UniCredit’s valuation gap looks too wide 7 Aug 2018 Italy’s biggest bank by assets has been a perennial slowcoach compared to Intesa Sanpaolo. But its return on tangible equity warrants a valuation closer to that of its main rival. Especially as a broad European base can offset a slowing Italian economy and jittery markets.
Commerzbank M&A pressure respite is only temporary 7 Aug 2018 The German lender reported a 689 million euro first-half pre-tax profit, compared to a loss in 2017. Higher revenue from smaller businesses should help it reinstate payouts. Still, a modest 6 percent return target means a merger with Deutsche Bank still makes long-term sense.
Chinese peer lending protests set political trap 7 Aug 2018 Beijing police on Monday stopped irate investors converging on the banking regulator and demanding compensation for losses from collapsed peer-to-peer lenders. Officials are partly responsible, yet a rescue would reinforce moral hazard. The risk is that discontent spreads.
Japan Tobacco coughs up for more frontier smokers 7 Aug 2018 The owner of Camel and Silk Cut is paying $1.5 bln – a hefty eight times revenue - for Bangladesh's second-largest cigarette company. Its latest emerging market splurge adds sales, but risks distracting the $50 bln giant from newer alternatives, where rivals are forging ahead.
Elaine Wynn’s deft hand puts house in order 6 Aug 2018 By arranging to install an industry veteran as independent chairman, the Wynn Resorts co-founder has played her cards wisely. The deal protects her stake in the $16 bln casino empire and ends months of management turmoil. Now the company can focus on real challenges, like Macau.
Sale can’t erase mark of 666 from Jared Kushner 6 Aug 2018 Selling the troubled New York skyscraper lifts financial pressure off the family of Donald Trump’s son-in-law but not the stain. The president’s young adviser layered conflict-of-interest concerns on an inflated investment. Buyer Brookfield brings adult supervision to the plot.
Nooyi leaves Pepsi wondering what might have been 6 Aug 2018 The $166 bln food-and-drink giant’s CEO is leaving after 12 years. She successfully fended off activists seeking a breakup as returns underperformed Coke. Though Pepsi has had a good run more recently, her successor Ramon Laguarta will need to reconsider the conglomerate.
HSBC’s targets start to look like a low bar 6 Aug 2018 The UK-based bank reported a slight drop in first-half pre-tax profit thanks to higher costs. More important is double-digit revenue growth at its biggest divisions and fatter lending margins. Higher rates should see the lender clear its 11 percent return target.
IWG botched takeover leaves uncertain future 6 Aug 2018 The 2.2 bln pound office provider walked away from suitors having failed to agree a price. Its UK business is struggling with the fallout from Brexit, and the advance of rival WeWork poses a bigger threat. That leaves founder Mark Dixon having to borrow to invest at a risky time.
Oil investors are complacent on climate change 6 Aug 2018 Shareholders in the likes of Shell aren’t holding companies to account on carbon targets. A Breakingviews analysis suggests why: they may suffer only mild losses if oil majors just run down their reserves. But doing nothing may backfire if governments take more radical action.
SoftBank investors grapple with Vision distortions 6 Aug 2018 Earnings at Masayoshi Son’s group jumped tenfold to almost $3 bln in the three months to June, helped by the sale of Indian e-commerce outfit Flipkart. Shifting values in the giant Vision Fund add to the noise. SoftBank’s attempt to tidy up won’t close the stubborn discount.
China’s yuan squeeze sends a bearish signal 6 Aug 2018 The central bank has reinstated a rule that makes it more expensive to short the currency. By turning back to 2016-style measures, Beijing slowed the slide. It also telegraphed where the yuan is heading. That will encourage capital outflows and complicate efforts to boost growth.
Campbell is an indigestible meal for all but Kraft 3 Aug 2018 Dan Loeb is pushing for a sale of the $13 bln soup maker. Campbell’s pretzel deal larded it with debt so an LBO won’t work. The $72 bln food giant with a penchant for cost cuts may be solo at the table. But heirs holding 42 pct of shares won’t roll over without a hearty payout.
SoftBank is the disruptor of technology disruptors 3 Aug 2018 Masayoshi Son’s investment mammoth is wreaking havoc across Silicon Valley and beyond. The $100 bln Vision Fund makes traditional venture-capital funds look puny, gives startups unimagined firepower, and distorts valuations and IPO markets. Tech finance can scarcely keep up.
RBS takes final step to being a cut-price Lloyds 3 Aug 2018 Royal Bank of Scotland has announced its first dividend since 2007, despite a paltry 1.1 percent return in the second quarter. Excluding one-off fines, the show of strength is credible. Lower core costs and impairments should close the valuation gap with Lloyds Banking Group.
Italian banks face worsening doom loop 3 Aug 2018 Rising sovereign yields since a radical government’s arrival hit capital buffers at Monte dei Paschi and peers. Weaker banks will hurt growth, feeding fears over Italy’s debt. More storms loom as the economy stutters, and the executive’s anti-business attitude spooks investors.
Luxury investors take benign view on trade wars 3 Aug 2018 A growing spat between China and the U.S. threatens sales in the sector’s two most important markets. A weaker yuan would make overseas shopping pricier for spendthrift Chinese tourists too. With share prices near record highs, investors are exposed to anything but all-out peace.
Vulnerable Toyota enjoys a moment in the sun 3 Aug 2018 Japan's largest automaker earned nearly $6 bln last quarter, a 7 pct bump. That’s a relief after Nissan, where a drop in U.S. sales weighed. Still, executives are right to strike a cautious tone while Trump's trade guns remain aimed at Tokyo: Toyota is less protected than rivals.
Heineken beats honourable retreat from China 3 Aug 2018 The Dutch giant is handing its business in the People’s Republic to CR Beer and taking a $3.1 bln stake in the country’s top brewer. Focusing on other countries makes sense. Influencing the future of its brand in the world’s largest beer market, however, will be more challenging.
Stake sales could ease CK Hutchison’s debt drag 3 Aug 2018 The ports-to-telecom conglomerate reported strong first-half results. But recent large acquisitions have left new Chairman Victor Li facing a mounting debt pile. Selling part of its Watsons health and beauty chain or Husky Energy would ease the burden without yielding control.