Tesco
In the last few days, the company has finalised the sale of its Fresh & Easy business in the US which is a sensible bit of tidying up, caps liabilities and means the group is not left with a whole load of unproductive real estate.
Today there is an interesting story about the company parcelling up 'its remaining operations in Asia – comprising its stores in Malaysia, Thailand, South Korea and ultimately India – and spin them off into a separately-listed company on one of the continent’s stock exchanges'.
The story goes on to say that the company's board is not taking this proposal seriously but to investors it is another value angle to think about. Whether the share goes to £4+ or back to sub £3.50 is probably dependent on the UK business shorter-term, but over any other period the non-UK businesses (which one day will be a majority of the group's profits) are an important differentiator and value creator.
I go for £4+ next and remain a holder.
Morrisons
One of Tesco's UK peers is Morrisons. I was struck by this comment in their half-yearly report today:
'Whilst early indications of a recovery in the UK economy are encouraging, we are yet to see this impact on consumers' pockets. We have therefore developed our financial and operational plans on the basis that there will be no significant change to the challenging economic environment in the near future'.
This fits in with the thoughts I developed earlier with the use of the Asda Income Tracker Survey.
I found the Morrisons update to be lacklustre, with falling profits and rising debt, as they scrabble to catch-up with the other large UK food retailers in areas such as convenience and online. At x11 EV/ebit I see more value in Tesco and would look at Morrisons only below 275p (or around 10% below the current share price).
Vivendi
We have been long-suffering Vivendi holders but events are coming our way. We were heartened by talk about further initiatives on running the company's remaining telecom and media assets more separately.
Despite Vivendi being a bit 'one-step-forward-one-step-back', the value is still there. It is in the management's grasp to push the shares up towards the fabled Euro20+ mark (last seen 2.5 years ago as per below)
Amec
Word this morning that the energy/industrial services company is dropping its interest in Kentz, the energy services company and is now considering other options, such as returning cash to shareholders.
This makes a lot of sense as we argued here previously. I still await for a £10 share price (7% below prevailing) but the company has done the right thing today.
Richemont
An interesting update from the Swiss-listed luxury goods company. Here is the key quote from the company's release (my emphasis added):
'Sales growth was satisfactory across all regions in view of demanding comparatives in Europe, the Middle-East and Asia-Pacific. European and Middle-Eastern sales continued to benefit from visitors in major tourist destinations. Asia-Pacific was led by good growth in Hong Kong and Macau, offset by lower sales in mainland China, largely reflecting a prudent consumer sentiment after several years of exceptional expansion. Sales growth in the Americas was strong, primarily achieved through the sustained momentum of jewellery sales'.
Difficult comparisons or something more material? I tend to favour the former (we talked about some good Chinese consumer points yesterday here) but am also a bit sceptical about over-exuberance in both sales and share ratings for the China/luxury story. Richemont shares (kicking around a x20 P/e) are still a bit too full for me. CHF80?
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