EQUITY UPDATE: 17 AUGUST 2012

ASIA

Japan would soon overtake China to become the biggest creditor to the U.S as it purchased USD 10.4 b of Treasuries in June to take its total to USD 61.3 b. total holdings in U.S Treasuries came in at USD 1.193 t vs China’s USD 1.164 t. (Bloomberg)

South Korea’s jobless rate declined marginally to 3.1 percent in July vs 3.2 percent in June. Expectations came in at 3.3 percent. The decline was contributed by rise in the no. of self-employed workers and rise in service-sector jobs. (Reuters)

China National Gold Group Corp – Precious metals mining firm is in early talks to purchase Barrick Gold Corp’s 73.9 percent stake in mining firm African Barrick Gold plc. (Bloomberg)

China Mobile – Co. reported lower than expected 2Q12 profit at RMB 54.40 b (USD 5.4 b) vs RMB 34.42 b a year ago, based on its 1HY12 earnings data. The co. saw its sales rise to RMB 139.1 b vs USD 131.9 b in the quarter a year ago. Estimates came in at RMB 140.5 b. The co. saw higher costs on attracting new customers amid slowdown in the economy. (Bloomberg)

INDIA

DII’s made gross purchases of INR 1,259.33cr and sales of INR 1,034.03cr. FII’s made gross purchases of INR 2,447.90cr and sales of totaling at INR 2,352.89cr. (Business Standard)

Indian oil marketing co.’s (OMCs) are faced with losses of INR 450 cr a day on rising prices of crude oil in the international markets and the fall of the rupee. Since the OMCs purchase oil, diesel and cooking gas at international rates and sell them at government-controlled rates, the difference in prices would see losses widen if it does not receive timely subsidies from the government. (Business Standard)

Maruti Suzuki – Co. to restart its Manesar plant on 21 August and said it is planning to remove 500 contract workers over their alleged involvement in the violence.  Co. to make 150 cars a day at its Manesar plant. (Times of India/PTI/Reuters/Yahoo)

Bank of Baroda – Nomura downgraded co. to a ‘reduce’ from ‘neutral; price target cut to INR 590 from INR 628. According to Nomura co.’s asset quality will continue to impacts its earnings growth over the next several quarters, and increased its delinquency forecast for fiscal 2013 and its loan loss provisioning forecast for fiscal 2012. Also expected change in top management later in 2012 reiterate the asset quality risk to earnings. (Economic Times/Reuters)

Punjab National Bank – Nomura downgraded co. to a ‘reduce’ from ‘neutral; price target cut to INR 680 from INR 719. Nomura expected loan delinquency to continue to increase over the next few quarters. (Economic Times/Reuters)

Wockhardt – Co. got US FDA approval to market Clopidogrel bi-sulfate tablets, used to help reduce risk of heart attack or stroke, in 75 mg strength. Co. also got a tentative nod for the 300 mg strength tablets. (MoneyControl)

Tata Motors – Co.’s July global sales at 101,605 units, up 21 per cent. (The Hindu Business Line)

Gitanjali Group – Co. acquired 15.3 per cent stake in Japanese firm Verite for INR 25cr. (Indian Express)

INDIAN EARNINGS

Nalco – Co. reported 1Q12-13 net profit at INR 223cr vs. previous 1Q11-12 net profit at INR 377cr. Net sales at INR 1,718cr vs. previous INR 1,733cr. (Yahoo/IANS)

RINL – Co. reported 1Q12-13 net profit at INR 150cr vs. previous 1Q11-12 net profit at INR 74cr. Turnover at INR 2,976cr vs. previous INR 2,582cr. (Financial Express)

ABG Shipyard – Co. reported its 1Q12-13 net profit at INR 41.31cr vs. previous 1Q11-12 net profit at INR 40.06cr. (Business Standard)

Jain Irrigation – Co. reported 1Q12-13 net loss of INR 16cr vs. previous 1Q11-12 net profit at INR 82cr. Sales at INR 865cr vs. previous INR 951cr. (The Hindu Business Line)

EUROPE

Spain’s exports touched EUR 18.9 b (USD 23.2 b), exceeding imports by EUR 1.2 b for the period of June 2012. The county still faces risk of declining exports as demand for its goods mainly comes in from Europe, which is still in recession. Besides, the exporters are not receiving adequate financing and incentives from the government, which itself is reeling from severe austerity cuts. Imports have declined to EUR 21.6 b in June vs EUR 21.4 b two years ago. The marginal rise is due to lack of domestic demand, which can be a worrying factor. (Reuters)

According to the Bank of England policy maker Martin Weale, the British economy was mired in stagnation rather than recession. The European debt crisis was the biggest source of uncertainty. The BOE policy maker was of the opinion that, squeeze on household spending through rising fuel prices was coming to an end. (Economic Times/Reuters)

ArcelorMittal – Steel mining giant is planning to hold discussions with the Indian government to expedite the procurement of a mining lease for its proposed INR 50,000 cr plant in Jharkhand, India. (Economic Times)

Airbus – Co. saw a loss of 10 A-380 aircrafts amounting to USD 3.8 b as Hong Kong airlines wound up its first class business category flight services. (Financial Times)

NORTH AMERICA

Construction of New homes in the U.S declined 1.1 percent to 746,000 vs June’s 754,000, falling below estimates of 756,000. The decline was offset by a rise in building permits to 812,000, its highest since 2008. The mixed data of low mortgage rates, decline in foreclosures, rising hiring and access to cheaper credit could show signs of an improvement in the property markets in the 2HY12 period. Construction of single-family homes declined 6.5 percent to 502,000 and multi-family home construction rose to 244,000, a five month high in 2012. (Bloomberg)

U.S initial jobless claims rose marginally by 2000 applicants to 366,000 for week ended 11 August vs prv week’s revised 364,000 vs exp rise to 365,000. The less volatile four week moving average declined to 363,750, a sign that labor markets picked up in July after the temporary layoffs caused by the auto plant maintenance activity. Unemployment rate remained at 8.3 percent. People on continuing jobless benefits declined by 31,000 to 3.31 m for week ended 4 August. (Bloomberg)

Ford Motors – Co.’s EU sales down 12.3 per cent at 83,100 units from a year earlier. YTD sales down at 10.6 per cent. Industry sales down 7.1 per cent through July, the lowest since 1995. (Boston.com/AP)

NORTH AMERICAN EARNINGS

Walmart – Retailer’s rising profits were reduced on unfavourable movements in the exchange rates which affected its revenues from international operations. Profits came in at USD 4 b, a y/y rise of 5.7 percent. EPS came in at USD 1.18 a share, marginally exceeding expectations. Revenues came in at USD 114.3 b vs exp USD 115.8 b. U.S like-for-like sales rose 2.2 percent on a y/y basis. Revenues from its global operations rose 4.5 percent to USD 113.5 b. The co. plans to expand its operations in markets such as Mexico, China and Brazil. (Financial Times)

7 banking firms have been issued subpoenas from U.S State prosecutors in the context of rigging the Libor rates. Banks summoned will be HSBC, Deutsche Bank, Citigroup, J P Morgan, UBS, RBS and Barclays. (Financial Times)

Brazil will implement a Brazilian Rias (BRL) 133 b (USD 66 b) worth of stimulus measures to increase investments in the nation to prop up the economy. The government plans to grant concessional opportunities on rail and roadways construction. Slowdown in the economy combines with shortage of skilled labour raised inflation and contributed to a slowdown in the economy. (Financial Times)

Cisco – Networking equipment manufacturer saw its profits and revenues rise that it raised its dividend and full year earnings estimate. Revenues rose to USD 11.7 b, exceeded estimates of USD 11.6 b. EPS came in at 47 cents vs exp. 45 cents, all on a pro forma basis. Cost cuts and prudent utilization of its resources saw the co. raise its FY12 forecasts at USD 46 b and EPS to 1.85 a share. The co. raised its dividend for the next quarter to 14 cents, a 75 percent increase. (Financial Times)

 

 

 

 

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: 1 AUGUST 2012

ASIA

China’s steel factories saw a 96 percent decline in profits for the 1HY12 period on economic slowdown lowering demand. The China Iron and Steel Association revealed that profits came in at RMB 2.39 b (GBP 376 m) on rising costs and lower demand. (Financial Times)

INDIA

FIIs saw net buying of INR 879.97 cr in trade today on a provisional basis with gross purchases of INR 2940.75 cr and gross sales of INR 2060.79 cr. DIIs became net sellers of INR 493.48 cr on gross purchases of INR 827.81 cr and gross sales of INR 1,321.29 cr. (Business Standard)

The Reserve Bank of India relaxed foreign exchange retention rules, by allowing corporate and exporters to keep entire foreign exchange earnings in respective currencies for a limited period versus a existing provision of 50 per cent conversion to Indian rupee. In other news, RBI lowered India’s growth forecast for the current financial year to 6.5 per cent versus previous estimate of 7.5 per cent. (MoneyControl/BBC)

Reliance Power – Co. is set to utilize USD 800 m as four international banks sanctioned its loan for its power project in Sasan, India. (Business Standard)

Maruti Suzuki – Rating agency ICRA will scrutinize around 14 auto parts suppliers to Maruti Suzuki India on account of the ongoings at the co.’s Manesar plant. Violence at its factory in Manesar has severely affected the co.’s production, thus affecting its suppliers. (Economic Times)

Tata Steel – Co. is stated to have lowered its operating capacity on account of power outages in the northern region of India. (Economic Times)

Bharti Airtel – Co. is exploring options of issuing new shares to raise funds, citing two people aware of the situation. (Business Standard/Reuters)

Tata Motors – Jaguar Land Rover is recalling 2,229 Freelander 2 SUV’s in China due to a potential perforation in power steering hose. (The Hindu Business Line)

Power Co.’s – According to the rating agency Fitch, the outlook on domestic power sector was stable, due to some progress in availability in fuel and a possibility of debt restructuring of SEBs. In related news Coal India agreed to supply at least 80 per cent of coal requirements for new power projects.  (Financial Express/Money Control)

INDIAN EARNINGS

IDBI Bank – Co. reported 1Q12-13 net profit at INR 427.34cr vs. previous INR 335.10cr in 1Q11-12. Total income at INR 6,786.81cr vs. previous 6,059.83cr. (The Hindu Business Line)

Cipla – Co.reported 1Q12-13 net profit at INR 400.76cr vs. previous 1Q11-12 net profit at INR 253.34cr. Net sales at INR 1,917.34cr vs. previous INR 1,550.33cr. (Financial Exprees)

Petronet LNG – Co. reported 1Q12-13 net profit at INR 270.85cr vs. previous INR 256.71cr. Turnover up 52 per cent to INR 7,030.41cr. (The Hindu Business Line/PTI)

Bhushan Steel – Co. reported 1Q12-13 net profit at INR 205.97cr vs. previous INR 209.96cr. Net sales at INR 2747.34cr vs. previous INR 2165.85cr. (Business Standard/PTI)

Titan Group – Co. reported 1Q12-13 net profit at INR 156.09cr vs. previous INR 143.51cr. Net income at INR 2,205.81cr vs. previous INR 2020.60cr. (Business Standard/PTI)

Karur Vysya Bank – Co. reported 1Q12-13 net profit at INR 145.95cr vs. previous INR 116.70cr. Total income at INR 1,109.81cr vs. previous INR 768.72cr. (Business Standard)

Jaiprakash Associates – Co. reported 1Q12-13 net profit at INR 138.84cr vs. previous net profit at INR 184.06cr. Net sales at INR 2,963.57cr vs. previous INR 2,902.30cr. (Business Standard/PTI)

EID Parry – Co. reported 1Q12-13 net profit at INR 22.47cr vs. previous net loss of INR 7.18cr. Total income at INR 578cr vs. previous INR 398.49cr. (Financial Express)

GTL – Co. reported 1Q12-13 net loss of INR 203.95cr vs. previous 1Q11-12 net profit of INR 12.93cr. Revenue at INR 615.98cr vs. previous INR 820.62cr. (The Hindu Business Line)

Man Industries – Co. reported 1Q12-13 net profit at INR 26cr vs. previous INR 24cr in 1Q11-12. Net Sales at INR 326cr vs. previous INR 466cr. (The Hindu Business Line)

Shoopers Stop – Co. reported 1Q12-13 net profit at INR 50 lac vs. previous INR 11.7cr. Gross retail revenue at INR 516.9cr vs. previous INR 448.5cr. (Business Standard/PTI)

Muthoot Capital Services – Co. reported 1Q12-13 net profit at INR 4.93cr vs. previous INR 2.35cr. Revenue at INR 22.17cr vs. previous INR 12.23cr. (Business Standard/PTI)

EUROPE

Italian PM Mario Monti, stated that the timely assistance from the ECB and the bailout funds could slowly help the country return to stability, ahead of his tour to Helsinki, Madrid and Paris this week. Italy is faced by rising government bond yields and surveys indicate that around more than half of the public believe that Monti would not be able to achieve the target of lowering the country’s fiscal deficit. (Financial Times)

ECB’s plans of staging a bailout program for troubled European economies, hit a resistance. As according to a Bundesbank source, most troubled European economies faced a fiscal problems and which should be addressed using fiscal instruments. (CNBC)

EU unemployment rate for the 17 country block rose to 11.2 percent or 17.8 m unemployed people in July vs. 10.2 percent in June 2011. Youth unemployment, the under-25 age group, rose to 22.4 percent. The results were affected mostly by Spain and Greece where the rates were 24.8 percent and 22.5 percent respectively. Germany, was more stable as the rate declined to 5.4 percent vs 5.5 percent previously. The data would weigh on the ECB meet this Thursday when it decides on its monetary policy and interest rates. (Financial Times)

Euro zone inflation for June was stubbornly stuck at 2.4 percent in July, similar for the last three months. The data, combined with the rising unemployment rates, could weigh in on the ECB meet this Thursday. (Financial Times)

Italian unemployment rate at 10.8 per cent in June versus 10.6 per cent in May. (Economic Times)

Moody’s lowered U.K’s GDP forecast to 0.4 percent for FY12 and 1.8 percent growth in FY13. However, the agency did not alter its AAA rating and its outlook on it. The agency stated that policies such as asset purchases, the government’s ability to reduce debt without hampering growth all prompted for the forecast. (Financial Times)

According to Fathom consulting, a Eurozone break-up could force UK into a deep recession, force governments to nationalise banks and trigger a GBP 1tr of QE. (Telegraph UK)

Deutsche Bank – Co. admitted that some of their staff was involved in LIBOR rate-rigging scandal. However an internal inquiry has cleared senior management. In other news, co. to cut 1,900 staff, mostly outside Germany, due to the European economic downturn. (BBC)

Tesco – Standard and Poor’s cut co.’s outlook to ‘negative’, warned on weakening profits. The rating agency has suggested that co. should sell off businesses. (Telegraph UK)

EUROPEAN EARNINGS

BBVA – Spanish bank saw its 2Q12 profit decline to EUR 505 m vs expectations of EUR 700 m. Profits declined 58 percent y/y on its property loan delinquencies. Net interest income rose 16 percent to EUR 3.74 b. The co. set aside EUR 1.43 b of the reqd. EUR 4.6 b to comply with Spanish regulatory laws. The bank’s Latin American division saw revenues rise to EUR 1.02 b vs EUR 774 m on stronger demand for loans and rise in deposits. (Financial Times)

British Petroleum plc – Co. saw its 2Q12 profits decline to USD 3.7 b vs USD 5.7 b a year ago, a 35 percent decline on lower production, higher writedowns on its shale gas unit and a tax charge in Russia. The numbers came in below estimates as lower crude oil and nat gas prices weighed on its earnings. The charges on its Deepwater rig oil spill could still weigh on profitability as it appeased shareholders with its strategy of delivering a 50 percent increase in cash flows by 2014. The co. was also affected by the sale of its Russian JV with TNK where income was lower by USD 700 m on a y/y basis. Lower output also hampered its operations. (Financial Times)

NORTH AMERICA

US consumer confidence for July at 65.9 versus estimated 61.5 versus previous 62.7 ; revised from 62. (FXStreet)

NORTH AMERICAN EARNINGS

Pfizer – Pharma co. saw its profits rise to USD 3.25 b, a 25 percent y/y rise on cost cutting vs USD 2.61 b previously. EPS came in at 43 cents vs 33 cents a year ago. EPS excl costs came in at 62 cents vs expectations of 54 cents. Overheads declined 17 percent with R&D expenses lowered by 24 percent. Revenues declined 9 percent to USD 15.1 b, declining 9 percent y/y on a 53 percent fall in the sale of Lipitor, its anti cholesterol drug, whose patent expired. The co. plans to sell its nutrition and animal health units to raise USD 3.0 b through 20 percent divestment to offset declining revenues of Lipitor. It reaffirmed its FY2012 earnings at USD 2.14 – 2.24 a share. (Financial Times)

 

 

EQUITY UPDATE: 31 JULY 2012

ASIA

China’s Railways ministry announced an increase in spending on railways and related infrastructure for the second time in the year to prop up the slowing economy. The ministry plans to issue RMB 470 b (USD 74 b) worth of investments on railroads, bridges and other related infrastructure vs July’s spending of RMB 461 b. The Cabinet has also called for investments from private entities and investors to make investments in the railway’s related project. (Bloomberg)

Hang Seng Bank Ltd – Co.’s 1HY12 profit saw a 14 percent increase to HKD 9.3 b (USD 1.2 b) vs HKD 8.16 b a year ago. Estimates came in at HKD 8.26 b Rise in the number of mortgages, credit cards and increased lending to firms boosted its results. Net interest margin, a measure of lending profitability, rose to 1.85 percent vs 1.75 percent previously. (Bloomberg)

South Korea’s confidence Index declined to 70 for August vs 81 in July on domestic concerns which are affected by the ongoing slowdown in the global economy. The index of sentiment declined to 100, for July meaning that the outlook was mixed. (Newstrack India)

INDIA

A survey of Professional Forecasters conducted by the RBI revealed a lower revised GDP forecast to 6.5 percent vs previous 7.2 percent for FY2012-13. Higher inflation, lower than expected monsoon were the reasons for the lower forecast.  In related news, according to Deloitte, India’s GDP is likely to grow between 6 per cent to 6.5 per cent in the current fiscal, poor monsoon and higher inflation. (Economic Times/PTI/Business Standard)

FII’s made gross purchases of INR 2,446.40cr and gross sales of INR 1,517.45cr. DII’s made gross purchases of INR 882.49cr vs. previous gross sales of INR 1,116.21cr. (Business Standard)

The BSE will delist 52 stocks from trading in the Securities Lending and Borrowing Segment (SLB) from 28 September 2012. The move comes on the back of NSE’s decision to remove around 51 stocks from the F&O segment to stem illiquid stocks. SLB segment permits short sellers to borrow securities to make delivery of shares. (Business Standard)

Exports of agricultural products rose 88 percent to INR 82,000 cr in FY2011 vs INR 43,627 cr in FY10 on rising exports of processed foods, basmati and non basmati rice, guar gum and buffalo meat. Rise in shipments also aided higher exports. Guar gum saw higher demand in the US on account of rising exploration of shale gas. Agri-based exports are expected to rise 15-20 percent in FY12. (Business Standard)

Maruti Suzuki – Macquarie has downgraded co. to ‘neutral’ from ‘outperform’. Price target cut to INR 1,200 from INR 1,665. (Economic Times)

DLF – Co. to sell its 17.5acre land in Lower Parel, Mumbai to Lodha Group and a private equity firm for INR 2,800cr, (Economic Times)

Spicejet – Rare Enterprise has acquired 25 lacs shares of co. for INR 7.69cr through an open market transaction. Shares were purchased at price of INR 30.77. (Money Control/PTI)

KNR Constructions Ltd – Co. secured orders worth INR 49.25cr, as per BSE Filings. (MoneyControl)

INDIAN EARNINGS

GAIL – Co. reported 1Q12-13 net profit at INR 1,134cr vs. previous 1Q11-12 INR 985cr. Turnover up 25 per cent at INR 11,089cr. 1Q12-13 LPG subsidy at INR 700cr vs. previous INR 682cr. (Financial Express)

Cholamandalam Investment and Finance – Co. reported 1Q12-13 net profit INR 69.65cr vs. previous INR 37.88cr. Total income at INR 558.07cr vs. previous INR 381.41cr. (Business Standard)

Kansai Nerolac Paints – Co. reported 1Q12-13 net profit at INR 63.3cr vs. previous 1Q11-12 net profit at INR 61.2cr. Total revenue for the period at INR 723.5cr vs. previous INR 652cr. (Financial Express)

Greaves Cotton – Co. reported 1Q12-13 net profit at INR 32cr vs. previous 1Q11-12 net profit at INR 35cr. Revenue at INR 412cr vs. previous INR 403cr. (Business Standard/PTI)

Bharat Electronics – Co. reported 1Q11-12 net profit at INR 19.32cr vs. previous INR 122.8cr. Total income at INR 960.2cr vs. previous INR 1084.9cr. (The Hindu Business Line)

Shanthi Gears – Co. reported 1Q12-13 net profit at INR 3.5cr vs. previous INR 7cr. Total income at INR 32.91cr vs. previous INR 41.27cr. (Financial Express)

EUROPE

According to ratings agency Standard & Poor’s, deleveraging process was underway in Europe’s public, household and banking sector, which was dragging Europe deeper into recession. The rating agency saw a 40 per cent chance of European economies sinking into a genuine double-dip recession in 2013. Particularly in a scenario of hard landing in some emerging markets delaying recovery in world trade, if one of the main euro-zone countries lost access to capital markets for a prolonged period and if consumer demand sunk substantially. S&P revised the GDP growth forecast for Euro Zone to a contraction of 0.6 per cent in 2012 versus a previous estimate of zero per cent; 2013 growth at 0.4 per cent versus 1 per cent growth. (Fox Business/Dow Jones Newswire)

Lower than expected mortgages were approved in the U.K as the ongoing eurozone crisis weighed on the British economy, which is concerned with its own deepening recession. Loans granted for June include 44,192 loans vs a revised number of 50,544 in May vs expectations of 48,000. Stricter terms of lending, lower consumer confidence and eurozone happenings could have been responsible for the decline. The Bank of England plans to boost the decline by lowering mortgage rates and borrowing costs. (Bloomberg)

Air France KLM – Airline firm faced a second quarter loss of EUR 895 m vs a loss of EUR 197 m a year ago. It faced a one-time charge of EUR 368 m related to its redundancy programme where it had axed around 5000 jobs earlier this year. The co. predicted that its operating profits would exceed previous year’s profits. The co. also lowered its operating losses by more than half, which exceeded expectations. Shares of the firm rose 18 percent to EUR 4.62 in trade. (Financial Times)

NORTH AMERICA

U.S Treasury Secretary Timothy Geithner and German Finance Minister Wolfgang Schaeuble praised the efforts taken by the leaders of the European Union to maintain stability in the region. Greece, however, didn’t get a mention by the leaders while Ireland, Portugal, Italy and Spain were appreciated for their efforts to mitigate rising debt and implementing austerity measures. (Bloomberg)

AT&T – Board of the co. approved its USD 11.1 b worth of share buyback. (Financial Times)

CKE Inc – Co. a franchiser of burger chains in the U.S, stated that its initial public offering would be priced between USD 14 – 16 a share. The total no.of shares offered at 13.3 m of which half would be issued by the co. and Apollo CKE Holdings LP, the sole stockholder. (Bloomberg)

NORTH AMERICAN EARNINGS

TNT Express – Freight co. saw its 2Q12 profit rise to EUR 39 m vs EUR 3 m a year ago on increase in business from Europe and Asia, better performance of its Brazilian subsidiary and the weaker euro. Revenues rose 1.7 percent to EUR 1.83 b. EBIT came in at EUR 77m, 67 percent higher y/y. (Financial Times)

Chrysler LLC – Co. reported 2Q12 profits at USD 436 m vs prv loss of USD 370 m y/y. Profits rose on higher sales of its passenger car model, the Dodge Dart compact. The results of 2Q11 include a one time charge of USD 551 m as costs for repayment of government loans. Sales rose 23 percent y/y to USD 16.8 b. The co.’s results prompted it to forecast FY12 profits to rise by USD 1.5 b. U.S car sales rose 42 percent and Europe underperformed for the fifth consecutive period. The co. and its parent Fiat SpA plan to merge in an attempt to boost sales in excess of USD 123 b. (Bloomberg)

 

WEEKEND COVERAGE : 28 JULY 2012 TO 29 JULY 2012

ASIA

China’s shipyard’s are piled on with a larger number of ships on account of declining orders experienced in the 1HY12 period. Orders for new ships declined on rising prices of commodities, fluctuating cargo rates and the uncertainty in the economy. Orders have declined by almost 50 percent to see some of the smaller firms file for bankruptcies. (Bloomberg)

China’s banking regulator, The China Banking Regulatory Commission would keep a watch on its property markets by enhancing risk management and lending activities. The regulatory body planned to increase lending activities to construction projects, smaller businesses and other housing projects. (Bloomberg)

INDIA

The chairmen’s of Central Bank and Union Bank , expect a 50 bps reduction in CRR to ease money supply. However the MD of Yes Bank and the Indian chief economist of HSBC, did not expect RBI to cut CRR or the Repo rate in the coming policy meet.  (Financial Express)

According to the Agricultural and Processed Foods Export Development Authority, exports of organic textile products are expected to rise to INR 1500 cr in FY2012-13 vs INR 1027 cr in the previous year. Uniformity in standards and regulations across major markets such as Europe and Japan would smooth the path for exports of goods. (Business Standard)

Market capitalization of top 7 co.’s in the Sensex declined by INR 31792 cr for the week ended 27 July. SBI led losses followed by Coal India, ONGC and Bharti Airtel and NTPC. TCS, ITC and HDFC Bank gained their market cap during the same period. (Economic Times)

Indian foreign exchange reserves grew by USD 580m (versus a previous decline of USD 872.27m) to USD 287.34b for the week ended 20 July. (IANS/YAHOO)

For the month of July (3rd to 27th) FII’s made a gross purchases of INR 44,192cr shares and sold equities worth INR 35,768cr. (Economic Times/PTI)

Steel Co.’s – According to CMIE, steel prices are expected to rise by 7.2 per cent this year and rates are expected to firm up from October due to rise in demand, despite the weakness in the international markets. However, prices were likely to remain under pressure during the July-September monsoon season. (Financial Express)

Reliance Industries – Infotel Broadband is likely to procure over USD 1b of network gear from Samsung Electronics, to meet its 4G equipment requirements. (Economic Times)

Petronet LNG – Co. is to construct a power plant project near its upcoming LNG import port in Kerala, India. The co. will construct a 1200 megawatt gas-fired power plant in a 50:50 joint venture with the state government. The outlay is expected at around INR 3500 cr. (Business Standard)

Sesa Goa – Co. plans to extract around 10 m tonnes of iron ore in the first phase from its Liberian Western Clusters project for FY2013-14. The co. expects a higher output on account of higher projection of reserves in the Liberian plant. Reserves are expected 3x higher than its original estimate of 1 b tonnes. (Business Standard)

Nalco – Co. is likely to take a hit of INR 300cr annually as it is forced to keep 5 per cent of production capacity idle due to lower metal price and shortage of coal. (The Hindu Business Line)

Godrej – Consumer product maker stated that it observes a slowdown in sales in the rural markets of India.  Rise in the cost of living, higher inflation and high interest rates could contribute to the slowdown inspite of the FMCG industry seeing a rise at a CAGR of 11 percent in the last ten years. (Business Standard)

Lupin – According to co.’s management, co. is looking to acquire brands and technology firms in US markets, as co. aims to grow its sales over 20 per cent over the next two years. (Business Standard/PTI)

Walmart Inc and Prudential Finance have started lobbying with the U.S government and legal policymakers to gain support for its retail venture in India. FDI in multi-brand retail has been kept on hold by the Indian government on account of the strong opposition by political parties. (Economic Times)

Firms NCC and IL&FS Engineering have decided to exit from the INR 850 cr hydro electric construction project on a tributary of the Sutlej River in India. (Economic Times)

INDIAN EARNINGS

Maruti Suzuki – Co. reported 1Q12-13 net profit at INR 423.8cr vs. previous INR 549.2cr. Total sales at INR 10,529cr vs. previous INR 8,256.6cr. (Indian Express)

HDFC Ltd – Co. reported 1Q12-13 bet profit at INR 1,275.86cr vs. previous INR ,1020.06 in 1Q11-12. Total income at INR 11,656.50cr vs. previous INR 7,268.79cr. (Indian Express)

Birla Corp – Co. reported 1Q12-13 net profit at INR 84.74cr vs. previous INR 111.88cr in 1Q11-12. Net Sales at INR 658cr vs. previous INR 556.97cr. (Indian Express)

United Spirits – Co. reported 1Q12-13 net profit at INR 144.95ce vs. previous INR 137.71cr in 1Q11-12. Net sales at INR 2,057.29cr vs. previous INR 1,935.42cr. (Financial Express)

EUROPE

The ECB president Mario Draghi is expected to meet with the head of Bundesbank, Jens Weidmann over next couple of days, to discuss plans of joint rescue by ECB and European rescue funds, to purchase Spanish and Italian government bonds, according to persons familiar. (WSJ)

Greece political leader have agreed on most of the austerity measures demanded by its creditors and now are looking at pension and wage cuts to find the Final EUR 1.5b. Greece requires to find savings worth EUR 11.5b for 2013 and 2014 to satisfy the demands of its lenders. In related news the ECB and national central banks are expected to take losses on their holdings of Greek government bonds. As official aims to reduce Greece’s debt by EUR 70b to EUR 100b, cutting its to about 100 per cent of annual GDP, according to several eurozone senior officials. (Reuters/Yahoo/Telegraph UK)

The Emnid poll for the Bild am Sonntag mass circulation weekly showed, 51 per cent Germans believed that, Germany would be better off outside the eurozone. The poll also showed that 71 per cent of Germans wanted Greece to leave euro if it did not live up to its austerity promises. (Telegraph UK)

The ratings agency Standard and Poor’s has affirmed UK’s ‘AAA’ credit grade, and expects the economy to recover in the second half of the year. (AP/ Boston.com)

Aviva Plc – Co. plans to divest its stake in U.S life insurance business division which it had purchased for USD 2.8 b in 2006. Buyers include private equity firms and financial firms. (Bloomberg)

NORTH AMERICA

President Barack Obama’s Office of Management and Budget has forecasted a budget deficit of USD 1.21 t in FY12, lower than the USD 1.33 t forecasted in February. It also forecasted that unemployment rate would average 8 percent and 4Q12 GDP is expected to grow 2.6 percent on a y/y basis. (Bloomberg)

The first year of recovery of the U.S economy from the recession was weaker than estimated as GDP rose only 2.5 percent in the period ended June 2010, vs 3.3 percent expansion previously. (Bloomberg)

Boeing – Co. won a USD 339m US Air Force contract to build the 10th satellite in the Wideband Global Satellite Communications program. (Economic Times/Reuters)

 

EQUITY UPDATE: 27 JULY 2012

ASIA

Nomura Holdings Inc – Co. named Koji Nagai as their new CEO after the insider trading charges faced by the co. saw former CEO Kenichi Watanabe’s resignation today. His lieutenant Takumi Shibata also resigned as part of the shake-up. (Reuters)

INDIA

According to a Reuters poll, the Reserve Bank of India is expected to hold its policy rates steady at its upcoming quarterly review. The poll showed 19 out of 20 economists expected repo rates to remain unchanged at 8 per cent. (Reuters)

The Indian government could ask Coal India to import coal in order to meet rising domestic demand especially for power companies. (Economic Times)

FII’s made gross purchases of INR 2,831.49cr and sales of total INR 4,012.19cr. DII’s made gross purchases of INR 1,634.25cr and sales of INR 1,211.55cr. (Business Standard)

Maruti Suzuki – Co.’s problems arising from the strikes is set to extend further, affecting its sales and affect its profits. Shutdown of its Manesar factory costs the co about USD 15 m a day as forecasted by analysts hampering its sales in October, a key period. Co. is slated to report its 1Q12 earnings this Saturday and is expected to report a fourth consecutive loss on weaker demand and rupee depreciation. (Economic Times)

Tata Steel – The rating agency Standard and Poor’s cut co.’s and its European subsidary’s outlook to ‘negative’ from ‘Stable’ due to weak financial position of the firm. The rating agency affirmed co.’s long terms credit rating at ‘BB’. (Yahoo/IANS)

Suzlon – Co. has successfully completed the sale of its wind farms assets. Co. was expected to raise approximately USD 40m from the sale. (The Hind Business Line)

MTNL/BEML/Orchid/Sintex Industries/IRB Infrastructure/Shree Renuka – Macquire sold 2.54 lacs shares in BEML for INR 8.28cr; 17.28 lacs shares in MTNL for INR 5.13cr and 4.18 lacs shares in Orchid chemicals for INR 4.58cr. Additionally the co. sold 35.96 lacs in Sintex Industries for INR 20.83cr; 18.83 lacs shares in IRB Infrastructure for INR 22cr and sold 44.89 lacs shares in Shree Renuka Sugar for INR 14cr. (MoneyControl)

SKS Microfinance – Deutsche Securities Mauritius picked up 9.15 per cent stake in co. for estimated value of INR 78cr. (Business Standard)

INDIAN EARNINGS

Sterlite Indistries – Co, reported 1Q12-13 net profit at INR 1,202cr vs. previous INR 1,640cr. Net Sales at INR 10,591cr vs. previous INR 9,863cr. (Financial Express)

ACC Cement – Co. reported 2Q12 net profit of INR 415cr vs. previous INR 328cr. Total consolidated turnover at INR 2,918.98cr vs. previous INR 2,539.41cr. (The Hindu Business Line)

Ambuja Cement – Co. reported 2Q12 net profit at INR 468cr vs. previous INR 348cr. Net sales at INR 2,566cr vs. previous INR 2,176cr. (Business Standard/PTI)

Bajaj Electricals – Co, reported 1Q12-13 net profit at INR 11.98cr vs. previous INR 11.06cr. Net income at INR 666.19cr vs. previous INR 544.36cr. (Financial Express)

Alstom India – Co. reported 1Q12-13 net profit at INR 12.88cr vs. previous INR 6.30cr. Total income at INR 441.36cr vs. previous INR 281.11cr. (Business Standard/PTI)

Excel Crop – Co. reported 1Q12-13 net profit at INR 10.96cr vs. previous 1Q11-12 at INR 6.27cr. Sales turnover at INR 213.58cr vs. previous INR 164.05cr. (MoneyControl)

Forbes Gokak – Co. reported 1Q12-13 net profit at INR 52.62cr vs. previous INR 3.39cr in 1Q11-12. Sales turnover at INR 63.92cr vs. previous INR 68.42cr. (MoneyControl)

Uflex – Co. reported 1Q12-13 net profit at INR 41.15cr vs. previous 1Q11-12 at INR 33.10cr. Sales at INR 865.11cr vs. previous INR 789.82cr. (MoneyControl)

Zensar Tech – Co. reported 1Q12-13 net profit at INR 40.86cr vs. previous INR 20.39cr. Sales at INR 213.06cr vs. previous INR 196.39cr. (MoneyControl)

Gandhi Special Tubes – Co. reported 1Q12-13 net profit at INR 6.78cr vs. previous 1Q11-12 net profit at INR 7.73cr. Sales turnover at INR 26.33cr vs. previous INR 26.68cr. (MoneyControl)

EUROPE

According to the ECB, deposits in Greek banks fell to six year lows as investors doubted the bank’s stability. Deposits declined to EUR 156.2 b for period ended June vs EUR 163.1 b a month ago. Private sector deposits declined 5 percent on m/m basis. (Reuters)

Spain has stated that it would not immediately seek assistance from the EU until the troika of institutions takes stock of its condition. (Reuters)

According to Greece’s finance ministry, Greece had identified EUR 11.6b in spending cuts over the next two years. (Economuc Times/AFP)

EUROPEAN EARNINGS

BG Group – Co. took a USD 1.3 b in writedown on its US natgas assets to report lower profits.  2Q12 revenues rose to USD 5.6 b vs USD 5.1 b previously. Operating profits excl charges declined marginally to USD 1.9 b vs USD 2 b a year ago. Otherwise, net profits came in significantly lower at USD 609 m vs USD 2.2 b. The co. raised its interim dividend by 10 percent to USD 11.88 a share. (Financial Times)

Banco Santander – Co. saw its 1HY12 profit decline to EUR 100 m (USD 122 m) vs EUR 1.39 b a year ago. The 93 percent decline was on rise in bad loans in the property market. Asset quality in its Brazilian and UK units suffered severe deterioration, which contributed to writedowns. The bank set aside EUR 2.78 b to mitigate the losses. (Bloomberg)

Roche – Pharma co. saw its 1HY12 profits decline 17 percent y/y as it was hit by a one-off restructuring charge of Swiss Franc (SFr) 1.68 b. Its attempts at job cuts cost the co. SFr 858 m and the overhaul of its diabetes and applied sciences amounted to SFr 289 m and other charges amounted to SFr 530 m. The impact drove down profits to SFr 4.4 b vs SFr 5.3 b a year ago. Diluted EPS came in lower from 6.04 to 4.99 a share. Revenues rose 3 percent y/y to SFr 21.7 b on higher demand for its cancer, hepatitis and rheumatoid arthritis medicines. The co. however maintained its sales target for FY2012 inspite of the market conditions. (Financial Times)

NORTH AMERICA

Index measuring resale of  homes in the U.S declined 1.4 percent to 99.3 in June vs a revised gain of 5.4 percent in May. Forecasts came in at a gain of 0.3 percent. Purchases decreased by 5.4 percent to 4.37 m units on an annual rate. (Bloomberg)

US durable goods orders rose more than expected for June on rising demand for aircraft and military hardware. Dat showed a 1.6 percent rise vs expectations of a 0.3 percent gain. Orders excl transport declined 1.1 percent. Business investments declined but were offset by other factors.

NORTH AMERICAN EARNINGS

Dow Chemical Co. – Co. reported 2Q12 net profits at USD 734 m vs USD 1.07 b a year ago. EPS came in at 55 cents vs 84 cents a year ago vs expectations of 64 cents. Revenues declined to USD 14.5 b vs expectations of USD 15.6 b vs prv USD 16 b. Co. saw the prices of plastic decline in the quarter and its plans to spend a total of USD 24 b on two projects, one in Saudi Arabia and one in Texas. (Bloomberg)

3M Co. – Co. saw its earnings come at USD 1.17 b vs USD 1.16 b a year ago as its healthcare, industrial and transportation businesses registered double digit growth. EPS came in at 1.66 a share vs 1.60 a share, beating expectations of 1.65 a share. Sales declined 2 percent y/y to USD 7.53 b vs expectations of USD 7.28 b. (Reuters)

Sprint Nextel Corp – Co. reported a 2Q12 loss of USD 1.37 b vs prv USD 847 m. EPS came in at loss of 46 cents vs 28 cents a share, previously. The co. took a one time depreciation charge of USD 782 m on network decommissioning and impairment charge related to Clearwire Corp as the co. tries to divest its operations with Nextel’s older networks, the co. saw a loss of 246,000 in customer base vs expectation of a loss of 203,000 customers. Operating revenue came in at USD 8.8 b vs USD 8.3 b previously vs expectations of USD 8.727 b. Co. raised its target for FY12’s adjusted operating income to range between USD 4.5 – USD 4.6 b from its previous forecast of USD 3.7 – USD 3.9 b. (Reuters)

Colgate-Palmolive – Toothpaste maker saw a 2 percent y/y rise in sales to USD 4.3 b, beating expectations, but was affected by exchange rate fluctuations. Diluted EPS came in at USD 1.33 a share, in line with expectations. Profits came 0.8 percent higher at USD 627 m. Co. stated that the impact of forex rates, in continuity, could see it report EPS data lower by 6-7 percent. Market share of the co. came in at 45 percent, its highest. (Financial Times)

Zynga – Co.’s saw its earnings decline, share price fall by 40 percent and slash its outlook for FY12. Net loss for 2Q12 came in at USD 22.8 m vs net profit of USD 1.4 m. Revenues came in 19 percent higher at USD 332.5 m, missing expectations of USD 344.8 m. The share price tanked 40 percent to USD 3.03 a share, as it stated that Facebook Inc. used a different software for its gaming network from Zynga’s competitors. Hence the co. slashed its FY12 EPS guidance to 4 – 9 cents from forecasts of 26 cents. (Financial Times)

United Airline – co. reported 2Q12 net income at USD 339m vs. previous 2Q11 net income at INR 538m. EPS at USD 1.41 per share vs. estimated USD 1.70 per share. Revenue at USD 9.9b vs. estimated USD 10b. (Economic Times/AFP)

WEEKEND COVERAGE : 21 JULY TO 22 JULY

ASIA

China’s 3Q12 GDP growth could slow to 7.4 percent on a y/y basis, as stated by an advisor to China’s central bank.  A short term deflationary period could also be posed to provide problems to the economy. (Bloomberg)

INDIA

According to economic think tank CMIE, the agricultural sector would perform well in FY2012-13 but major crop production is expected to decline 0.5 percent. The drop is due to decline in production of soyabean, cotton and rapeseed. Livestock, fisheries and forestry products are also expected to rise marginally by 4 percent, with agriculture industry expected to rise 2.4 percent. Delayed and insufficient monsoon is also expected to affect crop output. (Business Standard)

The market capitalization of top seven co.’s on the Sensex reduced by INR 14,931 cr for the week ended 21 July 2012. Major co.’s such as TCS, which led the losses by INR 5207 cr, saw ONGC, Infosys, ITC, SBI, HDFC Bank and NTPC post in loss of m-cap. However, Reliance Industries, Coal India and Bharti Airtel saw their market cap gain marginally over the week. (Economic Times)

FII’s have lowered their exposure (stake) in stocks of the co.’s under the umbrella of Reliance, owned by Anil and Mukesh Ambani. FII’s sold a total of INR 1500 cr worth of shares in Reliance industries owned by Mukesh Ambani and in four listed co.’s owned by Anil Ambani. Other investors which reduced their stake include offloading shares worth INR 500 cr, taking the total to INR 2000 cr. FII’s offloaded stakes on a marginal basis. (Economic Times)

Funds based in Mauritius which invest in the Indian equity markets will be under the purview of SEBI and RBI for possible transfer of illegal wealth of Indian and non-resident Indian’s back into India. Many funds have been identified as part of market regulator’s investigations. (Business Standard)

Sail – A proposed merger of SAIL and Neelachal Ispat Nigam will not go ahead as the government does not want to retain complete stakeholding in the co., as opposed to its earlier stance of divestment. Meetings with the Ministry of Commerce revealed its message of not going ahead with the merger. NINL is the largest producer of pig iron and divestment talks were on about the merger for over seven years. (Business Standard)

Sail/Nalco/JSPL/Monnet Ispat/MECL/Others – Co.’s to bid for developing copper deposits in Afghanistan. (Economic Times/PTI)

Maruti Suzuki – According to co.’s management dispatch operations to continue from the stockyard of Manesar plant, which has a inventory of about 26,000 units

Tata Power – Co. expects its hydel power project in Bhutan to commence operations by FY2013-14 period. The 126 megawatt Dagchu project accounts for USD 200 m in which Tata Power has a 26 percent stake. (Economic Times)

Bajaj Auto – Co. expects that exports would account for almost 50 percent of its revenues in the next three years. Co. plans to explore markets such as Latin America, viz., Chile and Argentina. Its motorcycle sales are also expected to pick up in the said period, which accounts for 35 percent of their sales. (Economic Times)

JSPL – Co. is to acquire Canada-based coal firm CIC Energy in a deal worth USD 115 m (INR 600 cr). The co.’s will sign a binding agreement in the next few weeks. JSPL will get access to CIC’s 2.6 b tonne thermal coal plant for its power projects. (Business Standard)

EUROPE

According to Greece PM, Greece was in a ‘Great Depression’, similar to the one faced by the United States in 1930. The PM wants the budget below 3 per cent of GDP by the end of 2014 from the previous 9.3 per cent in of GDP in 2011. In related news, IMF is expected to cut off further rescue aid to Greece. (FirstPost/Reuters/FoxBusiness)

U.K’s 2Q12 GDP data, expected on 25 July, is expected to decline 0.2 percent, based on median estimates, deepening the double-dip recession. Previous quarter decline was 0.3 percent and 0.4 percent in 4Q11. (Bloomberg)

BP – Co. has proposed that its joint venture TNK-BP pay shareholders a USD 1b interim dividend. (Fox Business)

NORTH AMERICA

Argentina’s Factory output (Industrial Production) declined 4 percent in June, a second successive m/m decline. Slowdown in trade with Brazil affected Argentina in terms of exports of automobile and steel. Previous month decline stood at 4.7 percent and 0.1 percent drop in May. Estimates came in at a drop of 4.5 percent. (Bloomberg)

GEOPOLITICAL

According to Iran’s head of Atomic Energy Organization, Iran has sent a new batch of enriched uranium to fuel a medical research reactor in its capital. (Yahoo/ Reuters)

 

 

EQUITY UPDATE – 20 JULY 2012

ASIA

According to KPMG, China’s imposition of restrictions on borrowing through trust companies and property sales could affect property and real estate developers in the region. The report came on the back of data which showed a decline in new funding available to developers as loans declined to 5.7 percent for the 1HY12 period. Additionally, home sales also declined 6.5 percent as the government maintains restrictions on property prices and purchases. Funds channelled through real estate funds declined more than 50 percent to RMB 84.6 b. (Bloomberg)

Chinese President approved a USD 20 b to various African countries in the coming three years, to boost ties with nations in the continent. (Reuters)

Hong Kong’s government warned that unemployment would continue to rise in the near term , affecting more graduates, as the economic crisis begins to tighten its effect on the country.  Unemployment rate for 2Q12 period ended June was unchanged at 3.2 percent, below expectations of 3.3 percent. The government stated that inspite of the encouraging data, the rate would rise to 4 percent by the end of 2012. (Bloomberg)

Temasek Holdings and China Investment Corp and two other firms have expressed interest in RCom’s IPO which would be launched in Singapore. RCom’s undersea cable unit Global Telecommunication Infrastructure Trust (GTIT) is to be listed on the Singapore Stock Exchange. Investors have proposed to invest a total of USD 250 to 300 m in the IPO. (Business Standard)

Australia’s index of business conditions for the next three months declined to 5, its lowest since 2Q09 and its confidence index for the same period declined to -2. Near term optimism on business dimmed as analysts and managers expect the Reserve Bank of Australia to cut its benchmark cash rate by atleast 25 basis points. (Bloomberg)

INDIA

According to a Reuter’s poll, India’s gross domestic product is expected to grow 6.3 per cent during FY12-13 vs. previous estimate of 7.1 per cent and 7 per cent in FY13-14 vs. precious estimate of 8 per cent. (FirstPost/Reuters)

Based on provisional details, DII’s made gross purchases of INR 924.56 cr vs sales of INR 1153.40 cr, making them net sellers of INR 228.84 cr. Meanwhile, FII’s conducted gross purchases of INR 2021.60 cr vs gross sales of INR 1895.82 cr, making them net buyers of INR 128.78 cr. (Business Standard)

According to Barclays, the Reserve Bank of India to slash policy rates by 0.25 percent in the upcoming policy meeting. (FirstPost/PTI)

Exports of Indian garments to non-traditional markets such as Latin America and Africa rose by 16 percent to touch USD 3.15 b in FY11-12. Slowdown in demand from Europe and Asia made exporters look for newer markets, stated the industry body, Apparel Export Promotion Council. (Economic Times)

Maruti Suzuki – Shares of co. dropped 9 per cent as violence between workers and management erupted at its Manesar plant. According to co.’s management the plant has been shut down. (Business Standard/PTI)

Sail – Indian government has approved the disinvestment of 10.82 per cent in co.; which at current price of INR 93.40 would fetch USD 750m. (FirstPost/Reuters)

Indian Overseas Bank – Co. plans to raise around INR 1500 cr in capital from the Indian government. (Economic Times)

Cairn India – Co. stated that output at its Rajasthan’s oil fields could rise by over 70 percent if the government does not block or delay its investment approvals. Output could rise to 300,000 barrels a day, totalling 15 m tonnes annually vs current output of 175,000 barrels a day. (Economic Times)

INDIAN EARNINGS

Hero MotoCorp – Co. declared net profits of INR 615 cr vs INR 558 cr from a year ago for its 1Q12 earnings. Revenues rose 10 percent to INR 6351.7 cr vs INR 5775.5 cr on a y/y basis. Co. sold around 1640,000 units for the quarter. (Business Standard)

Dr Reddy’s Laboratories – Co. reported 1Q12-13 net profit of INR 335.98cr vs. previous 1Q11-12 net profit of INR 262.74cr. Net income at INR 2,541cr vs. previous INR 1,978cr. (Financial Express)

NIIT Technologies – Co. reported 1Q12-13 net profit at INR 57.5cr vs. previous INR 41.2cr in 1Q11-12.  Revenue at INR 496.6cr vs. previous INR 328.8cr. (Financial Express)

BOC India Ltd – Co. reported 1Q12-13 net profit at INR 20.3cr vs. previous INR 27cr. (The Hindu Business Line)

EUROPE

France conducted an auction of about EUR 8.96 b (USD 3.68 b) at the top end of its target inspite of demand weaker than the previous period. Bond yields declined as compared to Spain’s auction, which saw a rise during their auction. Yields on French bonds due 2014 came in at 0.12 percent vs 0.83 percent previously. 4 yr BTAN’s yielded at 0.53 percent, down from 1.05 percent. 5 yr bonds had yields of 0.86 percent vs 1.43 percent previously. (Reuters)

Czech Republic auctioned around 6 b koruna (USD 292 m) of bonds due 2017 and 2021 for record low yields.  Yields on the 2021 nots declined to 2.316 percent vs 3.109 percent from its previous auction. Investors bid more than three times the amount offered. The effect of Moody’s previously upgrading the sovereign rating of to A1 boosted sentiment in the region saddled by nations with rising yields. (Bloomberg)

Credit Suisse – Co. to lay-off another 138 employees in the United States, co. said in its filings. (Reuters)

EUROPEAN EARNINGS

Nokia – Co. reported 2Q12 loss of EUR 1.41b vs. estimated EUR 654m vs. previous loss of EUR 368m. However co.’s sales of its flagship Lumia phone double to 4m units and also co.’s reserve cash improved by EUR 306m. (Fox Business)

NORTH AMERICA

Textron Inc – Co. an industrial conglomerate, would consider bidding for Hawker Beechcraft, to counter a deal proposed by China’s Superior Aviation Beijing Co. (Bloomberg)

Oracle Corp – Co. to acquire privately held Skire Inc for an undisclosed amount. (Yahoo/Reuters)

NORTH AMERICAN EARNINGS

Southwest Airlines – Co. saw its 2Q12 profits rise by 42 percent on record revenues offsetting the higher expenditure on fuel. Profit came in at USD 228 m vs USD 161 m a year ago. Earnings came in at 30 cents vs 21 cents a year ago. Adjusted earnings, which excluded USD 45 m in one time charges, came in at 36 cents a share, exceeding analyst’s forecasts of 33 cents. Revenues rose 4.7 percent to USD 4.62 b vs expectations of USD 4.59 b. The co. is monitoring the ongoings of the economy while it reported that demand hasn’t declined, it stated. (Bloomberg)

Freeport McMoRan – Co. reported 2Q12 net profit at USD USD 710m vs. previous 2Q11 at USD 1.37b. EPS at USD 74 cents a share vs. estimated USD 75 cents vs. previous USD 1.43 a share. Revenue at USD 4.48b vs. previous USD 4.43b. (FoxBusiness)

Fifth Third Bancorp – Co. reported 2Q12 EPS at USD 40 cents vs. estimated 1Q11 at USD 35 cents. Revenue at USD 1.58b vs. estimated USD 1.54b. (Fox Business)

BB&T – Co. reported 2Q12 EPS at USD 72 cents vs. estimated 1Q11 at USD 69 cents. Revenue at USD 2.47b vs. estimated USD 2.41b. (Fox Business)

COMMODITIES

Brent Crude Oil prices rose to USD 107 a barrel on crisis in Syria and Iran. (Reuters)

GLOBAL

Regulators in Sweden, Japan and South Korea are examining their respective interbank lending or benchmark borrowing rates amid concerns of them being susceptible to manipulation like the Libor. The main premise being that these rates are set based on estimations of banks rather than actual trade could make it easier to manipulate. (Bloomberg)

 

 

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)