Consumer Products and Services

Hermes loses niche status in fashion and finance

15 Jun 2018

The fashion group is joining rivals LVMH and Kering in France’s CAC 40 index. The Hermes family must get used to hoi polloi like ETFs and hedge funds crowding into its stock, and tougher disclosure norms. For companies, like luxury handbags, there’s a cost to going mainstream.

Judges supplement U.S. defences on China trade

15 Jun 2018

The Supreme Court said courts shouldn’t take foreign governments’ claims about their own laws at face value. The underlying case, over vitamin price-fixing, rumbles on. This decision attacks an inconsistency Beijing has exploited in arguing firms are just following orders.

Ralph Lauren’s growth track runs through China

12 Jun 2018

The clothier aims to boost revenue by $1 bln by 2023. The 16 percent target seems bold given the label’s recent woes and upheaval in the retail sector. But the quintessential American brand’s provincialism may be its saving grace. It has room to expand in the People’s Republic.

Valuing Xiaomi

12 Jun 2018

The Chinese smartphone maker is heading toward one of the biggest IPOs in years. A $75 bln valuation is being reported as a possibility. Run the growth, profitability and earnings multiple numbers to see how such a lofty figure might be achieved.

Chinese deal offers DRC miners a rare sign of hope

12 Jun 2018

State-backed CITIC has poured $560 mln into Robert Friedland’s Ivanhoe Mines. That is an unusual endorsement of the Democratic Republic of Congo, following a punitive new mining code. The move suggests a compromise is still likely, which would benefit Glencore and Randgold too.

Only a bold call dials up $75 bln Xiaomi valuation

12 Jun 2018

The Chinese company would have to deliver another year of soaring handset sales and double revenue from internet services. Superior profit margins and premium multiples also must be assumed, a Breakingviews calculator shows. Anything less and the IPO will have the wrong number.

China’s $50 bln bid for market calm might backfire

11 Jun 2018

New funds will guarantee demand for a string of big tech listings. They will also lock up backers' money for three long years, to dampen a frothy market. There could be unintended results: thinly traded stocks that are more volatile and fund investors who regret being trapped.

Ant’s $14 bln haul epitomises private excess

8 Jun 2018

The Chinese fintech group’s eye-popping funding round cements a $150 bln valuation. Ant raised nearly as much as Facebook and GM did in their IPOs, even as tech valuations cool and regulatory risks loom over Jack Ma’s firm. As insiders pile in, public investors may get squeezed.

Morrisons can pilfer from larger rivals’ trolley

7 Jun 2018

The merger of J Sainsbury and Walmart-owned Asda leaves the UK grocer in a distant third place. Boss David Potts could counterbid, but drumming up similar synergies looks tough. Better to lobby against the deal, and grab market share and the best shop locations if it goes ahead.

Smurfit Kappa loses a suitor, may gain an activist

6 Jun 2018

The Irish paper group irritated shareholders by stonewalling a 9 billion euro offer from International Paper. And it trades at a discount to rivals. Hitting ambitious targets would help close the gap, but an impatient investor could push for a breakup.

Hotpot IPO may offer a tasty dip

6 Jun 2018

One of China’s top hotpot chains is eyeing a $700 mln debut in Hong Kong. It has dealt adeptly with hygiene scandals and is a splash with local consumers, growing blisteringly fast. A push to take its Sichuan cuisine to smaller cities is also something promising for investors to munch on.

China’s bond market faces buyer crisis

5 Jun 2018

A crackdown on off-balance sheet wheezes is likely to sap banks' appetite for bonds. They are by far the biggest buyers, so their retreat will hurt prices. Yield-hungry entrants might appreciate higher returns, but the coming liquidity drain could destabilise a rickety market.

Walmart throws its BRICs into one basket

4 Jun 2018

The retailer is taking a $4.5 bln hit to sell most of its Brazil unit to private-equity firm Advent. As with its China - and UK - retreat, Walmart will at least get some benefit if fortunes improve. But it leaves CEO Doug McMillon’s shop even more dependent on India’s Flipkart.

DS Smith’s repackaging could have further to go

4 Jun 2018

The UK paper group is buying Spain’s Europac for 1.9 billion euros. As online shopping boosts demand for box materials, more European tie-ups are likely. One could be an International Paper deal for DS Smith, if the former’s bid for Smurfit Kappa finds the wastepaper basket.

Japanese unicorn runs astray ahead of IPO

4 Jun 2018

Mercari, an online flea market, could raise over $1 bln when it lists this month. Tokyo unicorns are rare and this bazaar appeals: it is wooing shoppers and growing fast. Still, a costly push into the United States, tempting but crowded, may warrant a discount at the till.

UK funeral probe is death knell for juicy earnings

1 Jun 2018

The competition regulator is investigating pricing in the 2 bln pound industry, sending shares in the only listed provider tumbling. Remedies range from forcing providers to be more transparent about burial costs to price caps. Either way, it’s curtains for morbid profit margins.

Toshiba has reasons to cling to its cash pile

1 Jun 2018

The scandal-hit Japanese group is poised to finally sell out of memory chips. Having also raised money from hedge funds, Toshiba will have $10 bln of net cash. Yet hurdles to distributing dividends and big transformation plans make large payouts to investors a distant prospect.

Best to kick the tires on Chinese used-auto apps

30 May 2018

Investors from Tencent to TPG are filling the tanks of second-hand car startups. There may be lemons on the lot; sites linking individual buyers and sellers could stall. Those brokering for dealers and providing loans – such as Uxin, which just filed for an IPO – deserve a spin.

Alibaba’s delivery route missing a few turns

30 May 2018

The e-commerce titan is leading a $1.4 bln investment into China's top courier service, ZTO. It's the latest in Alibaba's scattershot approach to logistics. Keeping up with rival JD may be the real motive, but it isn’t clear how the pieces fit together into a cohesive strategy.

Dixons Carphone turnaround may fail to connect

29 May 2018

The electronics group’s shares fell around 20 pct after it said UK customers would spend less on stereos and phones next year. CEO Alex Baldock’s plan to sell handsets risks angering suppliers, and pressure from online retailers is growing. A recovery looks distant.