Category Archives: Morning Notes

PepsiCo moves to the Nasdaq

Over the weekend, PepsiCo confirmed it would move its listing to the NASDAQ, ending a near 100-year relationship with the New York Stock Exchange. According to the NYSE, the group was originally listed as Loft Inc. with an initial listing date of 18 December 1919. PepsiCo’s shares will now start trading on the NASDAQ as of 20 December 2017, where it will join some of the world’s most valuable listed companies. The main reason for the move is PepsiCo’s anticipation that it will achieve greater cost-effectiveness and enjoy access to the NASDAQ’s unique portfolio of tools and services, which will assist the group in connecting with its investors more efficiently.

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Semiconductors continue to beat expectations

Yesterday saw semiconductor firm Broadcom announce better-than-expected results. During the 4th quarter, Broadcom saw net revenues increase to $4.84bn, surpassing analysts’ estimates of $4.83bn. This strong performance was partly due to its wired infrastructure unit, which makes chips for set-top boxes and cable modems. Overall, the group saw adjusted earnings come in at $4.59 per share, slightly higher than forecasts of $4.52 per share. Looking forward, Broadcom expects first quarter revenues to increase to $5.3bn, much better than expectations of $4.83bn. The group also increased its quarterly dividend to $1.75 per share, 72% higher than the $1.02 dividend declared previously.

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Nestle keeps on acquiring

On Monday, Nestle announced it would be acquiring Atrium Innovations for an amount of $2.3bn. Atrium Innovations is a maker of vitamins, probiotics and meal replacements and currently sources 80% of its $700mn in sales from the United States. From Nestle’s side, the deal aims to expand the group’s presence in consumer healthcare as well as offset weakness in packaged foods. The acquisition is in-line with Nestle’s ambition of becoming a nutrition, health and wellness company. Given Nestle’s decision to make consumer health a strategic priority, this marks the group’s fourth purchase in recent months.

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Broadcom goes hostile on Qualcomm takeover

Broadcom took its first formal step towards launching a hostile takeover for Qualcomm on Monday. In a statement, the chipmaker unveiled a list of 11 nominees to the board of Qualcomm. The nominees consist of nine men and two women and include a former president of Nokia and the former chairman of Dialog Semiconductor. This move comes after Qualcomm rejected Broadcom’s $103bn offer last month, with Broadcom now attempting to remove Qualcomm’s board in order to force the company to engage with it. Looking forward, Qualcomm’s shareholders will be able to vote on Broadcom’s board director slate at the group’s annual meeting on the 6th of March 2017.

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CVS Health agrees to buy Aetna for $69bn

On Sunday, US-based drugstore chain operator, CVS Health, announced it had agreed to acquire Aetna for $69bn. As a result, Aetna, a US-based health insurer, will see its shareholders receive $207 per share. Of this $207 per share, $145 per share will be in cash, while the rest of the offer will be in the form of 0.8378 CVS shares for each Aetna share. This sees Aetna owning  around 22% of the combined company, while CVS shareholders will have the rest. If the deal is concluded, it will see one of the US’ largest pharmacy operators combine with one of the country’s oldest health insurers. The merger seeks to tackle the soaring costs of healthcare through lower-cost medial services in pharmacies.

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The Kroger tops revenue estimates of $27.46bn

Despite gaining more than 10% early on in the session, Kroger finally added 6.07% by the close to settle at $25.86 per share. This after it released better-than-expected results. During the 3rd quarter, Kroger recorded a 4.5% increase in total revenues to $27.75bn, topping estimates of $27.46bn. Kroger net earnings grew to $397mn, or 44 cents per share, up from $391mn, or 41 cents per share, a year ago. As a result, this surpassed analysts’ forecasts of 40 cents per share. Looking forward, Kroger has forecast same-store sales set to increase by more than 1.1% in the 4th quarter, supported by a revamp in its business.

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Datatec shares rise after company declares special dividend

Datatec added 2.15% on Wednesday to settle at R56.50 per share, buoyed by its announcement of a special dividend. On the 13th of November 2017, the board announced its intention to declare a special dividend of $350mn, or around R5bn, pursuant to the sale of Westcon Americas. Following this, the board has now decided to declare a special dividend of R23 per share to ordinary shareholders. Furthermore, shareholders will also have the option to receive the dividend in the form of a scrip distribution of fully-paid ordinary shares. If shareholders elect to receive shares instead of cash, the board will use the full undistributed cash amount to undertake a general buyback of shares.

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Bell Equipment’s trading statement

During the previous session, Bell Equipment added 1.48% to settle at R13.70 per share after the group issued a trading statement for the year ending 31 December 2017. In it, Bell advised shareholders it currently expects both earnings per share and headline earnings per share to be at least 150 cents. This is much higher than the 39 cents recorded in the previous corresponding period. The uptick is mainly due to an increase in demand in the markets that the group operates in, certain once-off recoveries in 2017 and a recovery in the group’s subsidiary in the DRC. Bell will issue a further trading statement before the release of its results on or around the 16th of March 2018.

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Sirius Real Estate interim results

Sirius Real Estate release its results for the six months on Monday. The group, whose shares are traded in London and the Johannesburg, declared an interim dividend of 1.56 euro cents. This was 12.2% higher than the 1.39 euro cent dividend declared in the previous corresponding period. Meanwhile, the book value of the portfolio, including assets held for sale, stood at €857.4mn at the end of the period, up from €823.3mn as at the 31st of March 2017. Sirius Real Estate’s adjusted net asset value per share increased by 7.8% to 63.40 euro cents, compared to the 58.82 euro cents recorded six months ago.

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Praxair Linde merger takes one step forward and S&P downgrades SA

Chemical company, Linde has received approval from 90% of its shareholders for the planned $80bn merger with US-based Praxair. Praxair added 0.76%, or $1.16, to close at $152.88 per share, while German-based Linde gained 0.46% as it moved to settle at €191.00 per share. However, it must be noted that despite the approval, the deal is still subject to a number of regulatory approvals. If the merger completes, the newly formed group will be the new global leader in industrial gases with revenues of $28.7bn and around 88,000 staff.

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