(Boursier.com) — The CAC40 is setting records at the end of February. In the wake of Wall Street and the incredible Nvidia, the Parisian market posted a new gain of 2.56% over the week, to 7,967 points this Friday evening, at its all-time high. After expectations of rate cuts from central banks, it is company results that are supporting the indices. Besides the American king of AI, Liquid air, Crossroads, Sopra Steria or Axa have assured in recent days in Paris.
“With the quarterly earnings season almost over, the market has the opportunity to continue its upward trend, aided by the resilience of the US economy, disinflation, masses of cash stored in portfolios and expectations of declines in rate at some point this year, Kevin Thozet, a member of Carmignac’s investment committee, told ‘Reuters’. “I think these four elements constitute a good cocktail for the financial markets. There is a question whether there is a bubble or not, but when we look at valuations we see that it is not a bubble.”
On the oil market, black gold prices are consolidating, with a barrel of Brent (-1.5%) returning to $82 as a highly anticipated OPEC+ meeting approaches. Finally, on the currency front, the euro remains around $1.08 against the greenback and Bitcoin is moving close to $51,000 on Coindesk.
VALUES
* Fnac Darty surges 13.3% after its annual point. The Group remains vigilant regarding developments in the economic and geopolitical context. At this stage, it anticipates a 2024 ROC at least equal to that of 2023 and reaffirms its objective of achieving a cumulative free operating cash flow of around 500 ME over the period 2021-2024, i.e. a level of 180 ME in 2024 Fnac Darty will propose to the Annual General Meeting of Shareholders on May 29 to approve the distribution of a dividend of 0.45 euros per share.
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* Liquid air jumped almost 11%, to the highest ever after its annual accounts. The industrial gas giant has “almost achieved its objective of increasing operating margin”, at +160 basis points, planned for 2025, and has indicated “doubling its initial ambition”. For 2024, the group says it is “confident” in its ability to once again increase its operating margin and achieve growth in recurring net profit, at constant exchange rates… During the General Meeting of April 30, the payment of a dividend of 3.20 euros per share will be proposed to shareholders, representing growth of +8.5% compared to the previous year. In addition, an allocation of free shares at the rate of one free share for 10 shares held, as well as the application of a loyalty bonus, are planned for June 2024.
* Accor is part of the list of great satisfactions of the week with a title which advances by 10.8%. The hotel group reported a record 2023 Gross Operating Surplus, at 1.003 billion euros (+49%), for a turnover of €5.056 billion, up 18% at constant scope and exchange rates. Accor’s revenue per available room (RevPAR), a key indicator of hotel industry performance, jumped 23%. The Group’s share of net income stands at €633 million compared to €402 million in 2022. Based on the 2023 results, the dividend distribution policy implemented since 2019 (established on the basis of a distribution of 50% of the free recurring cash flow), and on the recommendation of the Board of Directors, Accor will submit for approval to the General Meeting of Shareholders on May 31 the payment of an ordinary dividend of 1.18 euros per share.
* ADP Group remains buoyed by its annual publication and takes another 8.4%. The dividend policy, based on a distribution rate of 60% of RNPG, with a floor of 3 euros per share for 2024 and 2025 has been confirmed.
* Bureau Veritas is one of the big winners of the week with shares climbing 8.2%. The testing and certification company has indeed provided results that analysts describe as “solid”, accompanied by comments on the reassuring outlook. Bureau Veritas expects to achieve moderate to high single-digit organic growth this year; an improved adjusted operating margin at constant exchange rate; and cash flow at a high level, with a cash conversion rate above 90%.
* Crossroads rose 8.1%, boosted by a solid annual publication… The distributor achieved in 2023 a current operating profit before depreciation (EBITDA) of €4.459 billion, up +8.9% at constant exchange rates, for a turnover including tax up +10.4% on a comparable basis to €94.132 billion (pre-IAS 29). The operating margin stood at 2.7% (2.9% in 2022), stable in the second half at 3.7%, and the generation of net free cash flow reached 1.622 billion euros (1.262 billion euros in 2022). Concerning shareholders, the company has decided to strengthen its remuneration policy with an ordinary dividend level increased to 0.87 euros per share (+55% compared to 2022). Carrefour has confirmed its objective of increasing the dividend by at least 5% each year, based on this increased level. At the same time, the Board of Directors decided on a new share buyback program for a total amount of 700 ME.
* Sopra Steria soars by nearly 7%, to its highest ever on the stock market, after the announcement of good annual results and the planned sale to Axway of most of Sopra Banking Software’s activities, representing a scope of around €340 million in turnover, or around 80% of the scope, for an enterprise value of €330 million. Morgan Stanley says the proposed sale of Sopra Banking Software is both attractive and accretive, citing premium multiples, reduced net debt and new firepower to pursue mergers and acquisitions. In addition, the results are considered good, particularly at the operational level and in terms of free cash flow.
* Axa increased by 4.4%, with investors welcoming the presentation of the insurer’s new 2024-2026 strategic plan. Over the period, the group is targeting growth in operating income per share for 2023-2026 of 6% to 8% per year on average; an operating return on equity (ROE) between 14% and 16% from 2024 to 2026; and more than 21 billion euros cumulative organic cash flow from 2024 to 2026. In addition, the firm led by Thomas Buberl intends to pamper its shareholders with a new capital management policy and a total distribution rate target of 75 % of operating profit per share, including 60% via dividend and 15% via an annual share buyback program, with a dividend per share “at least equal to the level of the previous financial year”. For 2023, Axa announced a dividend of 1.98 euros per share as well as a share buyback plan of 1.6 billion euros, in accordance with the new policy.
Conversely, * Forvia fall of 14.3%, in the wake of the spectacular correction of automotive equipment manufacturers under Chinese pressure and the group’s more than cautious announcements. The former Faurecia announced on Monday a project to reduce 10,000 jobs in Europe over the next 5 years, anticipating a drop in demand and Chinese competition. As car manufacturers reduce production in Europe, equipment manufacturers are facing overcapacity problems that benefit Chinese competitors… Forvia highlights overcapacity in Europe for seats and interiors, as well as to a lesser extent for lighting. The equipment manufacturer plans to reduce its European workforce by 13%, thanks to a significant attrition rate and a drop in recruitment.
* Edenred lost 9.4%, penalized by the announcement of the opening of an investigation against Edenred Italia Srl and certain of its directors and managers. This investigation relates to a public call for tenders launched in 2019. According to the Italian press, Edenred is facing allegations of bid rigging regarding this call for tenders. Even if the outcome of the investigation remains uncertain, the drop in market capitalization of €1.6 billion yesterday could prove exaggerated given the amounts involved, says Bryan Garnier: around €30 million in turnover according to his estimates, or 1.3% of the group’s total turnover. Edenred indicated that it was “available to the Italian judicial authorities to provide all necessary explanations”.
* Eramet returns 6.1%… As expected, the leading French diversified mining group published a sharp drop in its 2023 annual results, against a backdrop of sharply falling metal prices, explains Stifel. Even if Eramet remains very cautious over the first half, the broker estimates that the group’s results should improve significantly in the second half thanks to continued growth in mining production of nickel, manganese and lithium, as well as to the rise in metal prices. Indeed, due to the increasing number of closures and project shutdowns, nickel and lithium prices have stabilized and manganese prices are starting to recover. Furthermore, Eramet announced that it was negotiating the “neutralization” of 320 million euros of debt contracted by SNL, its subsidiary in New Caledonia, with the French State.
* ArcelorMittal fell by 5.4%. The Italian government announced that it had placed Acciaierie d’Italia (ADI) under extraordinary administration following Invitalia’s request, thereby transferring control of the company from its current shareholders, ArcelorMittal and Invitalia, to commissioners appointed by the government. This ends ArcelorMittal’s involvement in ADI, which began in 2018. ArcelorMittal said it has invested €2 billion in the company since its acquisition in 2018 and blames the current difficulties on the Italian environment, with Invitalia unable to meet the required capital requirements, banks unwilling to lend money and certain legal constraints.