Investment Rating - The industry view for European banks has been raised to Attractive from In-Line [8][30][31] Core Insights - With risks to European growth receding, there is increased confidence that yield steepening will hold and net interest income (NII) growth will resume in 2026 [1][2][32] - The report estimates a 10% compound annual growth rate (CAGR) for earnings per share (EPS) from 2024 to 2027, which is not currently reflected in the 9x price-to-earnings (P/E) ratio [1][3][30] - The sector is expected to experience a trough in NII in the second half of 2025, followed by a 3-4% growth starting in 2026, with potential upside if loan growth accelerates [3][6][30] Summary by Sections Economic Outlook - Post US-China de-escalation, risks to European growth have diminished, leading to a maintained assumption of 1.5% ECB rates, with expectations of 25-50 basis points higher steepening than previously estimated [2][14][32] Earnings and Valuation - The report indicates that the sector is trading at the lower end of the historical P/E range of 8-13x, despite improved cost efficiency, lower credit risk, and less leverage compared to pre-global financial crisis (GFC) levels [4][30] - The average price targets imply an 18% upside for Euro Area and UK banks, compared to a mere 3% upside for the wider market [5][30] Strategic Recommendations - The report highlights a preference for longer duration/high deposit beta names, with upgrades for AIB and BOI to Equal-weight, and ABN also upgraded to Equal-weight [6][31][37] - Top picks include Commerzbank, Lloyds, Santander, and Soc Gen, reflecting a strategic focus on banks with better growth prospects [6][9][31]

(-) Hotel RevPARs grew 1% YoY, slower than we expected, due to a 17% decline in Singapore. (-) Offer to privatize Millennium & Copthorne Hotels New Zealand ended with CDL growing its stake from 76% to 84%, below the 90% threshold for compulsory acquisition. CDL will not make another takeover offer for at least nine months from April 22, 2025. | M May 21, 2025 03:21 AM GMT | | Update | | --- | --- | --- | | City Developments Asia Pacific | Morgan Stanley Asia (Singapore) Pte.+ Wilson W Ng, CFA | | | | Equity ...

Play Audio Read more: Nipro: New Mid-term Plan: Will Nipro Achieve Dynamic Capex Allocation? (20 May 2025) May 21, 2025 02:00 AM GMT Sound Bites | Japan M Update Nipro: New Mid-term Plan: Will Nipro Achieve Dynamic Capex Allocation? Industry View In-Line The capex plan is our particular focus among the many KPIs. Although management has rejigged the balance of capex among businesses, we think investors may have preferred a plan for an overall clear capex reduction. Morgan Stanley MUFG Securities Co., Ltd.+ ...

Investment Rating - The investment rating for TDK is Overweight with a price target of ¥2,300, while the stock price was ¥1,558 as of May 20, 2025 [2]. Core Insights - TDK's operating profit (OP) guidance for the fiscal year ending March 2026 (F3/26) is projected at ¥225.0 billion, a slight increase from ¥224.2 billion in the previous fiscal year, with expectations of profit growth in passive components, sensors, and magnetics, while energy, particularly rechargeable batteries, is anticipated to decline [1]. - The company aims to achieve a return on equity (ROE) of 10% or more and a return on invested capital (ROIC) of 8% or more by the fiscal year ending March 2027 (F3/27), the final year of its medium-term plan, supported by an increased capital expenditure (capex) plan in energy from ¥320 billion to ¥450 billion over three years [1]. - TDK plans to initiate mass production of third-generation rechargeable batteries using silicon anodes between July and September 2025, increasing the sales ratio of small capacity rechargeable batteries from 7-8% in F3/25 to 15% in F3/26, with expectations of a rise in the sales ratio of rechargeable batteries using metal casing to 7% in F3/26 [1]. Summary by Sections Financial Performance - TDK's OP guidance for F3/26 is ¥225.0 billion, slightly up from ¥224.2 billion in F3/25, with a focus on profit growth in passive components, sensors, and magnetics [1]. - The company has set targets for ROE and ROIC for F3/27, with an increased capex plan in energy [1]. Product Development - TDK is set to begin mass production of advanced rechargeable batteries in mid-2025, aiming to significantly increase the market share of its small capacity rechargeable batteries [1].

Investment Rating - The investment rating for Ithaca Energy PLC is Equal-weight with a price target of 141p, while the current share price is 129p [7]. Core Insights - Ithaca Energy reported a 14% beat in 1Q25 EBITDAX, with adjusted EBITDAX of $653.2 million compared to consensus of $574.6 million, primarily driven by production performance and low operating expenses [3][10]. - The company achieved a strong production performance in 1Q25, averaging approximately 127.4 kboe/d, which is about 10% above consensus estimates [4][10]. - Cash flow from operations (CFFO) before working capital changes was $625.2 million, exceeding consensus by 3%, while free cash flow (FCF) was 11% higher than expected at $451.2 million [5][10]. - Ithaca's net debt at the end of 1Q25 was $792.4 million, a decline from $884.9 million at the end of 4Q24, despite a negative underlift impact of approximately $160 million [6][10]. - The company maintained its 2025 production guidance of 105-115 kboe/d, with updates reflecting the impact of an additional stake in the Cygnus field [11][12]. Summary by Sections Financial Performance - 1Q25 EBITDAX was $653.2 million, 14% above consensus [3]. - Average production in 1Q25 was ~127.4 kboe/d, 10% above consensus [4]. - CFFO before working capital changes was $625.2 million, 3% above consensus [5]. Debt and Cash Flow - Adjusted net debt at the end of 1Q was $792.4 million, down from $884.9 million [6]. - FCF ex working capital changes was $451.2 million, 11% higher than consensus [5]. Guidance and Future Outlook - 2025 production guidance maintained at 105-115 kboe/d, with updates due to the Cygnus field stake [11]. - Potential exit rate for 2025 is highlighted at ~135 kboe/d, including contributions from recent acquisitions [12].

Investment Rating - The investment rating for Arclands (9842.T) is Equal-weight [4][10]. Price Target - The price target has been revised from ¥1,500 to ¥1,700 [4][7]. Core Investment Thesis - The report indicates a focus on recovery in retail business earnings after a prolonged slump, alongside synergies with the wholly-consolidated Arcland Service HD [18]. - The investment thesis is supported by expectations of improved sales and margins, particularly in the DIY/gardening and seasonal goods segments, driven by stronger private-brand lineups and cost reductions from synergies [11][18]. Financial Estimates - The estimated EPS for fiscal year ending February 2026 is ¥194.2, with a projected P/E ratio of 8.5x [4][13]. - The bull case estimates an EPS of ¥233.0, which is 20% above the base case estimate [11]. - The retail business sales are projected to reach ¥255,270 million in 2025, with operating profit (OP) of ¥5,559 million [17]. Scenarios - The report outlines three scenarios: - Bull Case: Price target of ¥4,400 - Base Case: Price target of ¥1,700 - Bear Case: Price target of ¥600 [13][14]. Market Context - The report notes that the current stock price is ¥1,688, with a 52-week range of ¥1,986 to ¥1,501 [4]. - The industry view is classified as In-Line, indicating expectations of performance in line with the broader market [4].

Investment Rating - The investment rating for Kawasaki Heavy Industries is Underweight [3][56]. Core Insights - There is a high interest in the defense-related business, with substantial increases in orders and improving margins due to a rise in the government defense budget. The operating profit margin (OPM) for the defense business improved from 3-4% in the past to 6% in F3/25, with expectations of reaching 7-8% in F3/26. The company targets sales revenue of ¥500-700 billion in F3/31 [1][3]. - In the rolling stock business, margins remain low, and capacity utilization in domestic and Asian markets is also low. The company is exploring various strategic options for business restructuring despite perceptions of a passive approach [1]. Summary by Sections Investment Rating - Stock Rating: Underweight [3]. - Price Target: ¥5,100 [3]. - Current Share Price (as of May 20, 2025): ¥8,732 [3]. Business Performance - Defense business OPM improved to 6% in F3/25, with expectations of 7-8% in F3/26 [1]. - Sales revenue target for defense business is ¥500-700 billion in F3/31 [1]. - Rolling stock business faces low margins and capacity utilization [1].

Investment Rating - The Kraft Heinz Co is rated as Underweight with a price target of $28.00, while the stock closed at $27.90 on May 20, 2025 [2]. Core Insights - The Kraft Heinz Co's Board of Directors and Executive Leadership Team are evaluating potential strategic transactions to unlock shareholder value, which may indicate a sense of urgency due to the stock's underperformance and current valuation [4][5]. - The company has a history of discussing strategic options, including potential divestitures and M&A, with a focus on maintaining fair valuations [4]. - The resignation of two Berkshire Hathaway board members may raise investor concerns about Berkshire's long-term intentions, potentially impacting Kraft Heinz's stock [5]. Summary by Sections Company Overview - The Kraft Heinz Co has a market capitalization of approximately $33.131 billion and has experienced a year-to-date stock decline of 9% compared to the S&P 500's 1% increase [2][4]. Strategic Transactions - The evaluation of strategic transactions is not new, but the formal announcement suggests urgency due to the stock's underperformance and a high dividend yield of 5.7% [4]. - Management has indicated a preference for divestitures over M&A, particularly in light of past discussions about the potential sale of the Oscar Mayer brand [4]. Board Changes - The departure of Berkshire Hathaway board members is not attributed to disagreements, but it may lead to market speculation regarding Berkshire's future involvement with Kraft Heinz [5]. - The timing of these board changes could influence investor sentiment about the company's direction under new leadership at Berkshire Hathaway [5]. Valuation Methodology - The price target of $28 reflects an average of 10.5x P/E and 9x EV/EBITDA based on below-consensus estimates for 2026, aligning with current near-term valuations [6].

Investment Rating - The report assigns an "Overweight" rating to Intermediate Capital Group PLC (ICG) with a price target of 2,250p, compared to the closing price of 2,054p on May 20, 2025 [5]. Core Insights - The financial results for FY25 showed a strong performance, with FMC revenues approximately 5-6% better than consensus estimates, driven by management fees and catch-up fees of £62 million, exceeding the expected £45 million [2]. - The outlook for the company remains unchanged, with guidance of at least $55 billion in aggregate fund-raising over the next four years, having completed over 40% in FY25 [3]. - The valuation of ICG is considered attractive, trading at approximately 11.7x P/E for calendar year 2026, which is a significant discount compared to global peers at around 20x [4]. Financial Performance - The report highlights a strong performance in third-party business, with management fees approximately 3% ahead of expectations and performance fees at £86 million, significantly above estimates [2]. - Cost discipline was noted, with cost growth of about 10% year-over-year, compared to consensus estimates of 14-15%, leading to an operating margin expansion with FMC margin at around 60% [2]. - Fee-earning assets under management (AuM) reached $75 billion, in line with expectations, with strong fund-raising of $24 billion, surpassing consensus estimates of $20 billion [8]. Market Position - The report indicates that ICG's balance sheet returns are broadly in line, with a recovery in the second half compared to the first half, although slightly below the guidance of low double-digit growth [8]. - The company is expected to experience a positive share price reaction due to solid P&L performance and a reassuring outlook despite macroeconomic uncertainties [8].

Investment Rating - The report assigns an "Overweight" rating to SSE, indicating that the stock's total return is expected to exceed the average total return of the analyst's industry coverage universe over the next 12-18 months [5]. Core Insights - SSE's FY25 results were solid, with a headline EPS of 161p, which was broadly in line with consensus expectations of 159p [7][8]. - The company has reduced its 5-year capex plan from £20.5 billion to £17.5 billion, which is seen positively as it alleviates market concerns regarding balance sheet gearing and funding for network growth capex [3][7]. - The target for renewable capacity by FY27 has been lowered from 9GW to approximately 7GW, which reflects a cautious approach to capital allocation [3][12]. - The market may interpret the capex reduction as a positive signal regarding the upcoming UK Electricity Transmission regulatory review [3][12]. - SSE's share price has shown a recovery of 12% year-to-date, outperforming the FTSE 100 and the Utilities Sector [3]. Financial Performance Summary - For FY25, SSE reported EBIT of £2.4 billion, with adjusted headline numbers excluding a £250 million non-cash impairment in the Southern European Renewables pipeline [8][12]. - The company indicated a dividend per share (DPS) of 64.2p, which aligns with expectations and represents a 7% year-on-year growth [8][12]. - The FY27 EPS guidance was reiterated at 175-200p, which is expected to be supported by regulated inflation-linked contracts [13][12]. Future Guidance - The report notes that SSE did not provide explicit EPS guidance for FY26, but estimates suggest operating profit of £2.3-2.4 billion and EPS of 156-159p, which is marginally below consensus expectations [9][12]. - The company anticipates 40% growth in renewable volumes by FY27, implying a total of 18.6 TWh [13]. - SSE's balance sheet at the end of FY25 showed net debt of £10.2 billion, in line with consensus, and a net debt to EBITDA ratio of 3.2x [12].