Earnings season kicks off

January 16, 2023

Good Morning,

BNZ has reintroduced sales targets for its frontline bankers in New Zealand, more classified material has been found at Joe Biden's Delaware home, Janet Yellen has said the US would take extraordinary measures to avoid default, Japan will release radioactive water into the sea, China's top economic planner will tighten supervision of iron ore pricing & a Yeti Airlines plane has crashed in Nepal with 72 people on board.

Let's jump in.

Before The Bell

Markets

  • US stocks recorded a second consecutive week of gains as investors digested key inflation data and the start of the quarterly earnings season. The Nasdaq composite and growth-orientated sectors outperformed thanks to rebounds in mega-cap technology-related names (TRP)

  • Shares in Europe followed the US up for the second consecutive week on the back of better-than-expected economic data. The European STOXX Europe 600 index ended up 1.9% higher, and the FTSE 100 gained 1.9% (TRP)

  • The ASX and NZX also followed this trend on bets global inflation will ease this year as China reopens to the world (AFR)

Earnings and Data

Earnings and data from last week:

  • Idaho-based grocery chain Albertson's Companies (NYSE) reported $0.87 in earnings per share for the quarter, coming in $0.20 above expectations. Meanwhile, 8.5% revenue growth from the prior year quarter to $18.15B came in $550M above the analyst consensus (Seeking Alpha)

  • Australian inflation came in at a 32-year high of 7.3% (AFR)

  • Australia's trade surplus unexpectedly increased in November, as a weakening in local demand saw imports decline whilst exports remained constant (Yahoo)

  • Data from the Australian Bureau of Statistics on Wednesday showed retail sales jumped 1.4% in November from October to a record of A$35.9 billion. This was more than twice the median forecast of 0.6%, and October's result was revised up sharply to a rise of 0.4% from an originally reported drop of 0.2% (RT)

  • The latest building approvals data out of Australia has shown the total number of building approvals fell 9% in November (ABS)

  • Bank of America (NYSE) reported better-than-expected earnings per share of 85c (USD). Its revenue number also bet expectations (MW)

  • Bed Bath & Beyond (Nasdaq) has posted wider quarterly losses than expected as its chief executive acknowledged the struggling retailer's turnaround plan had not achieved its goals. Bed Bath & Beyond lost $393 million during the fiscal third quarter, it said, worse even than the $385.8 million quarterly loss it projected just last week, and a 42% increase from year-ago losses (CNBC)

  • BlackRock (NYSE) reported an 18% drop in profit in Q4 as fees were squeezed (RT)

  • China's CPI in December came in 1.8% higher than a year earlier, rising 0.2% since November. PPI slowed to 0.7% in December from 1.3% in November (RT)

  • China’s trade balance grew to a surplus of $78 billion in December, data from the Customs Administration showed. The figure was higher than expectations of $76.2B, as well as last month’s reading of $69.84B (Yahoo Finance)

  • Citigroup (NYSE) beat analyst expectations when it reported earnings of $1.16 (USD) per share and revenue of $18B (USD) (INV)

  • The world's ten largest banks made $US24.1 billion ($34.7 billion) in the most frequently traded currencies, known as the G-10, according to data from Coalition Greenwich. That’s a 48 per cent increase from the previous year. Only 2020 saw a better result when pandemic volatility and emergency quantitative easing pushed returns to $US26.7 billion (AFR)

  • Commercial Metals Company's (NYSE) earnings are as follows, net earnings were $261.8 million (USD), or $2.20 per diluted share, on net sales of $2.2 billion (USD), compared to the prior year period were net earnings were $232.9 million (USD), or $1.90 (USD) per diluted share, on net sales of $2.0 billion (USD) (CN)

  • Delta Airlines (NYSE) reported adjusted operating revenue of $45.6B (USD) for the 2022 full year. It beat expectations for both revenue & profit (MW)

  • Eurozone unemployment dropped to a record low in November, with 10.8 million unemployed people. The unemployment rate remained unchanged from October at 6.5% (FT)

  • Total consumer credit (US) rose by $28B (USD) in November, down only slightly from the $29.1B (USD) gain in the prior month, the Federal Reserve said Monday. That translates into a 7.1% annual rate, down from a revised 7.4% gain in the prior month (WT)

  • Jefferies Financial Group (NYSE) reported a 52.5% decline in fourth-quarter profit on Monday, hit by lower underwriting fees and volatile markets that dented income from its trading desks (RT)

  • JP Morgan Chase (NYSE) announced earnings of $3.57 (USD) per share and total revenue of $34.5B (USD), beating estimates on both (INV)

  • New Zealand building consents for new homes were up 3.2% YOY to 50,209 in November (Stuff)

  • PaySauce (NZX) announced it had increased its annualised recurring revenue by 54% to $6.6m (NZD), and in December, they were up 65% YOY to $1.65m (NZD). It also announced a 16% YOY increase in active customers to 6810 (NBR)

  • Summerset Group (NZX) reported sales for the three months to the end of December rose 18 per cent compared with the same quarter in 2021. The company had 277 settlements for the quarter to December 31: 139 new sales and 138 resales (Herald)

  • The Taiwanese Semiconductor Manufacturing Company (TWSE, NYSE) saw a record Q4 profit of Q4 profit T$295.9B but warned on Thursday that first-quarter revenue would drop as much as 5% and it would slash annual investment as the major Apple Inc (AAPL.O) supplier expects softer demand due to a slowing global economy (RT)

  • TradeWindow (NZX) has revised its trading revenue and total income down for the financial year due to implementations taking longer than expected (NBR)

  • UK GDP grew 0.1% in November, according to new data Friday from the Office for National Statistics, defying economists’ expectations and reducing the likelihood that Britain entered a technical recession in the fourth quarter (CNBC)

  • US CPI came in at its lowest level in more than a year at 6.5% YOY, whilst core inflation was 5.7%. It was the first negative month on price pressures since the COVID pandemic began in 2020, with CPI down 0.1% (BBG)

  • The US government's December budget deficit quadrupled from a year earlier to $85 billion as receipts shrank slightly and outlays grew to a new December record, the Treasury Department said on Thursday as it neared the $31.4 trillion federal debt limit (RT)

  • Volpara Health Technologies (ASX), a breast cancer diagnostics company, announced it has signed five-year contracts with five new healthcare providers in the US for a combined value of $12.3m (NZD) as well as a five-year renewal with an existing customer for a further $1.4m (NZD) (NBR)

  • Wells Fargo (NYSE) beat earnings estimates when it announced earnings of 67 cents (USD) per share but was below revenue estimate announcing revenue of $19.66B (USD) (INV)

Earnings and data coming up:

  • Tuesday: Consumer sentiment (AU)

  • Wednesday: Inflation (UK), inflation (Canada), BoJ meeting, electronic card transactions (NZ), Morgan Stanley, Goldman Sachs, United Airlines

  • Thursday: Jobs data (AU), PPI (US)

  • Friday: PMI (NZ), Netflix, Procter & Gamble

News Summary

Monday

  • New Zealand's egg shortage will continue for months as 300,000 more laying hens are needed (Stuff)

  • Australian home values have hit record lows (9 News)

  • Goldman Sachs will sack 3,200 people this week (BBG)

Tuesday

  • New Zealand breweries see CO2 rationing as shortage hits (RT)

  • China has opened the door to talks with Australia to begin resolving trade disputes (AFR)

  • Donors from around the world have pledged over $9B (USD) to Pakistan to help them recover from the devastating flood that hit the country last year (BBC)

Wednesday

  • New Zealand's inflation has hit 7.8% YOY, according to a Massey University forecast (Stuff)

  • Australia and Papa New Guinea are expected to sign a new defence treaty (9 News)

  • The global economy is perilously close to falling into a recession, according to the latest forecasts from the World Bank (BBC)

    Thursday

    • Tobacco companies could be accountable for cleaning up cigarette buds in South Australia (9 News)

    • Classified documents have been found in the house of Joe Biden (BBC)

    • Stripe cut its internal valuation by 11% to $63B (USD) (BBG)

    • FTX has recovered over $5B (USD) of assets (BBC)

    Friday

    • Apple Inc. is cutting Chief Executive Officer Tim Cook’s compensation by more than 40% to $49 million in 2023, citing investor guidance and a request from Cook himself to adjust his pay (BBG)

    • Putin’s military command reshuffle reveals a power struggle at the heart of the Ukraine war (CNBC)

    Weekend

    • BNZ has reintroduced sales targets for its frontline bankers in New Zealand (Stuff)

    • Prenups and contracting out agreements are becoming increasingly popular in New Zealand (Stuff)

    • Queensland is facing life-threatening flash floods whilst a fast-moving bushfire is threatening parts of Western Australia (9 News)

    • Russia fired a new wave of missile attacks across Ukraine, hitting the cities of Dnipro, Kyiv, Kharkiv, Odesa and others (BBC)

    • More classified material has been found at Joe Biden's Delaware home (BBC)

    • Treasury Secretary Janet Yellen has said the US would take extraordinary measures to avoid default (BBG)

    • Argentina has seen prices almost double in the last year, with CPI at 94.8% YOY to the end of December (BBC)

    • The execution of British-Iranian man Alireza Akbar has caused widespread outrage (BBC)

    • Over 80,000 Israelis have protested against plans by the right-wing coalition government to overhaul the judiciary (BBC)

    • Japan will release radioactive water into the sea as the destroyed Fukushima nuclear power plant runs out of storage space (BBC)

    • China's top economic planner will tighten supervision of iron ore pricing after the prices have surged in recent months (BBG)

    • A Yeti Airlines plane has crashed in Nepal with 72 people on board (BBG)

    • Tesla has cut prices by up to 20% to boost demand (BBC)

    Deal Flow

    Investments / M&A

    • Billionaire Andrew Forrest is mulling a deal to acquire control of the struggling Sun Cable project to export solar power to Singapore via a 4,200km submarine cable. A deal could be worth $30B (AUD) (BBG)

    • Brookfield and EIG Partners will reveal as soon as today if they plan to proceed with their proposed $18.4B (AUD) takeover of Origin Energy, as their period of exclusive due diligence expires (AFR)

    • CVS is Exploring a $10B + (USD) Acquisition of Oak Street Health (BBG)

    • According to a person familiar with the matter, Subway is exploring a potential sale that could value the sandwich chain at more than $10B (USD) (BBG)

    • Microsoft is mulling a $10B (USD) investment in OpenAI, the creator of the viral AI bot ChatGPT (BBG)

    • Pendal investors have withdrawn $5.3B (AUD) on the eve of Pendal's merger with fellow funds management business Perpetual (AFR)

    • A union lawyer arguing that the $5.4B (USD) purchase of broadcaster Tegna, by hedge fund Standard General should be blocked is also a lobbyist for three companies that stand to benefit if the deal dies (BBG)

    • The Consumers Federation of Australia has asked the Australian Consumer and Competition Commission (ACCC) to block the $4.9B (AUD) takeover because it would “materially increase the risk of coordinated conduct in a number of these markets by removing a key competitor, Suncorp Bank” (AFR)

    • Voyager Therapeutics, a Nasdaq-listed biotech, could get up to $4.4B (USD) for an agreement with Neurocrine Biosciences, a Nasdaq-listed biopharmaceutical company (BBG)

    • Frontline Plc, a global shipping giant controlled by billionaire John Fredriksen, has given up on plans to buy Euronav NV. The $4.2B (USD) deal would have created the world's largest publicly listed oil-tanker company but was scrapped after resistance from some of Belgium's oldest shipping families (BBG)

    • Standard Chartered is considering a sale of its aircraft leasing unit, which is worth ~$3.7B (USD) (RT)

    • Vista Equity Partners agreed to pay about $2.6 billion (USD) in cash for insurance technology provider Duck Creek Technologies Inc (BGG)

    • EY is setting aside $2.5B (USD) to fund an acquisition spree for its consulting arm following its planned split from the audit business (AFR)

    • A unit of Apollo Future Mobility Group Ltd. will buy Chinese electric vehicle maker WM Motor Holdings Ltd. for $2.02B (USD), according to a Hong Kong stock exchange statement (BBG)

    • China General Nuclear Power Corp's planned $2B sale of its European renewable energy arm is on pause after offers fell short of pricing expectations (BBG)

    • Vodafone Group, a telecommunications company, has entered into a binding agreement to sell its Hungary unit to 4iG and Corvinus. Vodafone will receive a total cash consideration of about €1.7B (BBG)

    • Russia's second-largest oil producer Lukoil has reached an agreement to sell its ISAB oil refinery in Sicily to Israeli-backed PE fund G.O.I Energy for $1.6B (USD), which has formed a partnership with international commodities trader Trafigura (RT)

    • Nuvei Corp, a Canadian payments firm, has agreed to buy Paya Holdings, an Atlanta-based payments processor, for $1.3B (USD)

    • Full-service Canadian headquarter investment bank Canaccord Genuity Group's management is looking to take the firm private in a $1.22B (AUD) deal (AFR)

    • Crayfish Bidco Oy, a company controlled by Triton, said on Thursday it has bought a 9.9% stake in Finnish construction company Caverion Oyj (CAV1V.HE), following the Swedish venture capital group's $1.17 billion (USD) takeover bid on Tuesday (RT)

    • Bankrupt crypto lender Voyager Digital received initial court approval for a proposed $1B (USD) sale of its assets to Binance US and said it would seek to expedite a U.S. national security review of the deal (RT)

    • Fujitsu, a Japanese IT firm, wants to divest its entire $1B (USD) stake in its air conditioning manufacturing unit Fujitsu General (BBG)

    • PAG and Mapletree Investments Pte agreed to buy an office tower in Hong Kong that was once owned by distressed tycoon Pan Sutong for HK$5.6 billion ($717m USD) (BBG)

    • ExxonMobil (XOM.N) has agreed to sell its two-thirds stake in Esso Thailand (ESSO.BK) to Thai energy firm Bangchak Corporation (BCP.BK), the companies said, in a deal valued at about 20.1 billion baht ($603 million USD) (RT)

    • German vaccine producer BioNTech has agreed to acquire British artificial intelligence startup InstaDeep for up to £562m to speed up its biotech research and manufacturing capabilities (RT)

    • World View, which focuses on remote sensing and stratospheric surveillance, has agreed to go public through a merger with Leo Holdings Corp. II which is set to value the combined entity at about $350 million (USD) (BBG)

    • PE firm Carlyle has bought a majority stake in Indian beauty company and wellness solutions provider VLLC. In a deal worth ~$300m (USD) (RT)

    • Life sciences firm Qiagen has acquired DNA-biometrics firm Verogen in a $150m cash deal (RT)

    • China's Alibaba Group (9988.HK) sold a 3.1% stake in Indian digital payments firm Paytm (PAYT.NS) for a total of $125 (USD) million through a block deal on Thursday (RT)

    • Vital Healthcare Properties Trust, a healthcare-specific property owner listed on the NZX, has canned plans for a $106m (NZD) hospital development in Tasmania in favour of a new $140m (AUD) research building on the Gold Coast. It is also preparing to sell-down $200m (NZD) of non-core assets (NBR)

    • IGO Group and Chinese company Tianqi the majority owners of Greenbushes lithium mine, have agreed to pay $136m (AUD) to acquire lithium explorer Essential Metals (AFR)

    • Seven Group, an Australian diversified operating and investment group has pulled the pin on Estia Health, a residential aged care operator and had Macquaire sell its shares for ~$55m (AUD) (AFR)

    • Car giant Stellantis has put $30m (USD) into ASX-listed battery materials manufacturer Element 25 and signed an offtake agreement for up to 10,000 tons of battery-grade manganese sulphate monohydrate for five years (AFR)

    • AstraZeneca, a global pharmaceutical company, has agreed to buy US clinical-stage biopharmaceutical company CinCor Pharma for $26 (USD) a share, a 206% premium. Shareholders will also receive an additional $10 (USD) per share if the company achieves regulatory submission for the blood pressure drug baxdrostat (BBG)

    • Berkshire Hathaway, the investment company owned by Warren Buffett, has sold 1.1m shares of Hong Kong-listed electrical vehicle maker BYD at an average price of $24.52 (USD) per share (RT)

    • Gas explorer Norwest Energy has rejected a takeover offer from MinRes that would have seen them granted one MinRes share for every 1367 Norwest shares held, valuing the stock at about 6¢ a share (AFR)

    • National Instruments, a US headquartered producer of automated test equipment and virtual instrumentation software is exploring strategic options including a sale (BBG)

    • Plan's by Nigeria's biggest lender, Access Bank to acquire a controlling stake in Kenyan bank Sidian Bank has collapsed (BBG)

    • India's national company law tribunal has allowed the ownership of carrier Jet Airways to be transferred to the Jalan-Kalrock consortium, news channel CNBC TV 18 reported on Friday (RT)

    • According to people familiar with the matter, T-Mobile US Inc. is considering an acquisition of Mint Mobile, the budget wireless provider backed by actor Ryan Reynolds, who owns about a quarter of the company (BBG)

    • US chemical distributor Univar Solutions is drawing interest from Apollo and Platinum Equity (BBG)

    • Exxon Mobil Corp. will sell its controlling stake in Esso (Thailand) Pcl, which runs a local refinery and retailing business, to rival Bangchak Corp. as the largest US oil company focuses on its home market and the production of lower-emission fuels (BBG)

    • Activist investor Nelson Peltz nominated himself to the board of Walt Disney Co. in what could become a highly public debate over Chief Executive Officer Bob Iger’s leadership (BBG)

    • Bain Capital, a US headquartered PE firm, is closing in on a deal to acquire a minority stake in EcoCeres, a biomass company which is majority owned by Hong Kong and China Gas. The deal is believed to be worth a few hundred million (BBG)

    • Saudi Arabia will establish a firm to invest in mining assets internationally as the kingdom seeks to diversify its economy from oil and secure access to strategic materials (BBG)

    • Endeavour group, an Australian retail company, has purchased Margaret River-based Cape Mentelle Winery from a subsidiary of French luxury goods conglomerate Louis Vuitton Moet Hennessy for an undisclosed price (AFR)

    • BP will sell Meta power from a solar farm under construction in Ohio (BBG)

    • English Premier League clubs Manchester United, Tottenham Hotspur, or Liverpool FC are being targeted by Qatar Sports Investments over a potential acquisition (RT)

    • Teneo, the global public relations and consulting firm backed by CVC Capital Partners, is nearing a deal to acquire UK competitor Tulchan Communications (BBG)

    • Goldman Sachs has suspended sell-side research on REITS listed in Australia and New Zealand as well as big listed property business as one analyst leaves the firm and another analyst shifts into a new role (AFR)

    • Nitro suitor Alludo is battling rival Potentia at the Takeovers panel (AFR)

    • K2 Asset Management, a funds management and responsible entity services business listed on the ASX, is set to bring in GAM Investments, an investment giant, as the manager of its select international absolute return fund (AFR)

    • Credit Suisse is nearing a deal to buy the incoming head of First Boston, Michael Klein's advisory business. The deal is believed to be worth a few hundred million (USD) (BBG)

    VC & Fundraising

    • Investment manager Blue Owl Capital raised $12.9B (USD) for its Dyal Capital Partners V fund (PRN)

    • PE firm TSG Consumer Partners raised $6B (USD) for its TSG9 fund (BW)

    • Ares Management Corp raised ~$5B (USD) for an infrastructure debt fund (RT)

    • Khosla Ventures, a US VC fund, is raising nearly $3B (USD) in new funds (AX)

    • Goldman Sachs Asset Management has raised $1.6B (USD) for a fund registered under the EU's toughest ESG rules (BBG)

    • ChrysCapital has raised $1.4B (USD), making it the largest-ever Indian PE fund (CQ)

    • Layer-1 blockchain Venom Foundation and investment manager Iceberg Capital launched a $1B fund to invest in pre-seed to Series A web3 / dApp startups (TC)

    • Kakao Entertainment Corp. has won $930m (USD) from the sovereign wealth funds of Saudi Arabia and Singapore, securing one of the country’s largest financing rounds at a time global investors shy away from big startup bets (BBG)

    • The US's largest public pension fund California Public Employees' Retirement System (CalPERS),will invest $500M (USD) each with PE firms TPG and GCM Grosvenor to help launch funds backing up-and-coming PE firms (PI)

    • Monogram Health, an in-home care provider, raised $375m (USD) in new funding from investors, including CVS Health, Cigna Ventures & TPG Capital (PRN)

    • Superannuation fund HESTA has committed $200m (USD) to its 12-year-old sustainable focused PE investment programme with Stafford Capital Partners (AFR)

    • Australian adventure tech startup Loose Cannon Systems which is backed by the iPhone manufacturing giant Foxconn has closed a $12m (AUD) Series A funding round (AFR)

    • A New Zealand-founded headphones company, Earshot, has its ear to the ground for fresh capital to expand into new markets. Founder James Bell-Booth wants to grow global sales and raise up to $2m (NZD) from institutional investors (NBR)

    • Aussie Angles, an Australian angle investing platform, has raised a $1.4m (AUD) seed round which includes funding from family office Euphemia and VC funds AirTree Ventures and Rampersand (AFR)

    • Bloom Impact Investing, a Brisbane-based fintech has raised a $525k seed round led by family office, Euphemia and the founders of Envato (AFR)

    • Ondo Finance, a decentralized investment platform founded by two ex-Goldman associates, launched a new fund for holders of stablecoins to invest in bonds and US Treasuries (BBG)

    Equity Raises

    • ST Telemedia Global Data Centres, a company backed by Singapore’s state-owned investment firm Temasek Holdings Pte, is exploring a potential initial public offering that could raise more than $1 billion (BBG)

    • Saudi Arabian automotive services firm Petromin Corp. is reviving plans for its initial public offering in the kingdom that could raise as much as $1 billion (BBG)

    • Tesla's Vietnam rival VinFast is considering launching a US IPO offering that could raise as much as $1B (USD) as soon as Q2 this year (BBG)

    • Lottomatica, the Italian gambling company backed by Apollo Global Management Inc., is considering a Milan initial public offering this year that could raise about $1B (USD), people familiar with the matter said (BBG)

    • Zehejiang Huayou Cobalt, a Chinese mining company, could raise between $500m and $1B (USD) via the sale of global depository receipts in Switzerland (BBG)

    • World View, a ballon surveillance startup, will list for ~$350m (USD) via a SPAC with Leo Holdings Corp. II (BBG)

    • Carbon trading infrastructure business Xpansiv has raised $181m (AUD) at a $2B (AUD) valuation. Investors include Goldman Sachs, Bank of America and Aware Super (AFR)

    • Sports & Health Tech Acquisition Corp, the blank-check firm backed by professional golfer Tiger Woods, dropped its plans for a $150m (USD) initial public offering (BBG)

    • Hesai Technology, a Chinese developer of sensor technology used in self-driving cars, is planning to file for an IPO offering in the US that could raise about $150m (USD) (BBG)

    • Nextracker, a solar energy technology provider, filed for an IPO (BBG)

    • Saudi property developer Umm Al Qura for Development & Construction Co is working with banks, including Lazard Ltd, on its planned Riyadh initial public offering, according to people familiar with the matter (BBG)

    • Natural hydrogen could play an immediate and vital role in Australia’s energy grid, Gold Hydrogen chairman Alexander Downer said on the eve of the company’s listing (AFR)

    • A Chinese firm QuantaSing Group Ltd, providing digital adult learning services, is set to be the first from the nation to list in the US this year, testing investor appetite after Beijing tightened oversight over its battered online education sector (BBG)

    • British PM Rishi Sunak has revived talks with Japan's SoftBank Group regarding a London listing for chip designer Arm (RT)

    • WeDoctor, a Tencent-backed Chinese startup that is aiming to transform China's healthcare system with advanced technology, plans to file for an IPO by the end of April in either the US or Hong Kong and is aiming to float in the second half of 2023 (BBG)

      Debt

      • Top Japanese banks are targeting the end of the month to issue commitment letters for a $10.6B (USD) loan that backs the takeover offer by a consortium led by Japan Industrial Partners for Toshiba Corp (BBG)

      • Bed Bath & Beyond is speaking with potential lenders that would finance the company during bankruptcy proceedings (BBG)

      Daily Picks

      • If you want an interesting read about the battle over chip manufacture, check out this article by the BBC

      • Check where your passport ranks in the henley passport index here

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