The items from the Brussels trade fair day: a rational Orange Belgium and an irrationally large discount at Euronav.
The Brussels stock exchange is reluctantly linking its cart to the European recovery, in the wake of the fresh Wall Street record on Thursday. The Bel20 is trading a fairly frugal 0.5 percent higher to 4,217 points.
Relatively frugal, frugal with the more than 1 percent profit in Paris. That’s where the French star basket beats CAC40
coin from the fantastic report of the cosmetics giant L’Oréal
, which even compared to the prepandemic third quarter of 2019 a turnover growth of almost 15 percent.
Less in the Bel20, there will be fireworks and WDP on Wednesday – the big wave of quarterly updates next week: Cofinimmo and Melexis Wednesday, AB InBev, Argenx, Solvay Telenet Thursday and Proximus Friday.
Orange Belgium kicked outside the Bel20
traditionally ends the ‘season’ for the telecom sector. That quarterly report may also appeal to the City of London. The stock exchange house HSBC investment advice for the number three of the Belgian telecom to ‘buy’, the price target goes from 22 to 23 euros.
The strong report found that the Belgian telecom services market is rational meets players who prefer product innovation over price.
“The strong report that the Belgian telecom services market is rational, with players who prefer product innovation rather than price,” writes analyst Nicolas Cote-Colisson. To be clear: the analyst means rational for the investor. A price war would be very welcome for consumers, but would seriously jeopardize cash flow and dividend.
Cote-Colisson also notes that the 5G spectrum auction – potentially with a fourth player as a prize breaker – is not scheduled to open until June 2022, with fewer frequencies than anticipated. ‘That may not be a total relief for the Belgian telcos, but it is certainly positive.’
The shipping news:
Euronav is 1.7 percent higher to 9.34 euros. The stock is up 32 percent in a month, but veterans of the oil tanker company know there have been many false springs in recent years (see chart).
‘This time is different’ are also dangerous words for investors, but ING still dares to raise the recommendation to ‘buy’. The price target goes from 8 to 11.15 euros in one pull.
That 11 euro is also the net asset value (NAV) for Euronav. ‘The share trades 16 percent below that net asset value and in our opinion a zero discount is intended,’ writes ING analyst Quirijn Mulder. He thinks that the shipowner, with its young and therefore more environmentally friendly fleet, is well placed for better market conditions from 2022.
Mulder points out four reasons why it could be a real spring for Euronav this time from 2022.
One: supply and demand have improved in balance, with demand for oil rapidly gaining momentum and a limited supply of new tankers. Two: there are hardly any tanks left that were temporarily used for storage and are now being put back into service.
Four: there is now a better floor under the second-hand prices on both sides of the life cycle. High commodity prices translate into high prices for both new-build and scrap iron, making it more interesting to scrap ships after 20 years.
Another visible riser is EVS
, with a spurt of 4.6 percent to 20.15 euros. The specialist in image servers for live sports coverage improved in a short press release the forecast for the annual turnover to 120 to 130 million euros. In August, EVS already had changes in its forecast, thanks to the many live sporting events that can take place again.
In other words: at 120 million euros, the annual turnover will be at least 36 percent above the 88 million of the pandemic year 2020.