percent to USD 18.4 b on account of write downs of bas assets of Citi Holdings. (Financial Times)

Comcast Corp – Co. is to buy Microsoft’s 50 percent stake in MSNBC for about USD 300 m. (Reuters)

GLOBAL

According to a survey conducted by the National Association for Business Economics, only 23 percent of the co.’s participating, planned on hiring staff in the next six months vs previous number of 39 percent. Slowdown in hiring, on account of a slowing economy and the euro crisis, would all affect the job markets, the study revealed. It also revealed that hiring may have slowed down due to co.’s exercising caution rather than seeing a decline in operations. (Reuters)

EQUITY UPDATE – 13 JULY 2012

ASIA

China’s bond markets saw a 60 percent rise in volume for 1HY12 period on a y/y basis. With banks being the primary source of capital in China, co.’s have now shunned the trend and have taken to the corporate bond market for funds. Total outstanding bank loans are at a staggering 123 percent of China’s GDP while bonds stood at a low 11 percent. Volume of bond issuance by non-financial firms stood at RMB 853 b (USD 134 b) vs RMB 530 b a year ago. (Financial Times)

Dentsu Inc – Japanese media firm is to acquire Aegis Group form GBP 3.2 b in an all cash offer. The co. will pay 240 pence a share, a 48 percent premium to previous session’s closing price of Aegis, which saw a 45.5 percent rise on the news. (Financial Times)

Sany Heavy Industry Co. – Excavator manufacturer lowered its FY12 unit-sales forecast on slowing Chinese economy and curbs on its property markets will dampen demand. The co. stated that sales of excavators could increase 10 percent in 2012 vs its previous target of 40 percent. Demand would pick up in the 1Q13 period according to co.’s Vice Chairman Xiang Wenbo. (Bloomberg)

Chinese banks upped their activity in issuing fresh loans to RMB 919 b (USD 144 b) in June 2012, which exceeded forecasts of RMB 880 b. Forex reserves declined to USD 3.24 t, as per data by the People’s Bank of China. (Reuters)

IHH – Malaysian healthcare co. saw its initial public offering being oversubscribed 132x from international and domestic institutional investors. The stock, which is to be listed simultaneously on the Singapore and Malaysian stock exchanges, will see its share price set at the upper range of the price band at MYR 2.80 a share and SGD 1.13 in Singapore. (Financial Times)

INDIA

According to HDFC Banks chief economists Abheek Barua, RBI was unlikely to infuse liquidity or cut policy rate in its policy meeting, citing high inflation. Similar expectations were registered by Deepak Joshi the chief economist of Crisil. (MoneyControl)

Infosys – According to co.’s CFO, co is on a serious lookout for acquisitions. (Economic Times/PTI)

Maruti Suzuki – HSBC Global Investments Funds stake in co. dips to 4.99 per cent vs. previous 5.06 per cent. (Financial Express)

Welspun Corp Ltd – Co. plans to raise INR 1000cr through the issuance of non-convertible debentures.  Co. to use funds to pay back debt. (The Hindu Business Line)

Kingfisher Airlines – LKP Merchant Financing offloaded 1cr shares in co. worth more than INR 10cr through an open market transaction. (Financial Express)

INDIAN EARNINGS

Tata Consultancy Services Ltd – Co. reported 1Q12-13 net profit at INR 27975.90m versus 1Q11-12 net profit of INR 20624.30m. Total income in 1Q12-13 at INR 115799.10m versus INR 86968.10m in 1Q11-12.

On consolidated basis:

Group reported 1Q12-13 net profit at INR 33176.80m versus 1Q11-12 net profit of INR 24147.60m. Total income in 1Q12-13 at INR 150549.70m versus INR 110911.60m in 1Q11-12. (BSE Filing)

Cera Sanitaryware Ltd – Co. reported 1Q12-13 net profit at INR 9.24cr vs. previous 1Q11-12 net profit at INR 6.90cr. Sales at INR 90.51cr vs. previous INR 64.64cr. (The Hindu Business Line)

Magma Fincorp Ltd – Co. reported net profit of INR 33cr for the quarter ended 30 June 2012 vs. net profit of INR 17cr during the same period last year. (The Hindu Business Line)

Geojit BNP Paribas – Co. reported 1Q net profit at INR 8.5cr vs. previous 1Q11-12 at INR 4.3cr. Consolidated revenue at INR 59cr vs. previous INR 62cr. (The Hindu Business Line)

EUROPE

According to European Central bank’s President Mario Draghi, inflation is slowing faster than expected in the eurozone and than bank’s lending activities would improve towards the end of FY12. He added that the austerity and fiscal cuts undertaken by Spain were significant in proportion and could be effective in meeting its deficit reduction target. (Reuters)

According to ECB policymaker Klass Knot, ECB could cut main interest rate below 0.75 per cent, if economic conditions deteriorate further. (Financial Times Deutschland/Reuters/Economic Times)

Greek jobless rate for April at 22.5 per cent in April versus a revised 22 per cent in March versus 16.2 per cent in April last year. (Reuters)

HSBC – Co. could face USD 1b in fines, as US authorities’ investigate co. for money laundering. Co.’s management to testify before the Senate panel on July 17. (Yahoo/Reuters)

PSA Peugeot Citroen – Co. plans to shut down its plant near Paris and cut about 6,500 jobs in prder to rejig its operations. The co. warned that the economic conditions would see it face a EUR 700 m loss for the 1HY12 period. Peugeot had fixed costs at about EUR 200 m a month, excluding non-recurring items such as asset disposals. The co. expects to generate positive operating cash flow to break-even by the end of 2014. (Financial Times)

Vodafone plc – Co. will acquire TelstraClear, a New Zealand based subsidiary of Telstra Corp for GBP 430 m. (Financial Times)

EADS – Airbus won orders and commitments for a total of 115 aircraft worth USD 16.9b at this week’s Farnborough International air Show. (WSJ)

SAP AG – Business software manufacturer and developer SAP reported 2Q12 results which exceeded market estimates on higher software sales. The co.’s sales rose 19 percent to EUR 1.06 b, touching the higher end of its previously made forecast of 15-20 percent growth. Estimates came in at EUR 977 m in sales of software. Operating profit rose 8 percent to EUR 1.2 b while net sales rose to EUR 3.9 b. Annual results of the firm are scheduled for 24 July. (Financial Times)

NORTH AMERICA

U.S Initial Jobless benefits claims applicants declined by 26,000 for week ended 7 July to touch 350,000, the lowest since March 2008. Data came in better than expected with forecasts coming at 372,000 claims. News of automakers Chrysler and Nissan keeping factories open to meet increasing vehicle demand could have affected the claims result. Generally, auto manufacturers shut their plants routinely during this period for periodic maintenance. Claimants who continue to avail benefits declined by 14,000 for week ended 30 June to 3.3 m. The unemployment rate remained at 8.2 percent. (Bloomberg)

A US Labor Department data showed that prices of goods imported in the US declined 2.7 percent vs 1.2 percent decline in May. Prices excl. fuels also declined 0.3 percent. (Bloomberg)

US Mortgage rates declined to record lows for a month accompanied by a slight improvement in the US housing market. The rate on the 30-yr fixed mortgage declined to 3.56 percent while the 15 yr rate declined to 2.86 percent. (Bloomberg)

According to strategists at BOFA-ML, lowered the earning per share on S&P 500 components to USD 102 for 2012 versus previously USD 103.50 and 2013 EPS at USD 109 versus previously USD 110.50. Growth forecasted at 4 per cent in 2012 and 7 per cent 2013. In an separate Thomson Reuters data showed Wall Street EPS growth estimate at 5.9 per cent in 2012 and 12.3 per cent in 2013. (Reuters)

United Continental Holdings Inc – Co. is to purchase a felt of 100 Boeing 737aircrafts and 50 737-900 ER planes from Boeing in a deal worth INR 14.7 b. (Reuters)

Groupon Inc – Shares of the online coupon co. declined to levels below its initial public offering price as investors were concerned over its profitability. The stock price declined 5.7 percent to USD 7.33 a share in early trade, touching lows of USD 7.25 a share. Concerns on the co. facing a tougher environment as rivals Google, Amazon and Yelp Inc ramp up operations saw the share decline in trade today. (Bloomberg)

COMMODITIES

According to an IEA report a global economic slowdown could put a lid on oil prices; however a supply surprise could push oil higher. IEA further added that a reduction in production by OPEC countries below the 30 bpd previously agreed mark could have a dramatic impact on the markets. Global oil demand growth steady at 800,000 bpd for the current year and to increase to 1 m bpd in 2013, the report said. (Business Standard/Reuters)