Saved by the Bell ( ORL, QBE, PNA, NCM. ERA. )
Morning Some Observations US- Tapering…ongoing talk of an earlier start and investors are appearing less paranoid of a major selloff. Europe – Not much to be gleaned. China - Chinese banks gained the freedom yesterday to issue large –denomination negotiable certificates of deposits (NCDs) . The rate will be determined by the market unlike bank deposits that are subject to an interest rate cap. Initially they will only be available to fund managers and the interbank market, but not issued directly to individuals or non-financial enterprises…. yet . Note there are no controls on rates of loans( since July); Deposits rates , however, are still subject to a ceiling, which we understand will be eventually phased out. (…and that is the tax angle for savers). NCDs should provide a better understanding of the cost of capital, by forcing banks to negotiate the cost of lending themselves. Inflation data released yesterday in China revealed slightly lower inflation readings, which has most likely put paid to any expectation for a formal tightening of monetary policy for the near term. The Daily- ORL - UBS lowered FY14 estimates to reflect guidance updated at ORL’s recent AGM. Beyond FY14e, their modelling now assumes the ~$10m of overheads are maintained to rollout of GAP and Brooks Brothers (BB) instead of reverting to a single brand cost structure. As a result our FY15-16 earnings estimates fall by ~20%, as the ramp up of GAP gross profit contributions are expected to be offset by retained CODB in the medium term. Their key question is whether ORL’s valuation multiple will continue to face structural and cyclical headwinds vs. peers, Neutral maintained. QBE - Expecting US$250m reported loss in 2013; Lowering price target to $13.00 and rating to Hold PNA - Downgrades as a result of PNA’s initial 2014 guidance; Costs higher in 2014-15 on higher strip ratios, lower grades; Earnings downgraded, stronger free cash flow pushed out; Investment thesis – Downgrade to Hold TP$1.80/sh NCM - surprise- equity raising more likely with gold falling. ERA- all about the Leak at Ranger,. Short and brief. Have a pleasant day Regards Alastair.
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