EU AUTOMOTIVE: Valeo (FRFP): CMD
Nov-20 11:21
Credit neutral. More of an equity story with short term sales guidance soft. Medium term guidance seems muddled with an implied step change in FY28. Leverage picture is intact.
- Valeo outlined targets for “Elevate 2028” in the press release for today’s CMD. FY25 FCF (after restructuring cost) guidance was upgraded to >€550m from €450-550m equivalent on a revised definition. Other items were confirmed.
- EBIT margin to improve ~220bp from FY24, to 6-7%. It expects recent and future cost savings plus AI/robotics to drive that. BBG consensus has 5.4% at FY27.
- FCF targeted above €500m from €250m at FY24. It sees a turning point from this year, with restructuring costs rolling off and capex reduced to 4.5-5% of sales. This is also partly AI driven with 25% of code now AI-generated.
- It expects flat sales growth in FY26, with consensus at 3%. A return to growth in FY27 is expected backed by its order book. Revenue seen at €22-24bn by FY28; that seems to imply a large jump YoY.
- Aiming for a return to IG in 2028, with 1x leverage targeted organically. That aligns with expectations.
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SEK: EURSEK Pierces Support With Scandis Outperforming G10 Basket
Oct-21 11:20
- SEK outperforms the G10 basket alongside NOK this morning, despite little net movement in European equity futures and SEK swap rates. SEK already outperforms the G10 basket year-to-date, and conditions appear in place for this relative strength to extend.
- EURSEK is down 0.4%, piercing the October 7 low at 10.9392. Clearance of the Oct 7 low would expose more important support at 10.9036, the September 15 low. The cross has traded in a fairly contained 10.90 – 11.10 range since the end of August. Moving average studies are currently in a bear-mode setup, reinforcing current bearish conditions.
- We’ve previously highlighted several factors that could support continued SEK outperformance in the coming months, including an accommodative monetary policy stance, an expansionary 2026 fiscal budget aimed at stimulating household consumption and positive German/European defence spending spillovers.
- The median analyst surveyed by Bloomberg expects EURSEK at 11.00 at year-end, 0.5% above current spot levels. However, forecasts range from a low of 10.60 to a high of 11.20.
- Vols imply a ~46% probability of EURSEK ending the year below 10.90, compared to a ~25% probability of the cross ending the year above 11.10. This suggests the risks to the consensus median may be skewed to the downside.
- Important Swedish growth metrics are due next week, including September credit data and retail sales, and the October Economic Tendency Indicator. The Q3 flash GDP indicator is also due. July/August monthly GDP data suggests there are upside risks to the Riksbank’s 0.5% Q/Q Q3 projection, but as always we caution that the flash activity indicators are unreliable and revision prone.
MNI EXCLUSIVE: Interview with Former BOE policymaker Andrew Sentance
Oct-21 11:14
- Former BOE policymaker Andrew Sentance looks at interest rates and inflation -- On MNI Policy MainWire now, for more details please contact sales@marketnews.com
JAPAN: USDJPY Briefly Rises Above 152.00 amid Takaichi Headlines
Oct-21 11:04
- "JAPANESE PRIME MINISTER TAKAICHI TO INSTRUCT COMPILING STIMULUS PACKAGE AT FIRST CABINET MEETING, KYODO SAYS" (Reuters)
- Not entirely sure if linked to the above Reuters headline, but this was out a little while ago from Kyodo:
- Takaichi “will instruct the preparation of a supplementary budget for fiscal 2025 that includes measures to combat rising prices. She will position its passage in the extraordinary Diet session as her top priority. Takaichi will hold a press conference at the Prime Minister's Office on the evening of the 21st.”
- It is worth noting that although the coalition framework has changed, the party remains a minority government, and therefore negotiations with the opposition parties are essential to realising policies.
- USDJPY briefly climbs above the 152 handle, reaching a session high of 152.05, a solid 1.05% above session lows. As a reminder, the technical bull trigger remains further out at 153.27, the Oct 10 high.
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