The Breakout Trader: Mota-Engil Africa

 I am posting another entry from the Blog The Breakout Trader. This entry is about the Construction sector Portuguese Mota-Engil company and its African subsidiary Mota-Engil Africa. The company is preparing a first floatation in the Capital Markets with an IPO in the London Stock Exchange, and The Breakout Trader analyses the share price behaviour in the near term as well as looking to the weeks ahead. For the Portuguese audience please check the link at the bottom. Here it is an English translation:

''Mota-Engil is to proceed with the initial public offering (IPO) of its African subsidiary, which will be listed on the London Stock Exchange.In a statement to the CMVM the construction company announced that this operation will be carried out through two offerings, a "preferential" and other "institutional". Thus, the preferential offer "Mota-Engil Africa allocate new shares to all investors who hold shares of the parent - Mota-Engil SGPS - until tomorrow, 17 June, which is leading to a rush for the purchase of shares Mota-Engil which now rise 4.15%. A parallel run of an institutional offering will happen, which will show the number of shares increase if demand for shares in preferred not cover the entire offer.Investing in Mota-Engil Africa seems to me to be a good alternative for those who want to be exposed to the growth of the African continent. In addition to the shareholder remuneration proposal which is quite generous the company intends to achieve a payout ratio between 50% and 75% and is now guaranteed a cash dividend of 20%, approved by the shareholders of Mota-Engil. Moreover, Mota-Engil Africa will benefit from being listed in an index with greater visibility than the national and aimed more at the construction sector.For shares in Mota-Engil, as already stated in the previous analysis, this separation is rather negative, given the strong impact that billing obtained on the African continent has to the group accounts. Recall that, according to the latest annual report, the activity in Africa accounted for over 40% of the turnover of the parent company.Tomorrow being the last day for the purchase of shares entitled to participate in the IPO, I believe that the shares of Mota-Engil can continue to value in tomorrow's session. After that, we are witnessing a correction in the titles, because we are close to the resistance given by the annual maximum € 6.25 / € 6.40.

The Breakout Trader: Amanhã será o último dia com direito a participaçã...: A Mota-Engil vai avançar com a oferta pública inicial (IPO) da sua subsidiária africana, que passará estar a cotada na bolsa de Londre...

EDPR - Renewable shake down

Today's research note about the Portuguese company EDP Renováveis. Goldman Sachs in a latest research note cuts the price target for the company from a period of three years starting at 2016 (2016-2018). The business paper Jornal de Negócios had access to the American Investment Bank research note, which I reproduce here a translated version with a link to the original Portuguese site.

'' "Our estimates of earnings per share for 2016-2018 were cut by 16%, 15% and 14%," says the analyst Manuel Losa in the analysis note.

"Our target price is based on a combination of 50:50 assessing the sum of its parts, from 4.90 euros, and assessing multiple of EV / EBITDA [enterprise value to EBITDA ratio] of 5.40 euros" , the note explains. The evaluation of the sum of the parts "includes € 1.7 billion of sales to a premium of 30% over the review"  of the investment house, which is "in line with the history of EDP Renewables".

The investment house said that, on the side of "positive" risks are higher than sales to an assessment by the Goldman Sachs bonus. Have the opposite side is the "new government intervention", as well as sales at lower than the rated value.

The shares of the company led by Manso Neto following losing 0.50% to 5.333 euro ''

http://www.jornaldenegocios.pt/mercados/bolsa/research/detalhe/goldman_corta_avaliacao_da_edp_renovaveis_para_510_euros.html 

Collective Pensions.

In the advanced Investment world there isn't an issue with cutting pensions when costs are high, and the sharing of risks between generations is properly handled.

Securities Lending

In the Investment Management universe of businesses the Securities Lending sector is an important part of whole sector. I present in this post a video from Global Custodian Magazine, which is a publication dealing with the Custodian, Private Banking and Investment Management sectors generally. It features an interview with Simon Lee senior vice president for Business Development EMEA eSecLending in which is discussed recent trends in securities lending industry. I would highlight the new regulatory framework for the industry, that may bring greater clarity and transparancy; hard issues like indemnification, that is an increasing cost to these industries but with room for innovation and development, and other issues.

This industry plays an increasingly important role in the Financial Services industry, and was one of the protagonists of the Financial Crisis. The major changes going on on the whole Investment Management industry is in some part a proper response to the events of the Crisis, like the issues related to Clearing, Repurchase Agreements, Central Counterparties, Risk Management and so on. These changes hopefully will restore the good reputation of the industry, the competiteveness and quality of the services delivered and of course being a healthy source of business opportunities.