28 May 2025 | 5:49AM BST NN Group (NN.AS): CMD takeaways We see the key takeaways from NN's Capital Markets Day as: 1) its €2.2bn / >€1.8bn 2028e operating capital generation (OCG) / free cash flow (FCF) targets, 2) the c.€200mn of benefits expected from its Future Ready AI investments (included within its targets), and 3) capital return where there was no change to its c.7-8% DPS CAGR or the €300mn buyback; however, given its organic capital build, we still expect an upgrade to a €350mn buyback at its FY'2 ...

Investment Rating - The report maintains a "Buy" rating on Capital One Financial Corp. (COF) with a 12-month price target of $242, indicating an upside potential of 30.8% from the current price of $185.08 [14][15]. Core Insights - The report projects a consolidated EPS of approximately $25.50 by 2027, reflecting an EPS accretion of around 34%, an increase from the previous estimate of 29% [3][5]. - The analysis includes a pro-forma CET1 ratio of 14.13% at closing, which adjusts to 15.00% when factoring in updated deal assumptions [7][8]. - The report anticipates approximately $24 billion in share buybacks through the end of 2027, with $16 billion expected by the end of 2026 [11]. - Cost reduction estimates for the integration of Discover Financial Services (DFS) into COF are conservative, with an expected reduction of 26% in operating expenses, compared to historical reductions of 35-40% in similar deals [3][11]. Summary by Sections Earnings Projections - GAAP net income is projected to be $7.94 billion in 2025, $10.01 billion in 2026, and $12.43 billion in 2027, with corresponding GAAP EPS of $13.15, $17.50, and $22.85 respectively [6][12]. Capital and Buybacks - The report models a total of $24 billion in buybacks through 2027, with a focus on maintaining a CET1 ratio of around 11% post-integration [11][12]. - The estimated TBV dilution post-deal close is approximately 21%, driven by a higher non-PCD allocation of DFS loans [11][12]. Fair Value and Loan Analysis - The fair value of the loans is estimated at approximately $116.6 billion, with no PCD "gross up" in the updated loan marks [9]. - The report indicates that a Day 2 allowance will need to be established for the non-PCD portion of the loans, resulting in a pro-forma CET1 of 13.77% post-closing [10].

28 May 2025 | 7:13AM BST Aroundtown SA (AT1.DE): 1Q25 results: FFO1ps 8% below GSe, FY25 guidance reiterated Aroundtown released 1Q25 results which were 8% below GSe on FFO1ps and 1% above GSe on NTAps. The miss on FFO1ps was due to lower-than-expected operating and other income (i.e. service charge) and EBITDA contribution from joint ventures (e.g. seasonality), while financial expenses were below GSe. Operationally, net lfl rental growth was 3.0% for the portfolio (+10bp qoq). In residential, the lfl net ...

28 May 2025 | 7:38AM BST Roche (ROG.S): Key takeaways from Diagnostics Day Yesterday (27th May) Roche hosted its annual Diagnostics Day event presenting its strategy and key growth drivers in each franchise (slides here). Our key takeaways from the event and discussions with management were: 1) Management reiterated guidance on the Diagnostics division in the mid-long term whilst noting near term headwinds in China on 2025 sales growth; 2) The Sequencing by Expansion (SBX) solution, Mass Spectrometry (MS) s ...

Investment Rating - The report maintains a "Buy" rating for Link REIT since March 31, 2023, with a target price of HK$48.00, representing a 17.4% upside from the current price of HK$40.90 [13][21]. Core Insights - Link REIT reported a headline net loss of -HK$8.9 billion for FY25, primarily due to a -HK$15.8 billion markdown in rental properties. However, the underlying profit grew by 13% year-on-year to HK$7 billion, aligning with expectations [1]. - The overall revenue for Link REIT increased by 4.8% year-on-year to HK$14.223 billion, with a notable contribution from non-rental ancillary income, which rose by 16% year-on-year [1][23]. - The rental portfolio valuation was marked down by 4.7% half-on-half to HK$226 billion, reflecting a 9.2% decline from its peak at the end of FY23 [2][23]. - Management anticipates ongoing pressure on rental reversion, guiding for a low-to-mid single-digit percentage decline in FY26E [18][22]. Summary by Sections Financial Performance - Link REIT's total revenue for FY25 was HK$14.223 billion, with a year-on-year growth of 4.8%. The revenue growth is expected to moderate to 3.2% in the second half of FY25 [1][23]. - The net property income (NPI) grew by 5.5% year-on-year to HK$10.6 billion, with a margin expansion to 74.7% [1][23]. - The group declared a final dividend per share (DPS) of HK$1.37, a 3.7% increase year-on-year, totaling HK$2.72 for the full year [2][23]. Rental Trends - Tenant sales showed signs of improvement, with a decline of -3% year-on-year in FY25, compared to -4.3% in the first half of FY25 [22]. - The rental reversion for the Hong Kong portfolio was negative at -2.2% for FY25, with management expecting continued challenges in rental reversion amid uncertain macroeconomic conditions [22]. M&A and Strategic Initiatives - Management is actively exploring M&A opportunities under the Link 3.0 strategy, with preparations already in place [19][22]. - The company has a treasury of approximately 17 million units, which could be utilized for funding potential acquisitions [19]. Market Position and Valuation - The stock offers a compelling valuation with a dividend yield of 6.7%, which is above the historical average spread over US treasury rates [21]. - The financial position remains healthy, with a slight increase in the net gearing ratio to 21.5% and an interest coverage ratio improved to 5x [17][22].

28 May 2025 | 7:05AM BST Kingfisher (KGF.L): First Take: Good start to the year with 1Q26 Group LFL +2.7% (cal adj); FY26 guidance reiterated What does this mean? All things equal, we would expect FY26E PBT consensus to remain c.£520mn. Valuation: Our DCF-derived 12-month PT is 270p, equating to a c.11x FY27E P/E (11x EV/NOPAT). We are Neutral rated. Richard Edwards +44(20)7051-6016 | richard.edwards@gs.com Goldman Sachs International Ben Williams +44(20)7051-0661 | ben.williams@gs.com Goldman Sachs Interna ...

Investment Rating - The report recommends positive optimal allocations to both gold and enhanced oil futures in long-run portfolios as strategic hedges [4][55]. Core Insights - The report concludes that positive long-run allocations to gold and enhanced oil futures are optimal for minimizing risk or tail losses in equity-bond portfolios [2][10]. - Gold serves as a hedge against losses in central bank and fiscal credibility, while oil protects against negative supply shocks [2][10]. - Historical data shows that during any 12-month period when real returns for both stocks and bonds were negative, either gold or oil provided positive real returns [9][13]. Summary by Sections Strategic Case for Gold and Oil - Investors are seeking protection for equity-bond portfolios due to recent failures of US bonds to hedge against equity downside and rising borrowing costs [2][7]. - The report emphasizes the importance of gold and oil as hedges against inflation shocks affecting portfolio returns [2][10]. Recommendations for Long-Term Portfolios - A higher-than-usual allocation to gold is recommended due to risks to US institutional credibility and increased central bank demand [2][41]. - A lower-than-usual allocation to oil is advised because of high spare capacity and reduced risk of shortages in 2025-2026 [2][50]. Tactical vs. Strategic Positioning - For tactical positioning (0-2 years), the report suggests using oil puts to hedge against recession risks and benefit from increasing oil supply [2][54]. - For strategic hedging (5+ years), it recommends going long on gold and maintaining a positive but underweight position in oil [2][54][55]. Historical Performance Analysis - Historical analysis indicates that adding gold and enhanced oil futures to a 60/40 equity-bond portfolio can reduce volatility significantly [20][23]. - The report highlights that gold and oil futures have historically provided diversification benefits due to their low correlation with equities and bonds [26][29]. Expected Returns and Risks - The report forecasts a potential gold price increase to $3,700 per ounce by year-end and $4,000 per ounce by mid-2026 due to institutional credibility concerns [43][49]. - It also notes that while oil shortages are less likely in the near term, long-term risks remain due to potential supply growth slowdowns from 2028 [50].

Noah Poponak, CFA +1(212)357-0954 | 28 May 2025 | 8:44AM EDT Huntington Ingalls Industries Inc. (HII): Management meeting takeaways: substantially increased support of US Navy shipbuilding is We hosted a group investor meeting with Huntington Ingalls management, including CEO Christopher Kastner, CFO Thomas Stiehle, and VP Investor Relations Christie Thomas. Investor conversation focused on the proposed defense reconciliation legislation and recent Navy contract modifications, how HII is navigating labor an ...

Investment Rating - The report downgrades Booz Allen Hamilton (BAH) to Sell from Neutral, indicating limited revenue and earnings growth potential in the medium term, with valuation still having downside risk [1][45]. Core Insights - Medium-term revenue growth is expected to be closer to flat due to pressure on federal civilian spending and shifting priorities within the Department of Defense (DoD) [1][2]. - Margin pressures are anticipated as the industry shifts towards more outcomes-based contracting and fixed-price contracts, which could increase risk for contractors [3][31]. - BAH's current trading multiples are 17X P/E and 12X EBITDA on CY26E, which are in line with historical averages but could decline further if earnings remain flat [4][41]. Revenue Outlook - Federal civilian agency budgets are under pressure, leading to expectations of organic revenue growth for BAH being closer to flat for the next several years [2][18]. - The company reported a book-to-bill ratio of 0.71X for the March 2025 quarter, indicating potential challenges in securing new contracts [17][25]. Margin Analysis - The industry is experiencing a shift towards more fixed-price contracts, which may lead to increased competition and pressure on margins [3][31]. - Historical trends show that during periods of revenue pressure, margins in the government services industry have declined due to increased price competition [31][34]. Valuation Metrics - BAH's valuation metrics indicate it trades at 17X CY26E P/E and 12X CY26E EBITDA, which are consistent with its 15-year historical average [4][41]. - The report suggests that if growth and margin pressures continue, BAH's valuation could decline further [4][41]. Financial Projections - The report provides revised financial forecasts for BAH, with expected revenues of $12,220 million for FY26 and $12,342 million for FY27, reflecting lower organic growth assumptions [40]. - Adjusted EBITDA is projected at $1,335 million for FY26 and $1,337 million for FY27, indicating a downward revision from previous estimates [40][45].

Investment Rating - The report downgrades Sipchem to Neutral from Buy due to limited earnings upside and full valuation [3][62]. Core Insights - The energy sector is experiencing a lower-for-longer oil price environment, with oil prices dropping approximately 13% since the start of the year to US$65/bbl, and forecasts suggest an average of US$64/bbl for 2025 and 2026 [1][34]. - The report favors GCC upstream/midstream names, particularly Abu Dhabi energy companies, which are better positioned to weather market volatility due to secured growth potential and advantageous contractual frameworks [2][34]. - In the chemicals sector, fertilizers are preferred due to strong demand dynamics, while caution is advised on petrochemicals due to high uncertainty and oversupply concerns [3][62]. Summary by Sections Energy Sector - The report highlights a preference for Abu Dhabi energy names due to their regulated returns and visible growth potential, with companies like ADNOC Drilling, ADNOC Gas, and Saudi Aramco rated as Buy [2][36]. - GCC energy names have shown strong year-on-year growth, with an average EBITDA consensus beat of approximately 6%, although share price performance has been muted [35][38]. - The report notes that the UAE's natural gas supply is expected to grow significantly, with Saudi Aramco aiming to increase gas production by over 60% by 2030 [12][54]. Chemicals Sector - The ME&A chemicals sector has underperformed, down approximately 11% year-to-date, with a notable decline in share prices for companies like Sipchem and Kayan [20][62]. - The report indicates that while margins are expected to expand in the second quarter, a weak macro backdrop could pressure earnings into the second half of 2025 [22][67]. - Companies with balanced product exposure and those benefiting from shareholder returns have fared better, while Sipchem is seen as less likely to benefit from a lower oil price environment due to its high fixed feed component [62][63].