market share

Soft inflation at the Top of Santa's Wishlist

By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank  

GBP: ECB's Dovish Stance Keeps BoE Expectations in Check

9 March 2021

Stock market news Stock market news 09.03.2021 11:47
Savills: 2021 will see the stars align for sale and leaseback transactionsSale and leaseback transactions (S&LB) in Europe reached a total of €8.4bn in 2020, 8.5% higher than the five year average, with the trend set to continue into 2021 according to Savills. Also in Poland, Savills sees an increasing number of companies willing to take the sale and lease back route mainly in industrial and retail sectors.Data from the international real estate advisor shows that although the 2020 volume was 10% lower than 2019, historically there has been a significant correlation between property prices and S&LB activity, which translates into an increasing number of S&LB transactions when yields are moving in. This current period is indeed an ideal time for S&LB transactions to take place as rising prices trigger owner-occupiers’ interest in selling their properties, whilst investment opportunities are scarce on the market.Oli Fraser Looen, Joint Head of Regional Investment Advisory, EMEA, Savills, commented: “The increased need for businesses to find liquidity to shore up balance sheets or make acquisitions in the current and post-Covid environment, will help S&LB transactions to become increasingly popular during 2021. Our view is that H2 2021 will see a record number of corporate-led S&LB deals. These sales will be welcomed by the increasing wall of capital which will be hunting long income assets as they try to match liabilities.”Logistics leadsIn terms of sector breakdowns, logistics popularity continues to gain momentum off the back of rising e-commerce. Lydia Brissy, Director, European Research, Savills, commented: “With limited product on the market, strong competition has naturally driven down yields by around 312 bps to as low as 3% in core locations, over the past 10 years. With strategic footprint, omnichannel improvement and the integration of automation processes to consider, many ecommerce operators are having to inject large investment volumes to maintain market share. As such, a S&LB transaction makes strong commercial sense for some logistics owner-occupiers.”As a result, European logistics S&LB activity increased regularly since the end of 2013 and reached a record level last year, €3.4bn, approximately 15% higher than in 2019. At the same time, the overall logistics investment market increased by 4% only, confirming that limited supply is restraining the overall activity in the sector.In terms of other sectors, retail S&LB transactions were largely confined to supermarket and hypermarket retailers with the grocery sector proving its resilience during country lockdowns. Such resilience has caught investors’ attention seeking to maintain their retail exposure resulting in the compression of supermarket yields. On average across Europe, prime supermarket yields moved in by 14bps between 2019 and 2020 whilst during the same period, prime shopping centre yields softened by 39bps. For offices, despite a strong prime yield compression recorded since 2009 (270bps on average across the major European cities), office S&LB has only risen slightly and sporadically since 2013. Nevertheless last year the office S&LB investment totalled €3.4bn.Lydia Brissy continued: “The office sector has gone through a reassessment of its fundamental role over the past 12 months, leaving most office occupiers in a status quo situation. Although S&LB is one potential exit towards flexibility, potential investors will be wanting to asses the combination of location, occupier sector and covenant in order to consider a purchase.”Location location locationIn terms of geographical spread, it was France that led the charge, by a number of large transactions , including most notably the sale of the future large office scheme named Harmony located in La Garenne-Colombes, which will be the headquarters of Engie.In Germany, which follows as the second biggest S&LB beneficiary, the volume was predominantly boosted the sale of the Hamburg Commercial Bank HQ bought buy Signa Holding and the sale of Randome House from Bertelsmann to Allianz Real Estate.In the Netherlands, the S&LB volume nearly tripled last year, predominantly due to many sales from logisticians, including notably the sale from DSV of a 115,0000 warehouse to Savills IM. Nevertheless, the sale & leaseback of the Jumbo supermarket portfolio was the largest deal recorded last year.In the UK, S&LB activity was also mainly driven by the logistics sector although supermarket brands including most notably Waitrose and LondonMetric have also been active in selling.Focus on PolandLukasz Frominski, Associate Director, Investment, Savills Poland, commented: Over the past two years we have observed that owner occupiers in Poland are becoming more educated in understanding and in turn pursuing a SLB strategy. They see the benefit in this solution to help them boost and grow their business faster in our dynamically expanding and developing economy. Also professional net lease investors are conducting deals in a fast track mode that is particularly attractive to companies who otherwise have to deal with often slow performing banks. To succeed the property owner needs a good story, a strong covenant and attractive real estate.John Palmer, Director, Head of Industrial Investment, Savills Poland, adds: Despite the downward pressure on yields across all jurisdictions, Poland still benefits from a significant and appealing pricing gap compared to Western European opportunities. Therefore a purchaser acquiring a S&L in Poland can purchase an investment, often with the same named corporate covenant found on similar deals in Western Europe, whilst delivering significantly better returns to the ultimate investors.-ends-For further information, please contact:Isabel Stoddart, Savills press office Tel: +44 (0) 7580 587746Jan Zaworski, Communication Manager Tel: +48 (0) 666 363 302Founded in the UK in 1855, Savills is one of the world's leading property agents with 600 offices across the Americas, Europe, Asia Pacific, Africa and the Middle East offering a broad range of specialist advisory, management and transactional services.Should you not wish to receive Savills press releases, please email us at: kontakt.rodo@savills.pl. Click here for our Privacy Policy.
DXCM Stock: Is DexCom investor sentiment turning bearish?

DXCM Stock: Is DexCom investor sentiment turning bearish?

Wall Street Harold Wall Street Harold 12.02.2021 09:02
Despite the DexCom (DXCM) Nick Jonas Super Bowl ad, investors seem to be turning bearish. It is very important to watch insiders of the company you’re invested in and it seems insider faith is dwindling. According to a recent press release, the company stated that it has partnered with Nick Jonas to bring more awareness to DexCom’s continuous glucose monitoring system for diabetes. The ad is expected to run Sunday, February 7th. Despite this partnership, DexCom insiders are selling their stake. This could be a sign that helps investors acknowledge that insider faith is dwindling. There are many reasons as to why these insiders are selling stock, however the most common reasons are that they could believe that the company is heading in the wrong direction. They do this in order to sell before the stock price takes notice which may lead other investors to sell their positions. It’s fair to note that these insiders has been selling all of their shares with no buying positions since February 2020. Another company which may take major market share Another soon to be major player in the diabetes device market is Senseonics (SENS), this company has a new innovative approach. Instead of creating a device that pokes into the skin and limits movement, they created an implantable sensor that goes under the skin and a transmitter which sits atop above the skin. According to recent reviews, the implant procedure is painless and takes less than 10 minutes. In a few years I predict that this company will take major market share from its competitors like DexCom therefore reaching a price target of $20+ after the FDA approves the 180-day CGM device.
Oil prices hold steady despite Biden announcement

Oil prices hold steady despite Biden announcement

Walid Koudmani Walid Koudmani 25.11.2021 09:23
Oil prices hold steady despite Biden announcement Oil prices have returned to their recent range despite the announcement from president Biden that the United States would be releasing some of its strategic petroleum reserves, a move which was meant to cool oil prices after many expressed concerns for the serious effects they are having on consumers and ultimately, the post pandemic economic recovery. While OPEC maintains its narrative and continues to expect a fall in demand towards the end of the year, the US along with a group of other countries are attempting to ease the pressure by tapping into their strategic reserves. As stated in the past, this move was unlikely to have a long term effect on prices since it would not be able to make a significant impact on total demand, and after a brief pullback which saw prices drop by around 4,5%, the move was reversed. Furthermore, we are seeing a faster than expected recovery in oil prices as Brent is trading above $80 once again and WTI hovers in the $78 range, this may worry markets once again as governments begin to run out of options to control the ongoing situation on the oil market. VirginMoney annual report paints optimistic picture Annual results from Virgin money continued to offer investors reassurance as they outlined the growing strength of the company which managed to increase its market share while reducing costs and ensuring expansion of the brand. The report also highlighted the ongoing effort to continue investing in different sectors of the business while also aiming to return to a sustainable dividend in the medium term and keeping up with technological advances. Despite some questions relating to the logistics and practical implementation of strategies, today’s report could be seen as an overall positive and may reaffirm confidence in the board as it managed to deliver on many of its promises and could continue to do so moving forward.  
Twitter steps out of Dorsey’s shadow

Twitter steps out of Dorsey’s shadow

Peter Garnry Peter Garnry 30.11.2021 17:54
Equities 2021-11-30 14:30 6 minutes to read Summary:  Twitter's founder Jack Dorsey is stepping down as CEO leaving the reign to CTO Parag Agrawal. This is hopefully the beginning of a new trajectory for Twitter that has underperformed relative to its potential for way too long. The company has two main objectives. Lift revenue growth to around 30% which would put Twitter well above Facebook and Alphabet in terms of growth, and then drastically improve the operating margin to around 35% which would be almost double of the current level. Is this Twitter’s Nadella moment? Another technology founder in Silicon Valley is leaving the stage, Mark Zuckerberg of Meta is one of the few left, with Jack Dorsey stepping down as CEO after presumed a lot of pressure from shareholders such as the activist hedge fund Elliott Management. His successor is the CTO Parag Agrawal and Dorsey will stay on the board for 2022. The main question is whether this is Twitter’s Nadella moment (Nadella is the current CEO of Microsoft and took over in 2014) meaning whether the new CEO with less strings attached and not being a founder can drastically change the growth and product profile of the company. Too much fat Our main issue with Twitter has always been the lack of consistency in operating margins. Given how consistent Google and Facebook are running their business it has always been a mystery why Twitter has not been more consistent in its operating performance. The company’s operating margin has come down for three straight quarters despite a healthy backdrop for online advertising spending in terms of demand and pricing. Free cash flow generation has been very disappointing over the past year and ultimately that has been driving the share price lower. Twitter has to fundamentally improve the EBITDA margin from its current 18.5% to somewhere closer to 35%; it will be a stretch to demand Facebook-like margin of 50%. If Twitter’s new CEO can deliver that then shareholders are in for some great returns. But more importantly there are no excuses for not delivering high revenue growth while improving the operating margin when you are generating $5bn in annual revenue. Facebook and many other technology companies have been able to grow revenue and operating margin at the same time. Twitter must do the same. Source: Bloomberg So there are two operating yardsticks for shareholders: revenue growth and operating margin. The latter should easily be done by either reducing headcount or at least stop hiring more people at the same pace as before. On revenue growth the key yardstick is to grow faster than the duopoly (Meta and Alphabet) which is expected to grow revenue around 20-25%. Twitter needs to take market share and get closer to Snap revenue growth in order not to lose the narrative and sentiment from investors. In our book, Twitter should be able to grow 30-35% on improved engagement, product features, more brand spending from large brands etc. and with analysts currently estimating 21% revenue growth in 2022, there is a heavy and urgent task ahead for the new CEO. Source: Bloomberg Twitter is an acquisition target With Dorsey gone as CEO and eventually leaving the board by late 2022, it clears the way for an acquisition of the company should the right buyer with the right price come by. Twitter could be an interesting bolt-on acquisition for a traditional media company that wants to enter the social media industry. Investors were initially trading the shares higher on the news of Dorsey stepping down, but the shares ended lower for the session now down 43% from the peak in late February. Given the expectations from earlier this year it is clear that the company has not performed as expected and the new CEO Agrawal will have to quickly earn the trust of investors. For Twitter we really hope this is the company’s Nadella moment. Analysts remain positive on the stock with a 12-month price target of $68 which 49% above yesterday’s close.
Bitcoin’s dominance went below 40%: crypto winter or maturity?

Bitcoin’s dominance went below 40%: crypto winter or maturity?

Alex Kuptsikevich Alex Kuptsikevich 09.12.2021 08:46
The cryptocurrency market capitalisation rose slightly, by 0.4%, to 2.36 trillion in the past 24 hours. The cryptocurrency Fear & Greed Index added another 1 point overnight to 29, a significant retreat from the December 6 lows of 16 points, but still in the fear zone. Binance Coin, XRP and Luna have added between 4% and 10% over the past 24 hours, leading the gains among the top altcoins. Growth has been held back by the negative dynamics of the first cryptocurrency, which is losing more than any other of the top-20 coins. The pressure intensified on exceeding the $50K level, pushing it down 1.7% in a day and 12% in seven days. As another result, bitcoin’s overall crypto market share fell below 40%. Approaching this mark in May was a manifestation of sharp profit-taking in Bitcoin after a dizzying rally. Any sustained period when the share of the first cryptocurrency fell below 40% was in January -March and April-June periods in 2018. After that, the BTC domination has recovered with altcoins’ deeper crash, called later the crypto winter. But there is another crucial point: Bitcoin’s peak share declines from cycle to cycle as more new players emerge. At the beginning of 2017, it was 87%, then in 2019, it is already less than 70%. Many other projects have appeared in place of XRP, which has lost its former strength, like a hydra with several new ones growing in an area of its severed head. That said, neither the mechanics (BTCUSD above its 200-day average and retreating from an oversold area on the daily charts) nor the sentiment in the stock markets are pessimistic, indicating that we see purely local momentum in Bitcoin. Ether continues to pivot around its 50-day moving average, sticking to local bullish momentum. As always, it should be stated that a sustained negative on Bitcoin has the power to affect the entire crypto market, but the smooth slide in price suggests that enthusiasts are looking for other ideas in the sector, but not a general flight out of it. Perhaps capital flowing from one cryptocurrency to another is the best scenario for the entire market. However, as Saturday showed, it is easy to scare the whole market with solid moves in BTCUSD.
No Turnaround Tuesday for Equities?

No Turnaround Tuesday for Equities?

Marc Chandler Marc Chandler 14.12.2021 15:01
December 14, 2021  $USD, Canada, Chile, Currency Movement, EMU, Hungary, Japan, Mexico, UK Overview:  Activity in the capital markets is subdued today, ahead of tomorrow's FOMC meeting conclusion and the ECB meeting on Thursday.  The MSCI Asia Pacific equity index fell for the third consecutive session.  European bourses are heavy after the Stoxx 600 posted an outside down day yesterday. Today would be the fifth consecutive decline. Selling pressure on the US futures indices continues after yesterday's losses.  Australia and New Zealand bonds played catch-up to the large drop in US Treasury yields yesterday, while European benchmark yields are edging higher.  The 10-year US Treasury yield is around 1.43%.  The dollar is mixed against the major currencies.  The Canadian and Australian dollars and Norway are softer, while the Swiss franc and euro lead with around a 0.25%-0.35% gain.  Most emerging market currencies are little changed, though the Turkish lira is paring yesterday's intervention-fueled gains.  Led by the Hungarian forint ahead of the outcome of the central meeting, and helped by a firm euro, central European currencies lead the emerging markets.  The JP Morgan Emerging Market Currency Index is off for a second session after breaking a four-week slide last week.  Gold continues to consolidate and is within yesterday's range ($1782-$1791).  Oil is also trading quietly, with the January WTI contract in a $70.50-$72.00 range.  European (Dutch) natural gas is rising for the sixth session of the past seven, during which time it has increased by nearly a third.  US natgas has fallen by almost 30% in the past two weeks and is off for about 4.4% this week already.  Iron ore is paring yesterday's 6.5% gain, while copper is drifting lower and is extending its loss into the fourth consecutive session.   Asia Pacific Year-end pressures are evident in Japan's money markets, and the BOJ responded by arranging an unscheduled repo operation for the second consecutive session.  Yesterday's overnight operation was for JPY2 trillion (~$17.5 bln) after the repo rate rose to two-year highs.  The repo appeared to have been lifted by dealers securing funding for bill purchases.  Today the BOJ offered to buy JPY9 trillion of bonds under the repo agreement.   The US has offered to lift the steel and aluminum tariffs on Japan on similar terms as the deal struck with the EU.   A certain amount, based on some historical market share, can be shipped to the US duty-free, but over that threshold, a levy will be imposed.  Unlike the EU, Tokyo did not impose retaliatory tariffs.  Estimates suggest that Japan shipped around 5% of its steel to the US, though some might have made its way through Mexico.   The regional highlights for the week still lie ahead.  Tomorrow, China reports November retail sales, industrial production, new home prices, investment, and the surveyed jobless rate.  Retail sales are expected to have slowed, while industrial output may have firmed.  Investment in property and fixed assets may have stalled.  Japan has its tertiary index (October) tomorrow, a November trade balance on Thursday (it nearly always deteriorates from October), and the Friday BOJ meeting.  The BOJ is expected to extend some of its emergency facilities.  Australia reports its November jobs data first thing Thursday morning in Canberra.  After three months of job losses, a strong report is expected as social restrictions were lifted.   Today, the dollar is confined to about a quarter of a yen range above JPY113.50.  It has not traded above JPY114.00 this month so far.  Nor has it traded below JPY113.20 since last Monday.  An option for $760 mln at JPY1113.85 rolls off today.  The Australian dollar tested the session high near $0.7135 in the European morning but met a wall of sellers, perhaps, related to the nearly A$600 mln option at $0.7130 that expires today. It has traded down to a five-day low around $0.7090, which is the halfway point of last week's rally.  The next retracement (61.8%) is near $0.7065. The dollar continues to struggle to sustain upticks against the Chinese yuan. It is trading heavily today, its seventh loss in the past eight sessions.   Still, the greenback held above yesterday's low (~CNY6.3580).  It was unable to poke above CNY6.37.   The PBOC's dollar fixing was set at CNY6.3675, while the market (Bloomberg survey) anticipated CNY6.3666.   Europe The UK reported solid employment data.  The November claimant count rate eased to 4.9% from a revised 5.0% (initially 5.1%), representing a nearly 50k decline after the October decline was revised to 58.5k from -14.9k.  The pace of earnings growth slowed to 4.9% from 5.9% (three-month, year-over-year).  Employment rose by nearly 150k (three months) after a 247k increase previously.  Tomorrow, the UK sees November CPI and PPI.  Both are expected to have quickened from October.  Nevertheless, the BOE is now seen on hold until February.   Hungary's central bank is set to hike the base rate today.  A 40 bp increase would follow last month's 30 bp hike.  Today's move would be the sixth in a row.  The base rate began the year at 60 bp, and today's hike would lift it to 2.50%.  On Thursday, Hungary likely hiked the one-week deposit rate.  It has been hiked for the last four weeks.  It had been at 75 bp until June, when it was hiked by 15 bp.  It was lifted by 30 bp in July and again in August.  It reverted to 15 bp increases in September and October.  The one-week deposit rate was raised several times last month to 2.90%.  It is up another 40 bp so far this month, and it is expected to be lifted by another 20 bp this week.   In October, industrial output in the euro area rose 1.1% after a 0.2% decline in September.  The preliminary PMI will be reported on Thursday, ahead of the ECB meeting.  Activity likely slowed. The focus of the ECB meeting is on the guidance about bond-buying next year.  The emergency facility is expected to wind down at the end of Q1, but given that it will still be buying bonds, tapering may not be as necessary or pronounced as, say, with the Federal Reserve.  The ECB staff will also update forecasts, including a sharp upward revision to next year's while extending the projections to 2024.  There is also interest in what the ECB will do about its long-term loans (TLTRO).    The euro has firmed in the European morning but remains mired in a narrow range.  Indeed, the range over the past five sessions is a little less than a cent (~$1.1260-$1.1355). There is an option for nearly 500 mln euros at $1.1330 that expires today.  For the past month, the euro has been in a $1.12-$1.14 trading range, with the notable exception on November 24, when the low for the year was recorded (~$1.1185).   Sterling slipped below $1.32 in late Asian turnover but found bids lurking there, and Europe has extended its recovery toward $1.3235.  Resistance is seen in the $1.3260-$1.3275 area. Sterling has not traded above $1.33 since December 3, yet a move above there is necessary to lift the technical tone.   America The US reports November producer prices today.  The headline rate is expected to push above 9%, while the core rate pokes through 7%.  The market is understandably more sensitive to consumer prices than producer prices.  Tomorrow, ahead of the FOMC statement, the November retail sales (softer than the 1.7% headline increase in October) and the December Empire manufacturing survey will be released.   Although the Senate is expected to maneuver to lift the debt ceiling today, the Treasury is planning a large bill pay down (~$175 bln) to ensure it would have the space to settle the coupon auctions.  That said, the supply of bills is likely to improve through Q1 22, according to estimates.  By most accounts, the Treasury has overfunded itself, and this will allow it to cut back further on new supply, just as the Federal Reserve is expected to accelerate its tapering.   The Bank of Canada was told its inflation target remains 2% but that it can overshoot to support "maximum sustainable employment."  The central bank's language is important.  It said it would "continue" to support the labor market objective, suggesting that yesterday's adjustment to the mandate will have a minor operational impact.  In fact, with inflation (October CPI 4.7%, an 18-year high), Governor Macklem quickly indicated that this was not the situation when it could probe for the maximum sustainable employment.  Still, the new mandate requires that the central bank explain when it is using its new flexibility and how labor market outcomes are incorporated into monetary decisions.  Separately, Canada is proposing alternatives to the US proposed tax incentives for electric vehicles in the Build Back Better initiative.  Canada and Mexico claim that it violated the USMCA and throws a wrench in the 30-year auto integration.  The EU trade commissioner has also expressed concerns about whether the legislation would break the WTO rules too.   Late today, Chile's central bank is expected to deliver a 125 bp rate hike, the same as in October.  The overnight target rate began the year at 50 bp.  It was hiked by 25 bp in July and 75 bp in August.  With today's hike, it will stand at 4%.  More work is needed as November CPI was at 6.7%.  Chile holds the run-off presidential election this weekend.  In the first round last month, the conservative Kast drew 28% support while the left candidate Boris garnered 26%.  Chile's innovation during Covid was to allow people to withdraw funds from their pensions (yes, like a farmer eating their corn seed).  Three withdrawals were granted, but a fourth effort was rebuffed earlier this month.  The World Bank and the IMF expressed concern about the pension fund industry, which had been among the best in the region.  The Chilean peso is among the worst-performing emerging market currencies this year.  It has fallen nearly 15.5% and has only been "bested" by the Argentine peso (~17.3%) and the Turkish lira (-48%).   The Canadian dollar's retreat is being extended for the fifth consecutive session.  The greenback has largely held above CAD1.2800 and is drawing near the high seen after the employment reports on December 3 (~CAD1.2855).  We usually see the exchange rate is driven by 1) general risk appetite, 2) commodity prices, and 3) rate differential.  Here we note that Canada's 2-year premium has fallen from about 60 basis points at the start of last month to around 27 bp now.  Over the same time, the 10-year premium has wholly disappeared.  It was almost 20 bp on November 1 and currently is trading at a four basis point discount.  Meanwhile, the greenback is consolidating against the Mexican peso. For the fifth consecutive session, it has been mainly chopping in a MXN20.85-MXN21.08 range.   On Thursday, Banxico is expected to hike its overnight rate by 25 bp.  We continue to think it is more likely to hike by 50 bp than standpat.  Since June, it has lifted the target rate by 100 bp to 5%.   November CPI stood at 7.37%.     Disclaimer
The battle for commerce with express deliveries

The battle for commerce with express deliveries

Finance Press Release Finance Press Release 16.12.2021 09:58
Warsaw, 15.12.2021 Several companies on our market are already developing their dark store networks, which allow for the delivery of food products within a dozen or so minutes from the order, and new shopping platforms announce their entry onto the Polish market. Things are getting very competitive in the quick commerce segment Quick commerce, which is a segment of express deliveries of basic food products, beverages, sweets, household chemicals and cosmetics, is a format that is now enjoying popularity, both in our country and around the world. Dark stores, distribution microcenters used only to handle orders placed on-line, already operate in the seven largest cities in our country. Due to the limited selection, covering from 1000 to 2000 products, they can’t compete with large retail chains and standard on-line shops offering a huge range of goods. However, they constitute direct competition to small local stores intended for quick, spontaneous shopping to meet the immediate needs. Even so, competition is difficult here due to the narrow range of products. - The development of this form of retail, which guarantees instant deliveries to the customer, favors the strong trend of convenience, related to the expectation of comfortable and easy access to goods. This trend became even more popular during the lockdown. The formula for deliveries within 10-15 minutes, however, requires the creation of a network of properly profiled distribution facilities scattered throughout the city. Dark stores resemble supermarkets measuring several hundred meters, usually from 200 sq m. up to 400 sq m, which are arranged in such a way that the individuals completing the order can efficiently move between the shelves and collect the products in the shortest possible time. They resemble shops, but act as warehouses for storing goods - explains Piotr Szymonski, Director Office Agency at Walter Herz. Free delivery up to 2:00 am Q-commerce on a larger scale began to develop in Poland only this year. The service is popular with a large group of customers. Dark stores offer goods at prices similar to traditional retail outlets. Orders are delivered 7 days a week, also on non-trading Sundays. Lisek, operating in Warsaw, Cracow, Wroclaw, Gdansk, Poznan and Katowice, ensures delivery up to 10 minutes. Completely free delivery is available at JOKR. At Jush, orders over PLN 35 get delivery free of charge. Recent months have brought not only a rapid development of this format in Poland, but also announcements of new large players entering our market. From week to week, companies operating in this segment are expanding their range of activities, providing their service to further city districts. Meanwhile, the express delivery market is already getting crowded. Dark store chains of the first platforms that appeared in Poland, such as Lisek, Jokr, and GetnowX, are growing. The number of Biedronka's distribution points for the Biedronka Express BIEK service, which from this October is being offered in collaboration with Glovo, is growing at a fast pace. This is the second platform that, just like the Lisek App, also functions outside the capital. Deliveries from dark stores scattered in Warsaw, Lodz, Cracow, Gdansk, Poznan and Wroclaw are made within a 2 km radius in a quarter of an hour. Distribution microcenters work throughout the week from 8am to 11pm, and in Warsaw on Fridays and Saturdays even until 2 am. Zabka Future Group chose the Lite E-Commerce start-up, which aims to create new modern convenience solutions. The company has recently decided to launch dark stores and fast food deliveries via the Jush app. This October, Zabka Jush launched in Warsaw. They also plan expansion into the other cities. New purchasing platforms are getting ready to take off in Poland Although the Swyft platform has temporarily suspended its operations after six months, the companies present on our market will soon gain considerable competition. Such companies as Gorillas and Grovy have announced their debuts in Poland. Gorillas, a German start-up specializing in instant deliveries from its own stores-warehouses, forms a project management team in our country. The company, with value that exceeding USD 1 billion just a few months after its establishment, is expanding in Europe. It operates in 15 cities in Germany, as well as in the Netherlands, Great Britain, France, Italy and Belgium. It also made its debut in New York, which will become a hub for the development of the network in the United States. Grovy is also getting ready to enter the Polish market. The platform has already been offering services in the largest cities in Germany and Romania. Now the start-up plans to enter the Polish, Czech and Hungarian markets. Glovo and Wolt specialize in deliveries from various stores. On our market, Glovo cooperates with Biedronka, and in its native Spain, Italy, Portugal, Romania and Ukraine, it operates on the basis of its own distribution facilities. Wolt, on the other hand, wants to launch its Wolt Market, a network of independent virtual supermarkets, in Poland, as it has in the Czech Republic, Denmark and Hungary. Wolt Market is intended to operate only as a dark store and fulfill online orders placed via the Wolt app. The company has launched their first virtual stores in Finland and Greece. One of the first Wolt Market stores also operates in the center of Warsaw. The market is open from 8 am to 11 pm, 7 days a week, and orders over PLN 150 are delivered free of charge within a 1.5 km radius. Soon, Bolt's dark stores are to open in Warsaw. Bolt is another company to offer delivery of goods purchased online within 15 minutes of placing the order. So far, the premiere Bolt Market has been launched only in Tallinn, the capital of Estonia. Pyszne.pl, belonging to the Dutch group Just Eat Takeaway, is also considering extending its services to delivering groceries. However, they do not plan to create their own network of dark stores, but to cooperate with the other stores. Dark stores not in every location - Creating a network of distribution microcenters is a big challenge. The facilities must meet the appropriate location conditions that allow for the rapid shipping of goods. They have to enable express completion of the order from its submission to delivery to the customer's door. Developers of dark stores are looking for space located next to large residential areas in most districts of Warsaw, also in those more distant from the center and in other large cities. They are located not only in commercial buildings, but also on the ground floors of office buildings. The format's potential is best demonstrated by the interest shown by many companies that plan to implement projects on our market - says Piotr SzymoÅ„ski. - The selection of location for dark stores should be based on an analysis of the range and availability of the location, as well as the demographic and transportation aspect. Prospective regions for distribution networks are also those city areas where the implementation of a large number of residential projects is scheduled in the near future. Of course, the technical aspects of the premises should also be taken into account, such as the load-bearing capacity of the ceiling or the ability to charge electric vehicles, which are often used by couriers - adds Piotr SzymoÅ„ski. Market analysis concludes that the constantly growing popularity of online purchases will mean that by 2026, in just 6 years, the value of online sales in Poland will double. Forecasts indicate that the e-commerce sector is facing a period of regular growth. There is still a lot of space for the development of e-commerce in our country. The segment will increase its market share, not only by disseminating new sales formats, but also by increasing the number of online stores operating in our country. In Poland, there are even several times less of them per 1000 inhabitants, compared to some EU countries. About Walter Herz Walter Herz company is a leading Polish entity which has been operating in the commercial real estate sector across the country. For nine years, the company has been providing comprehensive and strategic investment consulting services for tenants, investors and real estate owners. It provides extensive support for both public and private sector. Walter Herz experts assist clients in finding and leasing space, and give advice when it comes to investment and hotel projects. In addition to its headquarters in Warsaw, the company operates in Cracow and the Tri-City. Walter Herz has created Tenant Academy, first project in the country, supporting and educating commercial real estate tenants across Poland, with on-site courses held in the largest cities in the country. In order to ensure the highest ethical level of services provided, the agency introduced the Code of Good Practice.
SAVILLS: PROPERTY MARKET HAS ADJUSTED TO THE NEW REALITY AND REGAINS MOMENTUM

SAVILLS: PROPERTY MARKET HAS ADJUSTED TO THE NEW REALITY AND REGAINS MOMENTUM

Finance Press Release Finance Press Release 15.12.2021 10:30
SAVILLS: PROPERTY MARKET HAS ADJUSTED TO THE NEW REALITY AND REGAINS MOMENTUM 14 December 2021 Real estate advisory firm Savills presents a preliminary summary of 2021 and predicts trends for the coming months. The commercial real estate market in Poland is regaining momentum but has changed significantly, reveals Savills. Key trends expected to dominate in the year ahead include rental growth, increasing ESG awareness and a focus on innovation. As expected, the vaccine roll-out has had a positive impact on the commercial property market in 2021. With investors remaining active, this year’s investment is likely to hit EUR 5 billion. Savills expects recent investment trends to continue and industrial assets to account for close to half of the total transaction volume by the end of the year. “Although the real estate market has undoubtedly bounced back in 2021, it has remained mired in uncertainty. In addition to concerns about the course of the pandemic, there were also geopolitical and economic risks. This did not however prevent tenants and investors from gradually resuming activity. Key metrics for the past 12 months illustrating investment volumes and office take-up are likely to remain close to last year’s levels amid a positive outlook for the future. A bright exception is the warehouse sector, which - undeterred by the pandemic - is already setting new highs. The commercial real estate market has adjusted to the new reality and is beginning to return to form,” says Tomasz Buras, CEO, Savills Poland. 2021 was the year of searching for an optimal work model on the office market. Many tenants decided to introduce a permanent hybrid scheme combining in-office work and working from home. According to Savills data, Poland’s total office stock topped 12,315,000 sq m. Flexible offices continued to gain traction with flexible office providers shifting their focus to expansion in regional cities. The Build-to-Rent (multifamily) sector is gradually gaining ground on the Polish market. According to Savills, at the end of 2021 there were close to 40 BtR developments in Poland. Projects that are currently under construction will soon double the stock of rental apartments. As high-tech and e-commerce companies continue to enjoy brisk expansion, these sectors are seeing their headcount grow. According to Savills, even though this has not translated directly into more demand for offices yet, there will be a growing requirement for modern housing as the trend of hybrid working intensifies. The online penetration rate (share of total retail sales) has risen from around 5% pre-pandemic to close to 9% in 2021. The development of omnichannel strategies combining online and offline shopping has gathered pace. The growth of e-commerce remains one of the key drivers of demand for logistics space. Retail has also seen the rise of dark stores - small in-town distribution centres helping shorten delivery times. In 2021, this format was launched in Poland, among others, by Å»abka. Such platforms are also operated by Lisek, Jokr and Swyft, while Biedronka has teamed up with Glovo. According to Savills, 2022 is expected to see another spike in construction costs and land prices, as well as an upward pressure on wages amid a risk of rising inflation. This will, first of all, push service charges up. Tenants will also be affected by exchange rate differences as euro-denominated rents remain a market standard. In addition, 2022 is likely to be the first year in many to witness warehouse and office rental rates go up. “There is potential for the investment market to see more buying in 2022. Investor demand for industrial assets will remain strong while the PRS will increase its market share. Several spectacular office projects are likely to change hands. Next year’s investment volume is expected to come close to pre-pandemic levels. Commercial real estate is considered a safe haven in times of high volatility on currency, stock exchange and bond markets, driving investor activity,” adds Tomasz Buras, Savills Poland. Next year is also shaping up to be a time when ESG strategies will begin to gain prominence on the real estate market. The importance of ESG is rising as a result of the European Union’s taxonomy, or the change of regulations on non-financial sustainability reporting and the entry into force of the CSRD, as well as tenants’ preferences. ESG is not only about a concern for the environment, but also for the human being. According to Savills, this will be visible on the warehouse market, where developers wanting to stand out will also begin to focus on the second social pillar of ESG, i.e. the human aspect, in addition to investing in energy efficiency. On the office market there will be marked differences between ESG compliant buildings and those whose owners will fail to take action in this period of change. Today, both older office buildings and properties in non-central locations are faced with refinancing challenges. Prospective buyers are, however, beginning to look for existing buildings with an intention to upgrade or sometimes repurpose them, or even to pull them down. This is true not only for office assets. Warehouse developers have also become keener to engage in brownfield projects in order to secure good locations. A dichotomy or division of properties into buildings that may soon have to be repurposed for lack of other options and those that have been upgraded will become visible for example in Warsaw’s SÅ‚użewiec district. Office buildings in that area meeting high standards will be able to attract cost-sensitive tenants with an opportunity to bring rents down. Such buildings may, therefore, become the big winners of the pandemic, says Savills. In 2022, the Warsaw office market is likely to begin to slowly switch to a landlord’s market. The office development pipeline is currently at its lowest in 10 years. Savills forecasts that as office buildings whose construction began before the pandemic are gradually filling up with tenants, the second half of the year may see the first signs of an undersupply and landlords gaining the upper hand in negotiations. This trend is already apparent in prime office buildings in Warsaw. Another top trend for 2022 according to Savills is innovation comprising the implementation of new technologies in real estate (proptech) and the use of big data in property management. The drive towards more automation is expected in manufacturing facilities, office buildings and autonomous retail stores. Looking ahead, modern data analytics tools will be used for a growing number of tasks in property management and valuation.
Tesla Stock Price and Forecast: Despite market sell-off, TSLA finished Thursday in the green

Tesla Stock Price and Forecast: Despite market sell-off, TSLA finished Thursday in the green

FXStreet News FXStreet News 21.01.2022 16:06
TSLA finished Thursday in the green, gaining 0.06% to $996.27. Equities had gyrated sharply but fell as the close approached. Tesla stock outperforms as Nasdaq and S&P 500 both fall sharply. Tesla (TSLA) managed to hold onto intraday gains but only just barely on Thursday. Stocks (https://www.fxstreet.com/markets/equities) had opened well and were up some 1% for the main indices at the halfway stage of Thursday, but jitters resurfaced as the finish line approached. Investors began dumping positions, and the main indices closed in the red. The S&P 500 shed 1.1%, the Dow closed 0.89% lower and the Nasdaq closed down the most at 1.34% in the red. Tesla however just held onto a green day, up 0.06%. Given that it is a volatile name and a high beta one, this was a strong outperformance. Tesla Stock News: bearish Bank of America forecast a worrying sign Tesla (TSLA) stock may have held its ground in anticipation of its Q4 earnings, which are due out next week. Bank of America and Piper Sandler fought it out with conflicting analyst reports. Bank of America took a dim view of Tesla's market share forecasts, saying it would drop from 69% to 19% of the EV market due to legacy automakers ramping up EV production. However, Piper Sandler noted that it sees Tesla beating delivery estimates for the year due to factories in Texas and Berlin ramping up production. For now, it appears investors are putting more focus on those delivery numbers and anticipating a strong earnings report. The Bank of America report is more alarming, but it does have a longer term outlook with the market share fall predicted for 2024. Tesla Stock Forecast: $886 is a futher downside target Yesterday's move has kept Tesla above the key short-term pivot at $980, but note that yesterday's high price was stuck at the 9-day moving average and Tesla failed to break through. This gives us more belief in an imminent break of $980. If this level does go, then the move to $886 will likely be quick due to a lack of volume. Tesla (TSLA) chart, daily
Tech Stocks: (MSFT) Microsoft Stock, Facts About Microsoft

Tech Stocks: (MSFT) Microsoft Stock, Facts About Microsoft

Dividend Power Dividend Power 24.01.2022 15:51
As stocks have trended higher, especially the tech stocks, soared in 2021, we must be reminded that Microsoft is once again one of the top companies in the world by market cap. Apple is number one in the world by market cap, and Microsoft continues to be right behind them. In October of 2021, Microsoft had bypassed Apple as the largest company by market cap globally, but Apple soon passed them once again. Microsoft is not the same old company we had known back when Bill Gates was in charge. They have changed and have created a more diverse brand and product portfolio leading that change. Bill Gates stepped down as CEO in 2000 and officially left his full-time role in Microsoft in 2008. Since then, Microsoft has diversified its portfolio to include many more products, including gaming, cloud services, and making Office more business-friendly. Microsoft under Gates was known for two big things: Microsoft Office and Windows; that was the entire portfolio. Satya Nadella, the current CEO of Microsoft, has revolutionized the software company and has made it a software company with a vision of working with businesses, making gaming a priority, and expanding Azure, its cloud network. How Does Microsoft Make Money? A diverse portfolio of many more products allowed Microsoft to branch out from only MS Office and Windows software and adapt to software technology's future. Microsoft has adapted to the world of sales in its subscription-based software model. They sell their Microsoft Office products to businesses and consumers, creating a pay-as-you-go subscription-based business model. Productivity and Business In 2020, Microsoft Office made a significant amount of their revenue from subscription-based software compared to 0% in 2000. MS Office at one point brought close to half of the revenue in 2000, but Office is not even 25% of the revenue that Microsoft takes in now, having over $35 billion in revenue each year. The new software has been revolutionizing businesses. First, they pay for Microsoft Office, and with that, they get Microsoft OneDrive, Teams, and Dynamics. Teams is just a fancy business video chat software like Zoom Video Communications (ZM), but you can only have Teams with Microsoft business accounts. Dynamics is another software that helps with business computing. It helps with business efficiency and works with customer relationship management or CRM, but it is not one of the top competitors to Salesforce (CRM). However, it has over $3 billion in revenue. Windows continues to be one of the most widely used software globally. That domination is starting to penetrate other parts of their customers giving them opportunities to dominate other businesses. With the subscription-based model, they will continue to bring in significant revenue, earnings, and cash flow. Before the proposed acquisition of Activision Blizzard (ATVI), LinkedIn was Microsoft's largest acquisition. It came in at $26 billion in 2016. Today, LinkedIn makes over $8 billion annually in revenue, up from the $3 billion pre-acquisition. LinkedIn has no major competitors and creates most of its money from job offer advertisements, other advertisements, and cash for LinkedIn premium. The Cloud Cloud software has become a bigger space for companies. It has led Microsoft to enter the space and business opportunities through the Azure Cloud system. Microsoft has thus gained a foothold in the cloud space. Azure Cloud system by Microsoft came out in 2009, and in 2021 the platform had become the second-largest cloud-based service in the world behind Amazon Web Services (AWS). With the cloud service, Microsoft's revenue grew by 48% in quarter 3 of 2021. It has reached a 21% market share and continues to gain more traction in the cloud space.   Azure consists of public, private, and hybrid cloud service products that help to power modern businesses. Dynamics and Azure are contributing to over 31% of Microsoft's revenue. In addition, customers are reaping many benefits through the cloud as it enhances the user experience with Microsoft products. The Gaming Industry Microsoft is becoming one of the leaders in the gaming industry. The Xbox is leading the charge with gaming, and Microsoft just made a deal to acquire Activision Blizzard for $69 Billion; if government regulators approve the sale, this acquisition will occur in 2023. The purchase would make Microsoft one of the largest gaming companies in the world. They would then own games like Call of Duty, War of Warcraft, and Candy Crush. In addition, making the deal would put them behind Sony and China's Tencent as a top-three gaming company globally. Microsoft is putting their company in a position to take on the Metaverse. Apple (APPL), Google (GOOG), Meta (FB), and Microsoft are creating technologies for the Metaverse. Satya Nadalla has emphasized that gaming technologies are part of the Metaverse. Is Microsoft a Good Stock to Buy? If we look at the price-to-earnings (P/E) ratio, we end up with an overvalued stock compared to Apple and Google. The P/E ratio is 32.0X, making it a bit more overvalued than Apple, which is trading at a valuation of 28.5X, as of this writing. They are close in the P/E ratio, but you would like to see the P/E ratio lower as an investor. Microsoft is a dividend growth stock that has raised the dividend for 19 consecutive years. The most recent quarterly dividend increase was $0.62 per share from $0.56 per share. The forward annual payout is now $2.48 per share with a conservative payout ratio of about 27%. The question is whether the hype of Microsoft is worth a buy as this company continues to create a diverse portfolio moving from one business to another. You can see the company dominating competitive markets like gaming and cloud systems. It has also innovated different types of software to help other businesses. Microsoft's future looks excellent if you are an investor, but the stock is likely overvalued based on the P/E ratio. In addition, the dividend yield is low at 0.84%. This value is less than the average dividend yield of the S&P 500 Index. Suppose individual stocks are too risky for you. In that case, an alternative is to try an excellent ETF or even a tech ETF to gain exposure to Microsoft and other overvalued tech companies. In many cases, ETFs are market cap-weighted, and Microsoft is one of the top holdings. You can always own a piece of Microsoft, Apple, Google, and Meta through an excellent ETF like an S&P 500 ETF. Microsoft is also a top 10 holding in some of the best dividend growth ETFs. These index funds will help you own a selection of some of the most profitable and most prominent companies in the US. Author Bio: Dividend Power is a self-taught investor and blogger on dividend growth stocks and financial independence. Some of his writings can be found on Seeking Alpha, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, Entrepreneur, FXMag, and leading financial blogs. He also works as a part-time freelance equity analyst with a leading newsletter on dividend stocks. He was recently in the top 1.5% (126 out of over 8,212) of financial bloggers as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha. Disclaimer: Dividend Power is not a licensed or registered investment adviser or broker/dealer. He is not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money. 
Tesla (TSLA) Price Also Has Its Ups and Downs. It's Below $920 Currently

Tesla (TSLA) Price Also Has Its Ups and Downs. It's Below $920 Currently

FXStreet News FXStreet News 31.01.2022 15:49
Tesla stock tumbles after beating earnings estimates TSLA shares hit by concerns over supply chain issues. Apple and big tech could turn the market next week. Tesla (TSLA) staged a modest recovery on Friday, but the real damage was done on Thursday when the stock shed nearly 12%. Friday's move was not even that impressive given Tesla's high beta, a fact that would usually see it bounce significantly more than the major indices. As we know well by now high, growth is not the sector of choice this year, and Tesla does straddle this space. Investors are moving back to more traditional sectors and metrics for their portfolios, and the era of high flying growth is coming to an end, for now at least. We view this as a positive event, stretching too far would have resulted in an ugly snapback or bubble popping most likely. This stabilisation should continue for the year with one or two speculative dead cat bounces along the way. We may just get one of those next week as the remainder of big tech gets a chance to continue on from where Apple led. Amazon (AMZN), Google (GOOGL) and Facebook (FB) are all reporting earnings this week. Positive earnings should steady sentiment, and this would then also likely spread to some high growth names. However, in the longer term, we expect balance sheets rather than growth to outperform this year. Tesla Stock News Tesla is not just pure growth, although it is managing to do that rather impressively if the latest results are anything to go by. It will stay with the pace, while other start-up EV manufacturers are more likely to fade away. Tesla created the EV space and remains the brand leader. This will likely not change since it has positioned itself as a premium brand. It will likely face more competition, but we do not see it losing quite as much market share as that forecast by Bank of America. Forecasting a drop from 69% to 19% market share in the space of two years does seem a bit headline-grabbing. The problem for Tesla is its valuation got too ahead of itself, so it is likely to underperform in this new environment despite continued strong earnings and revenue growth. Tesla Stock Forecast The bearish trend is now well-established. Thursday's losses only followed on from what we identified back in early January. The spike higher failed, and then it created a lower low, which confirmed the mid-December low. Even Friday's price action set a lower low than Thursday before the bounce set in. Resistance at $987 is last week's high and is first up. A close above that is significant and a new bar above that will signify a small short-term uptrend. Otherwise, the medium-term downtrend remains in control with support at the 200-day moving average, which sits at $814 currently. Tesla (TSLA) chart, daily
NIO - Will It Support The Rise Of Chinese Tech Stocks?

NIO - Will It Support The Rise Of Chinese Tech Stocks?

FXStreet News FXStreet News 08.02.2022 16:08
NIO stock gets a strong rating from latest Barclays research. NIO remains bearish and is down 25% year to date. NIO and other Chinese EV names remain in growth mode as the latest delivery data showed. NIO stock remains mired as it ended Monday virtually flat. The stock is down over 40% from three months ago as Chinese names see international investors flee on regulatory concerns. NIO Stock News It has been a turbulent time for holders of Chinese tech stocks. Alibaba's ANT Group spin-off set things off. Then the DIDI delisting not long after its IPO added to woes. Then a host of regulatory crackdowns was the final straw for international investors who bailed out of the names en masse. This is despite the EV names in particular remaining on track from a growth perspective as all have posted strong delivery data. While January deliveries slowed from December, the yearly growth rates still are impressive. January is traditionally the slowest month of the year in China though due to the lunar new year. NIO for example delivered 7.9% fewer vehicles in January versus December. On a yearly basis, January deliveries were 33.6% higher. This was replicated across many other Chinese EV names. Now Barclays has picked up the theme as it issues a bullish note this morning. "We believe that the rapid adoption of EVs around the world and booming EV sales have presented China’s EV makers a rare opportunity to not only take a sizable market share of the domestic auto market – the largest in the world with about 25-30% global share by units sold per annum – but also build a dominant position on the world stage." Barclays put a $34 price target on the shares. This does highlight the potential growth potential of Chinese tech stocks and the EV space in particular. We question whether investors will reenter, however, having been let down previously. Fool me once, shame on you, fool me twice... Ok, let's not have another George W. Bush moment! The point is a valid one. It will likely take more than analyst upgrades to tempt investors back to the space. Goldman, the king of investment banks, has previously been strongly bullish on NIO and to no avail. It will take a series of strong earnings and relative calm in terms of regulatory concerns to eventually tempt investors back. NIO Stock Forecast The recent spike lower did fill the gap from back in October 2020. The market just loves to fill gaps. We also note this spike lower created a shooting star candle, a possible reversal signal. There is already a bullish divergence from the Relative Strength Index (RSI) as shown. The area around $27.34 is the first resistance. Getting back above indicates the bearish trend may finally be slowing. That would then bring NIO into a range-bound zone from $27 to $32. Only breaking $33.80 from January 3 ends the downtrend. Support is at $14 from the strong volume profile. Look for an RSI breakout as that could signal more gains. The RSI has been shrinking in range and may test an upside breakout. NIO 1-day chart
What Will US CPI Trigger And How Will Fed Deal With It?

What Will US CPI Trigger And How Will Fed Deal With It?

Walid Koudmani Walid Koudmani 10.02.2022 12:32
Inflation has been a key topic in the markets in recent times with several readings reaching the highest levels in decades and central banks trying to find a balance between adjusting their monetary and fiscal policy while stimulating the post pandemic economic recovery. One of the consequences of these policies has been a staggering increase in prices of most goods, which has become a serious issue of concern for central bankers as well as regular consumers who have seen their everyday expenses increase noticeably. Today’s CPI and Core CPI readings from the US could be highly impactful as they may dictate whether the Federal reserve will decide to take action in the upcoming meeting since as of now, five rate hikes are expected and several other central banks have already taken measures to contrast general inflation. Clearly there is a fine balance between sustaining the economy and exacerbating widespread inflation which may ultimately hinder stability across markets and today’s report could play a crucial role in that process of analysis. The US Dollar may react favorably to a higher than expected reading as it could almost seal the deal on an upcoming rate hike, while stocks could be impacted by prospects of less liquidity.   Watches of Switzerland report paints optimistic picture Watches of Switzerland's report showed a continued growth of its revenue and return on capital with significant gain in market share as the company plans to continue investing for growth and to enhance its leading position in the UK and as it attempts to become a clear leader in the US. The easing of restrictions and improving economic conditions have certainly helped but with potential supply issues and record inflation levels, we could be seeing a slowdown in the short-mid term if these issues are not approached carefully. Astrazeneca posts strong results but remains cautious Astrazeneca's results showed a total revenue increase of 41% to $37,417m including COVID-19 vaccine revenues. The company managed to achieve 14 positive Phase 3 readouts across nine medicines in 2021, and 22 regulatory approvals and authorisations in major markets which further boosted its market dominance in the field. Furthermore, the company expects CER of a high-teens percentage increase in total revenue and a mid-to-high twenties percentage increase in Core EPS for 2022. Despite this, while it will certainly benefit from a variety of innovations it provides, it may see a decline in its profits as revenue from vaccines potentially declines throughout the mid to long term.  
The shopping spree on the investment land market continues

The shopping spree on the investment land market continues

Finance Press Release Finance Press Release 14.02.2022 14:32
The battle for investment land is still going on, and the lack of attractive assets feels more and more severe. This applies to all large cities in Poland. For a long time, no matter the place, the investment land has not been easily available. In contrast, there are both plenty of people willing to buy land, as well as free funds to finance these purchases. The money surplus is enormous. Investors are trying to invest their capital in land as soon as possible, for fears of inflation. Although the peak shopping spree, often associated with really risky decisions, has already passed, the situation continues to bear resemblance to the one we remember from the years 2007-2008, when everything was selling like hot cakes, at rapidly rising prices. The appearance of new investors has shortened the sale process of attractive lands, which now usually closes within 3 months. In turn, the difficulty is the highly overestimated value of many plots of land or the unregulated ownership status of the property. The owners of land are also very reluctant to reserve the land through conditional or preliminary purchase agreements without deposit (earnest money). Maximizing profits through investments in land There are many companies willing to invest in land, despite the prices of land in some locations are growing in a blistering pace. The greatest shortage occurs in case of large plots for housing development in well-connected parts of cities. When the interesting plots of up to 5,000 m2 of residential and usage space appear on the market, even several companies compete for it. The larger the plot, the lower the number of competitors. Over the last two years, rates on the investment land market have increased by several dozen percent, depending on the location. Prices for 1 m2 of residential and usage space in attractive places in Warsaw or Krakow jumped by as much as 60 percent. Investors, for fear of further increases, buy land to increase their future profits. They are not deterred by soaring construction costs and time-consuming administrative procedures. The purchase of land can be financed in a number of ways. Many transactions are based on loans, many is financed from ongoing development activities, and some from issuance of bonds.   The pro-ecological, high standard housing estates, in unique location, turned out to be a hit among housing investments in the last year. The recent changes have translated into the demand for flats in recreational and tourist-attractive locations. The demand for land for residential buildings is further increased by the investments into premises for institutional quality lease. More and more development companies are involved in this type of projects, despite the lower margin. The share of the Private Rented Sector (PRS) in the sale of apartments as registered in 2021 by listed entities has already increased to over a dozen percent. Warehouses, warehouses everywhere As in case of housing developments, we can talk about very high demand for land for the planned warehouse and industrial investments. Wherever we see changes, road infrastructure improvements or express roads planned for construction, the land is immediately secured with preliminary contracts. It is easier to find plots for logistics projects, as investments in this sector are also carried out in greenfield areas located outside the administrative borders of cities. Therefore, both the greater supply and less competition from investors looking for land for investments in residential or service and commercial sectors. The land in required for both large-format investments with an area of ​​several dozen or over 100 thousand m2, as well as the so-called last mile warehouses and smaller municipal facilities. Investors from the warehouse sector are primarily interested in plots located near logistics hubs and in the vicinity of the largest cities, as well as plots located in smaller towns due to the rapidly growing online sales. The warehouse market is currently experiencing a period of the development of speculative investments. The companies are not afraid to perform such projects, as the demand for warehouse space has never been growing so fast as now, and there is practically no free warehouses space available. This is largely related to the growth of the e-commerce market, which is expected to grow further in value in the coming years, at the average rate of several per cent per annum. Moreover, the change of the transport structure, shortening the supply chains or the growing demand for buffer areas, where inventories are stored, also affect this demand. Similarly, the warehouses generate over half of the transaction volume on the investment market in Poland. Year by year, the logistics and industrial sectors are increasing their market share, reaching new highs. Our market is the point of interest of foreign capital from Europe, mainly from Germany, as well as North American and Asian companies. Shares of small shopping centers are going up Developers also share a keen interest in the construction of retail parks. The format now brings together as many as three-quarters of new investments in the retail sector. Retail parks, just like warehouses, have attracted more and more attention of funds and capital groups as investment assets. Although in Poland in 2021 the retail space has increased by 300,000 m2, with the same amount currently under construction, 70 percent of which being the retail parks, unfortunately there is still a shortage of this commodity. Hence, one-third of transactions for the purchase of commercial real properties from the last year concerned older-generation properties, dominated by properties owned by Tesco. The recent popularity of retail parks and convenience centers has resulted in the increased interest of the investors to perform such projects. Investors often enter into these investments in order to diversify their real properties portfolio. However, of course there are also entities on the market that specialize only in this format. The advantage of projects related to the construction of retail parks is that their construction process can be completed within 18 months, and the entry threshold is much lower in comparison to larger projects. In case of these projects, investors are looking for land mostly in smaller cities up to 100,000 or even 50,000 residents, in which market saturation is not too high. Land in such locations is much cheaper than in the largest cities, which also translates into higher investment profitability. The most attractive plots of land for new projects are located in areas which can potentially be visited also by residents of the surrounding boroughs. In case of retail parks, the key to ensuring satisfactory returns on investment is to include in the list of tenants a popular foodstuff chainstore. This is not only one of the most important reasons for visiting a shopping center, but also influences the image of the facility. An interesting trend that we can observe recently is the appearance of new brands in retail parks, often boutique brands, that have never been present in such facilities before. Land - the star of the investment market The high activity on the investment land market is also evidenced by the transactions carried out in 2021 by LBC Invest, most of which concerned land real properties. In WrocÅ‚aw and Kraków, we have supported our clients with comprehensive customer services for contracting of land in the implementation of development projects in the residential segment for over 45.000 m2 of residential and usable area. Some of them are under construction, and some are in the phase of obtaining building permits. We also closed a few speculative transactions last year. We are currently performing activities on over 70 ha of land. In the last quarter of 2021, we also signed contracts for the performance of comprehensive investment processes, including commercialization for retail parks located in Krakow and two smaller cities – in Lesser Poland and Pomeranian regions, with investors both from Africa and Poland. Last year, we also managed transactions for the purchase of commercialized land, together with construction designs and a building permit, and at the same time concluding general contracting agreements with previously selected companies. Concluding the contract of sale in this form was a condition for the purchase of investment areas, especially those for retail parks and located in attractive locations, with a built-up area of ​​2,500 to 8,000 GLA.
Crude Oil (BRENT) Price Plunges As There's A Chance Of Support

Crude Oil (BRENT) Price Plunges As There's A Chance Of Support

Alex Kuptsikevich Alex Kuptsikevich 10.03.2022 09:54
Brent crude experienced its biggest intraday decline yesterday, losing more than $17 on the day to $110, with the range of movements on the spot market exceeding $26.The momentum of the decline was triggered by Blinken's (US Secretary of State) reports that the UAE was ready to ramp up its production, replacing Oil from Russia and stabilising the market. UAE officials soon said they remained committed to the current agreements. But this did not help Oil, which stabilised near levels a week ago. The UAE and Saudi Arabia have significant spare capacity to restore their production to pre-demand levels and even increase their global market share. At the same time, most OPEC representatives are not fully committed to their quotas. Iran and Venezuela have more options. Both countries are trying to use the situation to ease US sanctions pressure. Iran produces 2.3 million barrels per day, about half of pre-sanctions levels. Venezuela's production is around 0.8m BPD versus 3.1m BPD before the 2019 sanctions. Both countries can get 0.4m b/d back on the market quickly, but it will take a significant investment in the industry and a long time to grow after that. Caracas is already curtseying towards the US by releasing two prisoners. The US is lifting some sanctions on some Iranian politicians even before the deal is struck. These are signs of progress towards easing sanctions and a clear signal to Russia that the world is not so dependent on its energy. These are all signs favouring our idea that the peak of fear, and therefore oil prices, is over. Furthermore, Russia has not yet even gone so far as to threaten to halt exports as OPEC did in 1972. That said, military tensions and further restrictions on Russian oil and gas imports could trigger growth impulses, some of which could be strong. However, the oil price situation looks depleted. We are set to see either a consolidation around these levels in a pessimistic war scenario, or a correction to around $90 on progress in the peace talks and the start of a move to ease sanctions on Russia, Iran and Venezuela.
Eurozone and German Services PMIs Weaken in June as Markets Await Fed Minutes

Consolidation Trends in the Growing IT Services Sector: A Shift towards Larger Companies and Diversification Strategies

ING Economics ING Economics 15.06.2023 12:50
It's therefore no surprise that the share of large and medium-sized companies in the market is growing at a faster pace than smaller ones. From 2017 until 2022, the number of bigger corporations grew by 67% – nearly three times more than the number of small companies with 10 to 50 employees. This evolution emphasises the consolidation that is taking place in the IT services landscape.   The number of big companies is growing faster than smaller companies   Driving forces Two other factors that are driving consolidation are commoditisation and margin pressure. IT products have been commoditised in recent decades, as large IT services providers such as Microsoft, Amazon, Google, and SAP have gained a bigger share of the pie in some areas (e.g. office software applications and cloud setups). This in turn has incentivised diversification by IT service providers in the mid-market segment. As a result, many of them have moved into areas such as cyber security and off-premises data centres. This can further drive M&A as companies strive to acquire additional skills and technology, and aim to become more efficient and better equipped to serve their clients.     Further consolidation expected, but the pace will slow Overall, there is enough space in the sector for consolidation to continue in the coming years. The IT services sector is dynamic and still relatively young, and new value propositions occur often. It's set to remain in high demand as a vital element in the functioning of the economy, as is that for services such as cyber security, data analysis, software integration and automation. Given increasing interest rates and declining multiples, however, consolidation will continue at a slower pace than in the past six years.
Sainsbury's Strong Performance Amidst Inflation Concerns, and Levi Strauss Faces Caution Over Q2 Outlook

Sainsbury's Strong Performance Amidst Inflation Concerns, and Levi Strauss Faces Caution Over Q2 Outlook

Michael Hewson Michael Hewson 03.07.2023 08:40
Sainsbury Q1 24 – 04/07 – despite posting a solid set of full year results in April the Sainsbury share price fell back before edging up to 14-month highs in May. Since those May peaks the shares have slipped back, with the March lows the next key area of support. Underlying full year profit before tax came in at £690m right at the top end of its guidance, down 5% from the previous year on revenues that were 5.3% higher at £31.49bn. Profits after tax saw a larger fall of 69% to £207m, but these are still 15% above pre-Covid levels. Cost of sales was 7% higher at £29.4bn, up from £27.5bn a year ago, pushing back against political accusations that supermarkets are profiting from the cost-of-living crisis. The main areas of outperformance were in grocery which saw annual sales rise 3%, and fuel which saw a rise of 23.4%. Clothing and GM was more of a drag declining 3% year on year. For 2024 Sainsbury says it expects to repeat and possibly exceed underlying profit before tax target of this year, guiding between £640m and £700m. The board proposed a final dividend of 9.2p per share.  The recent Kantar survey showed grocery price inflation eased slightly in June; however, it will be small comfort to consumers given it is still an eye-wateringly high 16.5%, with eggs and frozen potatoes showing the biggest increases. Kantar went on to say that the biggest winners in terms of sales growth were Aldi and Lidl. Tesco and Sainsbury maintained their position as UK's number one and two supermarkets by market share. Tesco Q1 results have given us a decent indication of the challenges facing the sector even as grocery price inflation has been showing signs of slowing.   Levi Strauss Q2 23 – 06/07 - when Levi Strauss reported back in April the shares fell sharply, eventually sliding to levels last seen in September 2020, before finding a base in May. The reason for the sell-off was due to caution over its Q2 outlook. For Q1 the company posted a 6% rise in revenue to $1.69bn and profits of $115m or $0.29c a share. All in all, the numbers beat expectations however there was some disappointment that the company left its full-year guidance unchanged, which was for annual revenue of between $6.3bn to $6.4bn. For Q2, revenues are expected to come in at a fairly lacklustre $1.34bn, before picking up in Q3 to $1.6bn. Investors will be hoping that this doesn't change, while profits for Q2 are expected to slow to $0.03c a share.          
PLN Soars to Record Highs Ahead of NBP Decision

Sainsbury's Share Price Slips Despite Solid Q1 Results: Analysis and Outlook

Michael Hewson Michael Hewson 04.07.2023 11:04
Solid Q1 sees Sainsbury's share price slip back   The Sainsbury's share price has seen a bit of a pull back of late, having hit 15-month highs back in May, the shares slipped to 3-month lows last month, although we have rallied since then.     Recent full year results saw the UK's second biggest supermarket post underlying full year profit before tax of £690m right at the top end of its guidance, down 5% from the previous year on revenues that were 5.3% higher at £31.49bn.   The focus on profits has drawn criticism that supermarkets are profiteering at the expense of consumers. At first glance this might seem valid, particularly with respect to recent headlines around fuel prices.   However, in such a highly competitive market, which UK food retail is, and with the likes of Aldi and Lidl growing their own market share rapidly according to recent Kantar data, such an approach would be self-defeating.   Looking at the underlying numbers there is little evidence of what is now being described as, greedflation, although to get the best deals you need to shop with your Nectar card, or your Clubcard if you're in Tesco.   In last year's results profits after tax fell by 69% to £207m, while the cost of sales rose by 7% to £29.4bn, up from £27.5bn a year ago.     Today's Q1 results have seen the Sainsbury share price slip back despite reporting a similarly solid set of Q1 results. Like for like sales excluding fuel rose 9.8%, with grocery sales seeing an increase of 11%.   The one area of decline was in clothing sales which fell 3.7% with the supermarket reiterating its full year outlook of underlying profit of between £640m and £700m. Fuel sales also fell 21.4%, however the comparatives from the same quarter last year have likely played a part here. On an encouraging note, Sainsburys also said that food inflation is starting to fall, and that any savings would be passed on to customers.     The lack of a change to guidance comes across as somewhat cautious which may help explain today's share price weakness, however such caution is probably sensible given some of the criticism coming the sectors way with respect to accusations of greedflation, which is a helpful tool for politicians to distract from their own shortcomings.     That is not to exonerate the supermarkets where evidence exists of such practices, however one needs to remember that without corporate profits governments will struggle to raise the tax revenue for public services, and in both the case of Sainsbury and Tesco, we've seen their profits more than halve over the last 12 months.     By Michael Hewson (Chief Market Analyst at CMC Markets UK)
Challenges for the Belgian Economy: Mixed Performance and Threats to Competitiveness

Challenges for the Belgian Economy: Mixed Performance and Threats to Competitiveness

ING Economics ING Economics 12.07.2023 14:25
Firing on all cylinders? Not quite In addition to household consumption, investment has remained volatile and has been impacted by a few large transactions in the shipbuilding industry. This largely explains the solid growth seen in the first quarter of this year. However, the contribution of net foreign trade to growth remains negative. This can be explained by imports holding up well on the back of solid domestic demand while the export sector is dealing with weak foreign demand and is also reflected on the supply side by the prolonged contraction in manufacturing activity (as detailed in the graph below). In short, the Belgian economy is not currently performing at its peak level. On the demand side, domestic demand alone is fuelling growth. On the supply side, only the services sector is still showing signs of growth as industry remains in recession. We should also point out that the ECB's restrictive monetary policy is weighing on household investment in housing, which fell by no less than 4.2% year-on-year in the first quarter of 2023. Nevertheless, activity in the construction sector continues to grow (+2.2% in the first quarter of this year), thanks to other developments in conversion, non-residential buildings and infrastructure.   Manufacturing sector in recession Quarterly GDP growth decomposition, supply side   Threat to competitiveness The fact that the Belgian economy has a less volatile cycle than the eurozone average is nothing new. As we are currently seeing, growth is more resilient in periods of economic weakness. Unfortunately, this is also accompanied by a lack of vigour throughout periods of recovery. In addition to factors currently impacting the eurozone economy as a whole (weakness in global industry, restrictive monetary policy), two key concerns are mounting in Belgium's case. These concerns are nothing more than the other side of the coin of the elements currently underpinning the solidity of the Belgian economy, but they could have a negative and lasting impact on growth. Firstly, economic developments in recent quarters have led to a loss of competitiveness for the Belgian economy. The automatic indexation of wages has meant that they have risen faster in Belgium than in neighbouring countries. Negotiated nominal wage increases this year could narrow the gap between these countries and Belgium, but they will not fully compensate for it. While the strength of the labour market is a good thing for the economy and the improved financial health of households, it is also currently translating into a decline in productivity. On the one hand, there are negative productivity gains within certain sectors. This is particularly evident within the manufacturing sector, where employment grew by 0.8% between March 2022 and March this year, while the sector's value added fell by 2.4%. On the other hand, we're seeing a composition effect on productivity. A large number of jobs are being created in low-productivity sectors (leisure, healthcare, public sector), while fewer jobs are being created in high-productivity sectors – some of which are even losing jobs (the financial sector, for example). Since productivity is an essential factor in the competitiveness of an economy, recent trends are jeopardising the Belgian export sector's ability to maintain its market share.    
Peer Valuation: Toya's Position Among Global Power and Hand Tool Producers

SecoWarwick: Competitive Landscape, Growth Prospects, and Financial Outlook

GPW’s Analytical Coverage Support Programme 3.0 GPW’s Analytical Coverage Support Programme 3.0 16.08.2023 14:18
Competition Competition for SecoWarwick's products is varied and depends on the business segment in question. For aluminum processing lines, the market is similar in value to vacuum furnaces. SecoWarwick's position in aluminum processing is TOP5. In contrast, the market for aluminum atmospheric processing lines (CAB lines within the AP segment) is the smallest of all segments, with SecoWarwick TOP1 in terms of projects worldwide. Given the increasing demand for battery brazing lines with cooling systems, this market can, in our opinion, record high growth rates in the future, which should also be followed by SecoWarwick's order book.   In the case of atmospheric furnace lines, SecoWarwick was one of around a few hundred to a thousand similar players in the industry (there are around 100 significant global competitors in the segment, while the entire segment, including all competitors, local and low-end companies, could number up to 1,000 players). The lack of clear competitive advantages and the progressive decline of the technology have prompted SecoWarwick to leave the segment. In the case of vacuum furnaces, there are approx. 20 significant companies. The remaining companies (approx. 100-150) are local (mainly Asian) players with global exposure and they do not supply key global customers (OEMs). The high technological sophistication of the equipment and access to key markets provides opportunities to increase market share in the future. In terms of melting furnaces, the market is very broad, with very extensive specialization (Retech is one of the market leaders; a smaller market than for vacuum and AP furnaces)   Overall, SecoWarwick's biggest competitive advantages are access to highly qualified engineering staff, its own highly advanced technology and its presence in key sales markets close to the customer (Europe, US, China). Cost advantages are the manufacturing locations in Poland and China.   Financial forecasts The SecoWarwick group's order book rose to a record PLN 560mn at the end of 1Q23. Relative to 1Q21, this represents virtually a doubling of the value of orders won, with aluminum processing equipment (Aluminum Process; +160%) the highest-growing sector in the period, followed by melting furnaces (+70%) and vacuum furnaces (+50%). The value of new orders won in 2022 was a record PLN 842mn, of which the highest was for melting furnaces (PLN 332mn), followed by aluminum processing lines (AP; PLN 182mn) and vacuum furnaces (PLN 182mn). It is worth noting the growing orders in Aftersales and Service, which is the most profitable part of SecoWarwick's business (over PLN 70mn of orders at the end of 1Q23).     On the basis of the order book, we assume that sales revenues in 2023 will exceed PLN 700mn and will be 13% higher y/y. The CAB AP and melting furnace segments will see the highest growth, followed by vacuum furnaces. We assume that, in the long term, the CAB AP segment will be one of the main drivers of revenue growth in the following years (due to investments in electromobility). We assume that EBITDA in 2023 will grow at a lower rate than revenues, due to higher staff costs, selling and management costs and the strengthening of the PLN against the USD and EUR. We assume that net profit in 2023 will be comparable y/y, due to higher financing costs and higher CIT.     We assume an improvement in cash flow from operations in 2023, which, assuming investment is maintained at replacement level, will lead to the generation of financial surpluses (partly paid out in dividends).   We assume that SecoWarwick's net debt will be approx. PLN 2mn at the end of 2023, a very low level that provides an opportunity to increase the dividend stream to shareholders in the future.
Peer Valuation: Toya's Position Among Global Power and Hand Tool Producers

Oponeo: A Successful Business Model Driving Market Share Growth and Potential Expansion

GPW’s Analytical Coverage Support Programme 3.0 GPW’s Analytical Coverage Support Programme 3.0 23.08.2023 09:51
Oponeo’s business model is proving its worth. The company is continuing to increase its market share, as was clearly evident in the 2Q23 results: despite the Polish market contracting by 13% y/y, Oponeo’s sales volume grew by 19.5% y/y. Admittedly, the company paid for it with a slightly lower gross sales margin (with good control of overheads), but in our opinion, it is on the right path.   Oponeo still has growth potential, given that offline sales in Poland exceed 50%. The size of the aftersales tyre market in Poland per capita is over 2x smaller than in Germany. In our view, the future trading model certainly has room for large specialised online sellers (in addition to broad marketplaces), which should continue to grow at the expense of offline sales and small players. As a market leader, Oponeo is driving its competitive edge by investing in automation and logistics. Growing dividends and ongoing share buybacks are a confirmation of sound corporate governance. The valuation seems attractive enough to more than offset the risks associated with high business volatility (weather, consumer sentiment, high working capital).             VALUATION Our valuation is based on the DCF model. We have additionally presented a peer valuation, taking into consideration pharmaceutical distribution companies. The DCF model consists of two phases. In the first phase (2022F-2026F), we have forecast in detail all the key parameters required for the company valuation, including, in particular, the value of revenue, capital expenditure, cost level, and balance sheet items. The second phase starts after 2027F. In it, we have assumed a constant free cash flow growth rate at the level of 2.5% per year.   We have used a WACC-based discount rate. The risk-free rate is assumed at 5.5%, which reflects the 10-year treasury bond yield. Beta is assumed at 0.9x (due to the strong balance sheet). We have adopted an equity risk premium of 5.5%. We have discounted all free cash flows for the company as at 31 December 2023 and deducted the forecast net debt (added net cash).        
Copper Prices Slump as LME Stocks Surge: Weakening Demand and Economic Uncertainty

Navigating the Fluctuating Landscape of Food Inflation: A Comprehensive Analysis of European Consumer Trends and Market Dynamics

ING Economics ING Economics 31.08.2023 10:42
Food inflation finally cools in Europe after a long hot summer Food price rises are finally subsiding in Europe. We saw the first Month-on-Month decline in almost two years in July. Many branded food manufacturers, however, are reporting lower sales as shoppers turn to more affordable goods. And a combination of high food prices and sluggish growth means those volumes won't be returning anytime soon.   Extraordinary rally in consumer food prices comes to an end Food inflation rates have been cooling for the past couple of months, and July’s inflation figures even showed a small Month-on-Month decrease in the European Union. That said, food prices remain at high levels. A typical EU consumer currently pays almost 30% more for groceries compared to the start of 2021, with some considerable differences across the continent. In Hungary, prices have gone up by more than 60% since January 2021, while food prices in Ireland went up by ‘only’ 19%. Across Europe, consumers reacted by buying less, shopping more at discount supermarkets and favouring private label products over brands. The trend in the US looks fairly similar. The main difference is that 'cooling down' set in a little earlier, and the relative increase was lower compared to Europe. That's partly explained by the fact that US food makers are less exposed to the energy price shock compared to their peers in Europe. American food prices started to move sideways in the first quarter of this year; a typical American consumer currently pays 20% more for groceries compared to the start of 2021.   Food inflation reaches a plateau in the EU and the US Consumer price index for food, 2020 = 100   Is Germany really leading the way on prices? Within the eurozone, Germany has been the only country seeing consumer food prices drop for several months in a row. According to Eurostat data, prices of food and non-alcoholic beverages in Germany were 1.4% lower in July compared to their peak in March this year. This is largely the result of lower prices for dairy products, fresh vegetables, margarine and sunflower oil.   What distinguishes the German food retail market from most other European countries is that discounters have a relatively large market share. Schwarz Group (Lidl) and Aldi have a combined market share of around 30%, and other major retailers such as Edeka and Rewe also own discount subsidiaries. Given the large and competitive German market, food retailers seem to have negotiated more strongly with suppliers than their counterparts in other European countries, even at the risk of losing those suppliers. As a result, retail food prices started to drop earlier. Also, the highly competitive market delivered special sales offers for consumers since the spring. For now, German consumers are benefiting from a reversal of the price trend, and consumers in other European countries might experience a similar trend in the months ahead. However, we believe that consumers shouldn’t get their hopes up too high given that some inflationary trends in the cost base of food manufacturers and retailers are still present. That’s also why we deem it too early to forecast a prolonged period of decreasing food prices.   Modest drop in German consumer prices due to lower dairy, vegetables and margarine prices Consumer price index, 2020 = 100   Underlying costs for food manufacturers show a mixed picture Throughout 2022, almost all of the costs for food manufacturers moved in one direction, and that was up. That picture has changed when we look at some important types of costs.   Input costs are by far the most important cost category, and agricultural commodities are a major part of these inputs. Prices for agricultural inputs are moving in different directions. World market prices for wheat, corn, meat, dairy and a range of vegetable oils are down year on year, which is partly on the back of reduced uncertainty around the war in Ukraine. However, prices for commodities such as sugar and cocoa rallied considerably in 2023. The prospects of the El Niño weather effect potentially upsetting the production of commodities like coffee and palm oil in Southeast Asia alongside India’s partial export ban on rice have given rise to new concerns.We estimate that energy costs make up about 3 to 5% of the costs of food manufacturing, but this will also depend on the subsector and the type of energy contracts. Current energy prices in Europe are much lower compared to their peak in 2022, but they are still much higher compared to their pre-Covid levels. Volatility continues to linger, in part because more exposure to global LNG (Liquified National Gas) markets makes European gas markets more susceptible to price fluctuations. Uncertainty about where energy costs will be headed over winter can make food manufacturers more reluctant to reduce prices.Continuing services price inflation means companies along the food supply chain will face higher fees for the services they contract, such as accounting services and corporate travel.     Wages account for a bit more than 10% of the costs of a typical food manufacturer in the EU (excluding social security costs). Both the spike in inflation in 2022 and 2023 and the continued tightness in labour markets are leading to a series of wage increases in food manufacturing and food retail. In our view, wages will be an important driver for the production costs of food and for consumer prices over the next 18 months, given that wages go up in subsequent steps. Examples of wage increases in the food industry In the German confectionery industry, 60,000 employees get an inflation compensation of €500 in 2023 and 2024 on top of a 10-15% increase in regular wages. We see similar patterns for wage agreements at individual companies, such as for the German branch of Coca-Cola Europacific Partners. In the Dutch dairy industry, wages will increase by 8% in 2023 and another 2.65% in 2024, while the collective labour agreement in the Dutch meat industry contains a three-tiered increase of 12.25% in total between March 2023 and 2024. In France, it's expected that average wages in the commercial sector will rise by 5.5% in 2023 and 4.2% in 2024. This also gives an indication for wage development in industries such as food manufacturing.   Wages make up 13% of German food manufacturers' costs with some variation between subsectors Wage costs as a percentage of total costs, 2020     Adverse weather pushes up prices for potatoes and olive oil Following the warmest July on record, it’s evident that people are wondering to what extent weather will push up food inflation in the months ahead. The most recent monthly crop bulletin from the European Commission notes that weather conditions were on balance negative for the yield outlook of many crops and thus supportive for prices. Although the picture can be different from crop to crop and from region to region, there are certain food products where inflation is accelerating due to weather. One of the biggest victims of unfavourable weather in Europe this year is olive oil. The continued drought in Spain, and particularly a lack of rain during spring, leads to estimates that olive oil production will be down by 40% this marketing year. It will be quite difficult to find enough alternative supplies outside the bloc, given that the EU is the top exporter of olive oil. This is also the case for potatoes and potato products. Here, a wet start of the year in northwestern Europe followed by dry weather in May and June and abundant rain in July means conditions have been very unfavourable for potato yields and quality.   Food prices are likely to hover around their current levels for a while The developments in underlying costs for food producers lead us to the view that consumer food prices will likely hover around their summer levels for a while. When there are decreases in general prices, those will be the result of trends in specific categories, such as dairy, rather than being widely supported across all categories. This view is also supported by business surveys which show that sales price expectations of food manufacturers are now clearly past their peak, as you can see in the chart below.  Multiple major food companies, including Danone, Heineken and Lotus Bakeries, have signalled in their second-quarter earnings calls that there will be less pricing action in the second half of this year. However, some companies are indicating that they’re not yet done with pricing through their input cost inflation. Unilever, for example, reported that we should expect moderate inflation in ice cream in the second half of the year, for instance. In any case, we do see a likely increase in promotional activity as brands step up their efforts to re-attract consumers and boost volume growth. But given the elevated price levels and the muted macro-economic outlook, it’s likely to take a while before volumes fully recover.   European food manufacturers expect fewer price increases in the months ahead Sales price expectations for the months ahead, balance of responses       Price negotiations remain tense Food manufacturers have fought an uphill battle to get their higher sales prices accepted by their customers, such as food retailers. Negotiations in the current phase won’t be easy either because food and beverage makers will be heavily pushed by major retailers to reduce prices. Retailers that lost market share will be especially looking to secure better prices in a bid to re-attract consumers. Whether there is room for price reductions will vary from manufacturer to manufacturer depending on the agricultural commodities they rely on, the energy contracts they have and cross-country differences in wage developments. As such, explaining why prices still need to go up, cannot go down (yet) or can only go down by so much will be a significant task for food manufacturers in the coming months.
Apple's Market Slide Over China iPhone Ban Exaggerated: Potential Buying Opportunity Emerges

Apple's Market Slide Over China iPhone Ban Exaggerated: Potential Buying Opportunity Emerges

Ipek Ozkardeskaya Ipek Ozkardeskaya 08.09.2023 12:45
Exaggerated. By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank   Apple lost almost $200bn in market valuation in just two days on the news that China would ban iPhone usage in government offices and state-backed companies. Of course, China is one of Apple's biggest markets; the company makes roughly a fifth of its revenue from China and it would be a shame to lose market share in such a huge marketplace, but the market has certainly overreacted to the latest news, because Chinese government staff could already not show up at work with their iPhones.   So, the chances are that, if you are a government worker in China, you already didn't have an iPhone! In this respect, an analyst at Wedbush highlighted that the ban would affect around half a million iPhones over the roughly 45 mio that he expects the company to sell in China over the next 12 months. That's around a 1% hit. Another analyst at Evercore ISI said that the government wouldn't got too hard on Apple either, as even if Apple moves production toward India, today, most iPhones are still assembled in China, and making Apple angry would cause many job losses, and that Xi is not in a position to afford today. Unfortunately for Apple, its iPhones lost market share from 20% to 16% between the first and the second quarter of this year, but iPhones market share stands at 65% of the smartphones worth more than $600 in China, according to IDC – cited by the WSJ. Huawei, on the other hand, stands for around 18% of the sales of iPhones of a higher price range. Therefore, the latest Apple selloff could be an opportunity for buying a dip. Apple lost almost 3% yesterday, after falling more than 3.5% the day before. The share price is now below $180 per share. 38 analysts on CNN's business survey point at a median price expectation of around $200 for Apple shares for the next 12-months. The high estimate goes up to $240 per share. 
Assessing the Future of Aluminium: Key Areas to Watch

Assessing the Future of Aluminium: Key Areas to Watch

ING Economics ING Economics 08.09.2023 13:17
Watch: Four areas to keep an eye on for aluminium It's no secret that aluminium prices have been facing a challenging outlook over the last few months, and after hitting a peak in January, they've now dipped by more than 7%. But are encouraging signs of life slowly beginning to emerge?   It's fair to say that aluminium prices have seen better days. But what's causing the slump? As major economies across the globe slipped into a widespread slowdown, aluminium products have followed suit – and it isn't quite clear just yet how long the weakness we're currently seeing could last. For the rest of 2023, we're keeping our eye closely on a few key areas that could help clear up a rather gloomy outlook. As the world's largest consumer of aluminium, developments in China will be crucial for determining the direction of metals prices as we head into the last few months of the year. Encouraging signs are slowly beginning to unfold in recent data following the introduction of new stimulus measures, and we believe the boost to consumer spending could help to alleviate rising concerns over lagging demand. The US dollar, Russia's market share of aluminium, and European production also have key roles to play – and while we're not entirely convinced that aluminium prices will return to their year-to-date highs anytime soon, we're just about starting to see the light at the end of the tunnel. In this video, ING's Ewa Manthey delves into the details.
Factors Impacting Selena FM: Exchange Rates, Competitive Pressures, Raw Material Prices, Construction Market, and M&A Risks

Factors Impacting Selena FM: Exchange Rates, Competitive Pressures, Raw Material Prices, Construction Market, and M&A Risks

GPW’s Analytical Coverage Support Programme 3.0 GPW’s Analytical Coverage Support Programme 3.0 15.09.2023 09:21
Exchange rates Production realised in Poland represents approximately 45% of total sales, while the market share of sales in the Polish market is <30%. The ratio of raw material consumption costs to realised revenues is approximately 50% and purchases are mainly made in EUR and USD. However, a significant proportion of foreign currency costs overlap with realised revenues, and high exchange rate volatility makes it difficult to implement an optimal purchasing strategy. Competitive pressures In the past, weak market conditions have led to increased competitive and pricing pressure from some players, resulting in reduced margins in the industry. In addition, more aggressive pricing by competitors may lead to a redistribution of market shares among individual players. Raw material prices The market for raw material suppliers is highly consolidated and the company is therefore a market price taker. The company's multi-sourcing strategy - i.e. sourcing from a number of different sources depending on local market prices - allows it to optimise its purchasing structure to a large extent in terms of the margins it achieves. Situation in the construction market The company's sales are mainly focused on the housing and volume construction markets. High interest rates are leading to a reduction in the volume of new housing purchases and a reduction in the realisation of cubature investments, as investors find it difficult to access finance. In turn, high inflation limits the purchasing power of consumers, who postpone home improvements. Risk of unsuccessful M&A The Group's strategy is based on the acquisition of companies with a similar business profile (foams, adhesives, sealants) in markets where the Group's presence is negligible, as well as market shares in complementary product areas (e.g. glass wool). There is a risk that the acquired businesses will not meet the Board's performance expectations.        
FX Daily: Lower US Inflation Could Spark Real Rate Debate

Soft Inflation Dynamics: A Key Factor in the Santa Rally

Ipek Ozkardeskaya Ipek Ozkardeskaya 27.12.2023 14:55
Soft inflation at the Top of Santa's Wishlist By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank   Appetite in European stocks waned yesterday, yet the US counterparts recovered Wednesday losses and closed the session more than 1% higher as the latest growth data was revised slightly lower to 4.9%, real consumer spending was revised down from 3.6% to 3.1%, corporate profits from above 4 to 3.7%. Else, jobless claims came in lower than expected and the Philly Fed index printed a sharper contraction in December. All in all, the data pointed at a certain slowdown – except for the jobless claims – but the numbers looked strong in absolute terms: that's about everything that the soft-lander camp love to hear : a slowing economy that will allow the Federal Reserve (Fed) to loosen its grip on the monetary policy, but an economy that will avoid entering recession if inflation falls and remains low near the Fed's 2% target. As such the S&P500 closed a few points below 4500 and Nasdaq 100 a few points below an ATH.   Today's inflation print is the Fed puzzle's last crucial piece. If today's PCE print comes in as soft as expected, or ideally softer-than-expected, we shall see the rally in bonds – and perhaps in stocks – extend the Santa rally. In numbers, core PCE is expected to show no change on a monthly basis. If that's the case, the core PCE – the Fed's favourite gauge of inflation – will fall to the Fed's 2% target over the past 6 months, on an annualized basis. Given the strong positive trend and the market's optimism, a sufficiently soft inflation figure should be enough to justify a fresh record for the S&P500 after the Dow Jones and Nasdaq renewed record after record over the past week. When the market is high on dovish Fed expectations, the sky is the limit.  Presently, swaps point at six 25bp cut in the US by this time next year. That's a 150bp cut in total. It means that the US rates are expected to fall to 375/400bp range in a year time. And that leaves the 2-year bond – which currently yields near 4.35% with plenty of room to extend rally. This being said – and I can't repeat it enough – if the US economy is set for a 150bp cut, it would also be due to something ugly that would've triggered that Fed reaction. A 5% growth, combined with robust consumer spending, strong profit expectations and a historically low unemployment rate don't call for a 150bp cut.   Elsewhere  Today's inflation data from Japan confirmed an expected fall in inflation to 2.5% from 2.9% printed a month earlier. As such, there is no rush for the Japanese policymakers to move; low rates are sweet for growth if they don't generate inflation. Plus, the yen appreciation should keep inflation contained in Japan and leave the Bank of Japan (BoJ) in a position to ... wait until at least April to exit the negative rates... et encore. Therefore, there is a weakening case for the USDJPY to dip below the 140 level, and there is no issue with buying the Japanese stocks at 33-year high levels when the BoJ remains so supportive.   In Europe, the EURUSD bulls are waiting for the US inflation data in ambush. A sufficiently soft inflation read is expected to boost the Fed doves, back a further USD depreciation and drive the EURUSD above the 1.10 mark to the end of the year. In this configuration, gold will also remain on track for further gains above the $2000 level.   Good Bye!  American crude is testing the top of the downtrending channel that has been building since the end of September. The $74/75 offers continue to push back the bullish attempts, while trend and momentum indicators are strong and tell that a positive breakout is still possible and could lead the price of a barrel to near 200-DMA – near $78pb.   The latest news from OPEC is not necessarily enchanting. Angola decided to leave OPEC as the country rejected the restricted production quotas that the cartel imposed on them. But note that, Angola won't be pumping significantly more outside OPEC: once Africa's biggest producer, the country's production collapsed by 40% in 8 years due to an unfavourable tax environment and the absence of fresh investments, and the country pumped just above 1.1mbpd, anyway. Therefore, in absolute terms, Angola's exit won't change the dynamics for OPEC, but Angola's walkout is just another reminder that the tensions are mounting at the heart of OPEC, and the cartel – which now has the lowest market share of its history – will hardly maintain an impactful position to influence the oil price if they can't show unity.    

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