Bolder smoke-free goals can singe BAT discount 28 Jul 2021 The Camel maker’s first-half sales grew 8% and it’s on track to generate 5 bln pounds in revenue from products like vapes by 2025. Yet its stock trades at half rival Philip Morris International’s multiple. U.S. exposure is partly to blame, but a bigger target would help too.
Rio Tinto CEO picks cash shower over kitchen sink 28 Jul 2021 Jakob Stausholm is spraying the miner’s shareholders with a hardy $9.1 bln in dividends after his first six months in the job. There’s also plenty to splash out on projects like Serbian lithium. Despite the mopping up required in ESG and beyond, the financial plumbing is sound.
China makes market tea leaves very hard to read 28 Jul 2021 It took a while, but an unrelenting stream of crackdowns finally spooked investors. The country’s blue-chip stocks have slid near bear-market territory from a February peak. Although some sectors have been spared, only the truly daring will venture into riskier areas now.
Billion-dollar whales fill 1MDB’s wide net 28 Jul 2021 Malaysia has clawed back funds almost equal to the amount the U.S. says was misappropriated from the sovereign fund. After chasing down Goldman Sachs, it has plenty of targets left to cover $5 bln of unfunded dues. Infamous 1MDB’s shortfall could soon become a surplus.
Capital Calls: Bank mergers, GlaxoSmithKline 28 Jul 2021 Concise views on global finance: U.S. lender Citizens helps make the case for consolidation with its $3.5 billion acquisition of New Jersey-based Investors Bancorp. A pandemic drug bounty may help the UK pharma group’s CEO Emma Walmsley see off activist Elliott.
Tech giants’ next acquisition could be themselves 27 Jul 2021 Alphabet, Amazon, Apple, Facebook and Microsoft hold around $600 bln of cash. As revenue booms, investors will be keen to see it put to work. Doing deals is a tough sell politically, so buying back more shares could be the logical answer, even with stock prices riding high.
Big “transition” funds reflect climate realism 27 Jul 2021 Brookfield has kicked off a new investment vehicle with $7 bln from backers like Ontario Teachers and Temasek. Like another fund from TPG targeted partly at helping traditionally dirty industries change, it’s a recognition that most decarbonization efforts can’t be pure green.
IMF skims over non-viral risks to global economy 27 Jul 2021 The emergence of new highly infectious Covid-19 variants could wipe about $4.5 trln off global GDP by 2025, the international lender warned. Its economic update pays less attention to policy missteps, market ructions, or more bankruptcies. Yet these also pose a threat to growth.
The Exchange: Spanish PM Pedro Sánchez 27 Jul 2021 In his attempt to revive the economy, Pedro Sánchez wants investors to give Spain more love. Local and global politics make that a challenging proposition. John Foley met with the prime minister as he set out for Wall Street, Silicon Valley and Hollywood but not Washington, D.C.
GE chief accepts the things he cannot change 27 Jul 2021 Larry Culp’s monomaniacal quest to make his $120 bln conglomerate “lean” is paying off. GE’s cash flows are improving. But Culp can’t do anything about shifting tides of customers’ behavior. Investing in GE also requires getting comfortable with the things Culp can’t control.
Capital Calls: Grill makers cook their IPOs rare 27 Jul 2021 Concise views on global finance: Weber and Traeger set conservative prices for their market debuts, leaving something on the table for new investors.
Tiffany shine contradicts LVMH deal tantrum 27 Jul 2021 The French luxury giant’s jewellery division, now including the famed U.S. brand, is more profitable than in 2019. Soaring first-half sales are also at odds with boss Bernard Arnault’s attempts to wriggle out of the deal during the pandemic. Future LVMH targets will take note.
Tencent sends frightening WeChat status update 27 Jul 2021 Investors wiped $54 bln from the Hong Kong-listed company’s value after it froze user sign-ups on its chat app. Tencent blamed a technical upgrade, reassuring few given regulators have used suspensions to punish other firms. As panic sets in, markets will get harder to calm.
Inflation complicates Reckitt’s tricky turnaround 27 Jul 2021 The Strepsils maker’s stock fell as much as 9%, as rising costs hurt its profitability. The shares are now down since CEO Laxman Narasimhan took over in 2019, highlighting the challenges he faces in reviving the group’s fortunes. A likely boom in cold medicine sales should help.
Slimdown can help Worldline get fit for M&A battle 27 Jul 2021 The $26 bln Paris-listed payments group may sell a unit that makes handheld kit for card transactions. A sale could boost its shares and raise $5 bln to replenish CEO Gilles Grapinet’s war chest. That would help him hoover up smaller players and fend off rivals like Italy’s Nexi.
China’s tutoring rules create tough VIE homework 27 Jul 2021 Variable interest entities used to skirt overseas investment restrictions have existed in a regulatory gray area. Beijing’s ban on foreign funds in education suggests those days are ending. Unwinding the structures will be messy, but also could teach other industries a lesson.
Tesla comes of age at just the right time 26 Jul 2021 Elon Musk’s carmaker charged past $1 bln in quarterly profit for the first time. Margins finally rival leaders like Toyota. It’s yet to mature into its $620 bln valuation. But growing pains at Lucid and other upstarts make Tesla’s push to validate its price look less fanciful.
Third time will be the charm for Aon Willis tie-up 26 Jul 2021 The insurance brokers scrapped their $30 bln merger – their second attempt – because U.S. antitrust regulators opposed it. The disruption of financial services means there may come a time when the idea no longer poses a threat. By then, of course, there will be less to celebrate.
Hedgie stumble takes German M&A to surreal heights 26 Jul 2021 Investors sank landlord Vonovia’s $21 bln Deutsche Wohnen offer, even though they wanted it to succeed. Too many sat on the shares, hoping for a fatter payout courtesy of Berlin’s odd takeover rules. While the deal may be salvageable, it’s a clear sign of the need for reform.
ABB offers lesson in virtue of simplicity 26 Jul 2021 The $75 bln Swiss industrials giant is selling a power transmission unit to RBC Bearings for $2.9 bln. The rich price vindicates CEO Bjorn Rosengren’s plan to slim down and focus on electrification and robots. That will likely cement a premium valuation versus rival Siemens.
Capital Calls: Duolingo IPO valuation 26 Jul 2021 Concise views on global finance: The language learning app has increased its price by almost 20%.
GSK’s messy split opens door to cleaner M&A cure 26 Jul 2021 The British drugmaker could sell its consumer unit after pressure from activist Elliott. The maker of Advil painkillers might be worth $70 bln to a bidder like Procter & Gamble. A sale would mean a faster exit and raise more cash than CEO Emma Walmsley’s spinoff plan.
Greener anti-flood investments will be win-win 26 Jul 2021 Germany’s worst natural disaster in decades and deluges in China have sparked calls to build more dams and reservoirs. There are better ways to protect people, land and buildings from both too much and too little water. These alternatives will also appeal to investors.
Real-estate SPAC deal pushes valuation boundary 26 Jul 2021 Peter Thiel and Richard Li’s blank-cheque firm is buying Southeast Asia-focused PropertyGuru in a tie-up worth $1.8 bln. That’s roughly double its failed 2019 IPO and a roof-raising 52 times EBITDA. Rupert Murdoch’s REA is also involved. The price is high for this neighbourhood.
Chinese communists are souring on capitalism 26 Jul 2021 Beijing wants its $120 bln tutoring industry to turn non-profit, wiping billions off U.S.-listed TAL and peers. Fintech giants are being forced to hand intellectual property to state banks. A push to shrink margins and convert private assets into public goods is gaining momentum.
India will give China tech a run for its money 26 Jul 2021 A hot list of upcoming Mumbai IPOs is captivating foreign funds that scored big backing startups from Shenzhen, Shanghai and beyond. First-time local investors are adding to the frenzy. Zomato’s market debut epitomises the opportunities for similar valuations and returns.
Self-driving is pricey route to car parts future 23 Jul 2021 Magna International is paying $3.8 bln for Sweden’s Veoneer, which makes systems that help cars steer themselves. It reduces the $25 bln Canadian group’s exposure to combustion engines. But CEO Swamy Kotagiri will have to put his foot down to keep financial returns on the road.
Guest view: Investing when inflation is a mystery 23 Jul 2021 Trying to outguess asset prices on how fast consumer prices will rise is pointless, Gerard O’Reilly, chief investment officer at Dimensional Fund Advisors, says. Better to focus on ways of outpacing or hedging against what’s anticipated by market gauges of inflation expectations.
Review: The many unseemly faces of Facebook 23 Jul 2021 The $1 trillion social network’s ruthless rise is well documented. “An Ugly Truth” captivates with new, disturbing details on recent scandals and CEO Mark Zuckerberg’s handling of the firm’s growing power. The uglier reality is that its 3 billion-plus users aren’t that bothered.
European payments jewels are wasted in bank vaults 23 Jul 2021 BNP, SocGen, Santander and others process billions of card transactions but the potentially valuable units get no credit within stodgy banks. CEOs may resist spinoffs for fear of missing future growth. Yet sitting on a subscale business means losing ground to digital upstarts.