Global Stocks Roundup


*Canada's BCE (a telco) reported earnings of 94 loony cents per share, 4¢ ahead of consensus estimates, and revenues up 2.5% to C$5.93 bn, also ahead of consensus but only by 2%. Moreover it again foecast EPS for the current year at C$3.48-3.58 on revenues of C$23.7-24.2 bn,

*German stocks are at relative lows and one of our holdings, ute EON.SE lost 1.9% yesterday after it was downrated to underweight from equal weight by JP Morgan and Siemens issued a profit warning . However EONGY gained back 0.4% today. Cf funds.

Funstocks part 2

Abhimanyu Sisodia from India resumes his coverage of Make My Trip Limited (MMYT), the on-line travel booking firm, his recent stock pick:

MMYT in Q2 (to June 30) increased revenues 6.7% in constant currencies to $141.74 mn mostly from air ticket sales, but remained unprofitable. Operating profit dropped $2.6 mn to $42.9 mn down 8% from last year, largely because of 7.3% slower growth in hotel and package tour sales, to $68.25 mn.

Given the turbulence in air travel here after Jet Airways crashed in April and grounded its 124 planes, (after Kingfisher did last year) the air booking growth heralds good health for MMYT.

Indian air travel is hard to price because while sales have grown in double digits each month over the prior year, making money is not as easy as margins are under 10% for air ticketing.

Hotels are higher margin, up to 25%. But MMYT has not been able to grow this sector and also is accused of spending too much on promotions in Q1, $76.3 mn. So last quarter they cut back (barely) to $72 mn in promotions to improve profitability, and also plan further chops. MMYT will be helped by its new 50% share sale to Ctrip which can share promotions. Meanwhile MMYT has $186 mn in cash on hand as of end June.


*British E-Therapeutics will use genetic data in diabetics to help Novo Nordisk of Denmark discover new drugs. The extended deal runs to June 2020.

*GlaxoSmithKline has completed its transfer of its OTC consumer health business to a jv with Pfizer. They aim at cost savings. Already Britain and the US share retail drug vendors Walgreen's-Boots Alliance. GSK owns 68% of the entity while PFE owns 32%. GSK fell 1.3% in US trading yesterday.

*Benitec Biopharma rose another 28.79% in Australian trading today. The otherwise inexplicable movements track those of a kangaroo holding a bunch of shares in its pouch. BNTC.

*Teva is inching upwards again. TEVA.

Energy & Raw Materials

*Olstein Capital Management L.P. has added Schlumberger Ltd (SLB) to its buy list, according to gurufocus.

*Ecopetrol is going into partnership with Occidental Pete to develop Permian Basin acreage in the Midland Basin in Texas. EC is Colombian and we sold when the govt there decided to cut its international operations. Now there has been a reversal. We sold too soon.

*BP created a jv with Didi Chuxing to build a Chinese network for charging electric cars which will also include convenience stores to shop in while the charging is going on. Didi plans an ipo but now is owned by investors including Tencent HoldingsUberAlibaba, and Ping An Insurance.

*Chilean copper miner Antofagasta rose another 2.1% yesterday in London taking its yield down to 3.8%. ANFGF is benefiting from the theory that interest cuts boost production, which needs copper.

*Brazilian Vale took a $133 mn loss in its Q2 over $2 bn plus in write-downs because of disasters at its tailings dams after an earlier $4.95 bn set of charges. We sold VALE after the second dam burst at Brumodinho after the earlier one oif 2015 in Samarco. One burst dam could be an accident, but a second revealed lack of concern for iron miners' lives. It also faces continued shut-ins of other dams at risk.


*Metrology share Renishaw which Martin Ferera is upset at my selling, rose 8% yesterday to GBX 3852, still near its low of 3510.

*South African Naspers won the first lap in internationalization after Standard & Poors upped its credit rating to BBB-A-3, based on NPSNY's future Dutch identity.


*BAE Systems yesterday refused to say how it can deliver the 48 Typhoon jet fighters sold to Saudi Arabia last year after Germany, a member of the European consortium making the planes, banned their sale after the murder of journalist Jamal Khasshoggi. BAESY gets 12% of its sales from the Saudis.

At the results session yesterday, CEO Charles Woodburn avoided discussing the order because it has not yet been formally booked, while describing BAE as “subject to geopolitical uncertainties”. He stressed that it “continues to provide equipment, support, and training to Saudi Arabia” for goods already delivered there.

He added that the firm is “working closely with industry partners and the UK government to fulfill contractual support arrangements on key European collaboration programs.” Back orders which do include the Typhoon rose £8.4 bn to a record £47 bn. The stock gained only 1.1% yesterday despite a 36% rise in pre-tax profits to £776 mn, despite its 4%+ yield, and despite the fall in sterling, which shows that ethical investing has an impact even in Britain.


*One reason for BNP-Paribas (BNPQY) being so keen on global banking and insurance deals with Bank ofBNPQY Nova Scotia is because BNP is now a leader in “a bedraggled pack” of failing French banks, writes “Lex” of the Financial Times.

*Sampo Oij will report on its H1 on August 7 before the markets open in Finland.


*Macquarie-First Trust Global Infrastructure-Utilities Dividend & Income Fund (MFD) in the half to May beat its index with an NAV return of 8.15% vs a mere 6.55% return on the S&P utilities index, but its trading price gained only 1.88%. It invests only 43% in US utes and among its top winners was Transurban Group, operator of Australian toll-roads. Its big loser even before the 50%

July drop for UK power distributor Centrica, and the fall in E.On SE (cf above.)

Today Richard Evans who covers funds for The Telegraph in London, put a sell on “infrastructure” ones. He quoted Nick Greenwood of Miton, an advisor, who called these funds “yield starvation vehicles” which appeal to investors desperate for income in a time of very low interest rates. “This has pushed their shares out to high premiums to net asset value”, Greenwood noted. “In our view they are increasingly exposed to political risk” citing the rise of populism around the world. Infrastructure assets are sensitive to consumer revolt. Finally because of the small trading buffer held by brokerages, if a sell of starts it will result in very speedy collapse of the funds.

*REIT Fibra Uno is appealing the MPN 40.8 mn ($2.1 mn) fine imposed by Mexico City over its cutting down trees to build its Mitikah project there, because it had the required permits. FBASF builds shopping and office blocks for foreign companies with $-rents covering its 50% dollar debt share.

*Mexican Equity & Income Fund (MXE) is more likely to suffer from the mere 0.1% growth the country managed in the 2nd quarter, reported yesterday. The bolsa was down 5.3% also reflecting pessimism about the Andres Manuel Lopez Obrador administration.

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