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An integrated European media powerhouse dies before being born
24 Oct 16
Once upon a time (say about 6 months ago), Mediaset and Vivendi concluded a splendid strategic alliance: the French group was to acquire 100% of Mediaset Premium, while each entity would be taking a 3.5% stake in the other on the occasion. The ambition was to build a pan-European OTT platform and to create a southern European content and VOD powerhouse… The announced wedding has since moved to the divorce legal battlefield, maybe paving the way for a ménage à trois.
Best quarter in Italy since 2009
27 Jul 16
Q2 revenues were down organically by 4.2% yoy (vs -5.2% in Q1) while the EBITDA (excluding the negative impact of non-recurring items) has decreased by only 1.7% yoy, with an EBITDA margin of 42.0%, 1.4ppts higher than in H1 15. But in Italy, revenues were down by only 1.1% yoy (vs -2.5% in the three previous quarters). The solid, structural recovery of Mobile revenues was confirmed, thanks both to the maintenance of market share and the stabilisation of ARPU levels. Note the revenues of the Consumer segment in H1 (55% of Domestic revenues) have increased by 1.5% yoy. But the key point is the EBITDA: excluding non-recurring restructuring charges (corresponding to 2% of EBITDA), EBITDA would have grown by +0.9%, with an EBITDA margin of 45.1%, up 1.2ppts on H1 15 and a positive inversion of trend compared to Q1 (+6.9% yoy in Q2 vs -5.2% yoy in Q1). In Brazil, Q2 revenues were down organically and at constant change by 13% yoy (vs -15% in Q1)! Service revenues were down by 5.7% yoy, while revenues from product sales dropped by c.60%, reflecting a sales policy less focused on the sale of handsets, as well as the impact of the Brazilian macro-economic crisis on family spending decisions. The main issue is that the total number of subscribers (c.64m) was still down by 3.4% vs end 2015 (with a market share of 25.6%, vs 25.7% at end 2015 and 26.7% a year ago). The H1 EBITDA margin was, however, at 29.9%, up 1.5ppt on H1 15. Another key point of the H1 release: TIM and Fastweb have entered into a strategic partnership aimed at speeding up the creation of the ultrabroadband infrastructure with FTTH technology in 29 Italian cities. The partnership envisages the establishment of a joint venture with 80% of the capital held by TIM and 20% by Fastweb. The new company’s business plan therefore envisages connecting around 3m homes with FTTH technology within 2020 which will allow connection speeds of 1Gps. Total investment is €1.2bn, which the joint venture will finance in part with equity and in part with debt. TIM’s share is already included in the capex of the 2016-18 Business Plan. Moreover, as part of the partnership, TIM will buy from Fastweb over the next 18 months the infrastructure with FTTH technology that will allow around 650 thousand homes in 6 cities to connect to TIM’s network a year earlier than envisaged in the Business Plan. The strategic partnership will allow the two companies to create the latest generation, extremely high speed, infrastructure more rapidly, at the same time permitting synergies in the investments.
The new CEO's aim to reach 2019 with €1.6bn of efficiencies
16 May 16
Q1 revenues were down organically by 5.6% yoy: In Italy, revenues were down by 2.3% yoy (as in the two previous quarters). This is a little bit disappointing: the recovery trend is slowing slightly compared to the previous quarters, after, in particular, a worsening of the performance in the Fixed segment, while the solid, structural recovery of Mobile revenues was confirmed, thanks both to maintenance of market share and stabilisation of ARPU levels. Note the revenues of the Consumer segment in the Q1 (55% of Domestic revenues) have increased by 2% yoy. In Brazil, Q1 revenues were down by 15% yoy! Service revenues were down by 8.3% yoy while revenues from product sales dropped by 61%, reflecting a sales policy less focused on the sale of handsets, as well as the impact of the Brazilian macro-economic crisis on family spending decisions. The main issue is that the total number of subscribers was 67.273m, a fall of 11.2% yoy, but this corresponds to a slight increase compared to end 2015 (with a market share of 26.1%, vs 25.7% at end 2015 and 26.7% a year ago). EBITDA was down by 7.5% yoy excluding non-recurring charges, with a quite correct margin of 43.34% in Italy while the Brazilian one was 28.7%, down 0.8 ppts on the previous year due to the contraction in revenues.
Don’t miss the opportunity to buy TI at a good price
17 Feb 16
The stock declined sharply by 4% yesterday following the release of mixed results in Q4. The stock has now declined just over 30% from its highs of last autumn (when Bolloré and Niel invited themselves to the capital of the Italian telco). 2015 revenues were down by 4.6% yoy, while the EBITDA declined by 17.9%, but this includes non-recurring charges of €1bn. Without these, the organic decline would have been of 4.5% with a margin of 41% (1.8ppt higher than in 2014!).
A good recovery trend in Italy but tough market conditions in Brazil
06 Nov 15
Q3 revenues were down by 4.6% yoy at constant currency. While the domestic decline of 1.4% yoy was slightly better than expected we note, however, that market conditions were once again tougher than expected in Brazil which recorded a sharp drop of 15% in its revenues (at constant currency) due largely to a 58% reduction in handset sales (sold with no margin a year ago). Q3 EBITDA was down by only 3.7% yoy organically and at constant change. Note in particular the Brazilian margin was up by 3.8ppt from 27.4% to 31.2%, while the domestic margin was back to a more reasonable number (44.7%) after an exceptional Q3 14 (at 47.2%!). Note in parallel to this release that the board proposed to convert TI’s saving shares (representing 30% of the capital but carrying no voting rights) into ordinary shares. This will have a dilutive effect on Vivendi’s stake in TI which could be only 13% given the 20% currently held by the French group.
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N+1 Singer - Morning Song 21-10-2016
21 Oct 16
Xaar has announced that its FD, Alex Bevis, will be leaving to pursue other opportunities after almost 6 years with the group. A search is underway for his replacement and Alex will remain with Xaar until 24th March 2017. While Alex’s departure is disappointing, Xaar’s strategy remains on track, with new product launches expected to drive near term organic sales growth and a target of £220m sales by 2020. This reflects stronger leverage of Xaar’s innovative technology into a broader spread of end products and markets, with the £220m expected to be composed of broadly equal contributions from ceramics, packaging & product printing, Thin film/P4, and partnerships/M&A. Prospects for the group are exciting, with positive news flow on product launches and end markets anticipated over the year ahead.
Que viva Espana !
25 Oct 16
Q3 revenues have grown organically by 0.8% yoy. This is quite a good performance, slightly better than the market’s expectations. Remember, revenues had increased by 0.3% during H1 (they were even stable in Q2). Growth was remarkable in Spain (+7.8%), led by mobile services and mobile equipment sales, while the growth in fixed broadband continued to be strong with the success of fibre (1.4m customers at end September). In France, revenues declined by only 0.6% yoy, the impact of roaming being completely offset by a clear improvement in the mobile trend. EBITDA rose by 1.6% yoy to €3.6bn (corresponding to a margin of 31.3%), mainly tied to revenue growth: a good performance as it was merely stable during H1. The group has confirmed the objective for the full year of a higher EBITDA in 2016 than in 2015 on a comparable basis. With no surprise, the group plans to propose the payment of a dividend of €0.60 per share for 2016.
Nvidia opens doors, weak PNDs slam them
21 Oct 16
TomTom reported Q3 revenues of €239.3m, down 5.9% yoy and 9.8% sequentially. Consumer decreased by 15% yoy to €137.1m, representing the biggest down-mover. Automotive’s top-line grew by 20.4% to €31.3m, Telematics by 14.8% to €36.5m, while Licensing showed some weakness (€34.4m, -2.3%). The gross margin came in at 60.4%, up 730bp yoy, while the EBIT margin lost 150bp to 0.4% (€1m). EPS came in at zero and adjusted EPS at €0.05. Despite the weak market conditions in Consumer, the company re-iterated its adjusted EPS guidance for FY16 of around €0.23, while the revenues are now estimated to be around €980m, down from €1,050m.
Consensus eps falling…falling…falling…rising 2.0
29 Apr 16
In January we screened for companies with estimates that had been declining consistently since a year previously, but which had risen in the immediately preceding three months (see our note dated 22 January 2016). We have reviewed the performance of those companies and, given the overall strength of this selection, we have re-run the screen. In the c.3 months since selection, the unweighted average rise was c.34% against a c.11% rise in the main All-Share index. From the same universe as before (some 900 companies) we find 38 companies selected by the screen. We note a number of stocks in the list where we have a supportive stance including: Devro (DVO LN, Buy), James Fisher (FSJ LN, Corporate), Mattioli Woods (MTW LN, Buy) and Spirent Communications (SPT LN, Buy).
28 Oct 16
"Yesterday's celebrations following the UK's better than expected GDP data release for the three months to September look to be short lived. This morning, release of the long-running barometer of consumer confidence from market researcher GfK, suggests sentiment has fallen back quite sharply during October, with Britons becoming increasing anxious over the economic outlook as the index slips back to levels last seen immediately prior to June's Referendum vote. This, following on from a relatively dull overnight performance from US equities, suggests London is set for a weak opening this morning with the FTSE-100 seen down some 10 points in early trade. US shares were knocked by a sell-off in Treasuries, which hurt yield-sensitive plays in the utility and real estate sectors, while technology stocks also continued to suffer from Apple's rather disappointing release earlier this week, leaving the NASDAQ the largest faller amongst the principal indices once again. Building expectations of a US rate hike before the year-end allowed the US$/JPY breach the important 105 level which, along with the more general boost being seen amongst global government bond yields, pushed up Japanese financials and resulted in the Nikkei claiming the best performance amid otherwise flat to negative Asian indices. The UK is not scheduled to make any significant economic releases this morning, but a slew of data from the EU, including the territory's Business Climate index, French GDP and CPI figures plus German CPI, are due to be followed this afternoon by the important US 3Q GDP numbers which are projected to rise by an annualised 2.5% according to the Wall Street Journal. UK Corporates due to report include IAG (IAG.L) and RBS (RBS.L), while majors reporting in the US include Chevron, Exxon Mobil and Goodyear. Investors will also be awaiting further news from General Electric, who told shareholders overnight that the Group was in talks with Baker Hughes regarding a partnership agreement or merger of their oil & gas operations, rather than the takeover that had been earlier rumoured by the media." - Barry Gibb, Research Analyst