Cepsa To Sell 30% Of Its Stake To Private Equity Firm Carlyle

There is a partial buyout deal with private equity giant Carlyle and Cepsa which is an oil and gas company in Spain. Carlyle has agreed to buy 30% stake in Cepsa from a sovereign wealth fund from Abu Dhabi which is a $3.6 bn deal according to sources who have information about this transaction. Earlier the Mubadala fund which was looking for a listing in the stock market had failed in its attempt due to the wrong valuation. Now with the sale, the total value of the enterprise is the same as it had earlier attempted and is at $12 bn. The owner of Cepsa is Abu Dhabi wealth fund Mubadala Investment company.

Cepsa happy with the result

A source from the company said it was happy with the partial buyout and added, “This is the greatest outcome for Cepsa because public markets only seem to pay attention to the short term movement in oil prices and don’t appreciate a company like this.” The oil and gas company produces 175,000 barrels of oil a day worldwide and has stakes in two of the fields in Abu Dhabi. It has also many power-generating assets, operates chemical plants and refineries in Spain and other parts of the world.

Deal with Carlyle

The deal to buy 30% of the stakes of Cepsa comes with an agreement that says Carlyle having the right to buy up to 40% of Cepsa. Last year, Cepsa had rejected the bid by the US equity giant as it thought the stock listing would be a better option than selling its stakes. But, after the listing on the exchange was pulled out due to lack of interest in the company and also coupled with a bad global market Mubadala owners who has been the head of the company for three decades have agreed to sell its stakes. If the deal is approved by the regulatory bodies it will close by the end of the year.

The investment in Cepsa is part of its diversification program outside its North American shores. The equity group is raising $4 bn for assets in oil and gas and has to invest $2.4 bn on this deal. As per the deal agreement, at least two board seats will be allocated to Carlyle, but Musabbeh Al Kaabi who is a senior executive at Mubadala will continue to be the chairman of the company.

The oil has seen a recovery this year and has reached $70 for a barrel which had reached $30 in 2016 and Cepsa is making the most of it.

Paul AlbinCepsa To Sell 30% Of Its Stake To Private Equity Firm Carlyle
read more

Tesla Deliveries Drop This Quarter

Tesla Inc deliveries dropped by 31 percent in the first quarter as the company struggled with its first Model 3 sedan shipment to China and Europe due to longer transit times.

The company has confirmed again that its guidance in delivering over 400,000 vehicles in 2019 has dropped. In fact, the order for its latest Model 3 sedan in the U.S. alone has already outpaced what Tesla is able to fulfill in the first quarter alone. The model was recently made available at $35,000 in the United States.

Tesla was able to deliver only above fifty percent of the first quarter’s orders by March 21. According to reports, over 10600 vehicles are still in transit. This is pretty high compared to 1900 vehicles in transit during the fourth quarter last year.

According to Wedbush analyst Daniel Ives, Wall Street expected a more apocalyptic quarter. Although the number of deliveries was clearly rocky, it was better than what many expected.

Analysts expected lower deliveries in the first quarter as Tesla started delivering its latest Model 3 sedan to China and Europe amidst the drop in demand in North America as well as the fifty percent reduction of $7500 tax credit at the end of last year.

Tesla announced on Wednesday that its net income this quarter would be affected negatively by the lower delivery as well as price cuts. The company warned investors of an impending loss in the first quarter.

According to the IBES data from Refinitiv, Tesla was able to deliver only 50,900 Model 3s which was lower than the estimated 58,900 by analysts. The car manufacturer delivered 63,000 vehicles including Model X SUVs as well as Model S sedans. This is lesser than the number of Model S, and Xs delivered in the last quarter of 2018.

The total production dropped by 10.92 percent from 86,555 to 77,100. The Model 3 sedan from Tesla is a part of the company’s growth strategy as Elon Musk, the company’s Chief Executive Officer is under pressure to guard its working capital as it tries to deliver the vehicle to international markets more efficiently. Delivering the model 3 sedan to international markets has brought forth plenty of challenges for Tesla.

Musk has been battling it out with the U.S. regulators about Tesla’s production. A judge will be hearing the case on Thursday.

Although Tesla promised to sell its $35,000 priced Model 3 sedan in North America, the price change was too late to make a difference this quarter.

Justin LebronTesla Deliveries Drop This Quarter
read more

Environment Conscious Investors to Not Buy Into Lyft or Uber

The number of environmentally conscious people has increased by leaps and bounds as the fears over global warming have intensified over the past decade or so. To that end, many investors have also emerged over the years, which have made it their mission to invest in companies that do not damage the environment and stay away from companies that are not ‘green’ enough by their standards.

According to reports, such investors have now decided to stay away from the initial public offering of ride-hailing company Lyft and are all set to do so for the mega IPO of Uber. They believe that both these companies will eventually have a damaging impact on the climate as the number of cars rise after they raise billions of dollars from the stock markets. Lyft was the biggest IPO of the year so far, and when Uber goes public, it is all set to be the biggest one in history with a rumoured valuation of $120 billion.

New Alternatives Fund, which is regarded as socially responsible, is not going to invest in either of these companies and a money manager at the fund, Murray Rosenblith confirmed it. “As far as I can tell, they’re actually putting more cars into the congested areas, and they’re pulling business out of the transit systems. This is not an area where New Alternatives is going to get engaged.” In this regard, it is also important to keep in mind that most ride-hailing companies claim that due to their business model, people will buying fewer cars in the years to come and carbon emissions are going to reduce dramatically. However, researchers do not believe that it is going to be the case since commuters might use these services more than other forms of public transport like train, metro and buses.

In addition to that, many of these funds argue that the fact that drivers often have to drive for long distances before they reach their customers, also leads to higher emissions and that is not factored into the ‘distance travelled’ statistic by these companies. That being said, the companies are also working on bringing in alternative modes of vehicles that will help in curbing carbon emissions and both companies are engaged in electrical vehicles projects that could come to fruition in the years to come. However, as of now, that is a distant dream, and the small group of investors are going to stay away.

Paula HearnEnvironment Conscious Investors to Not Buy Into Lyft or Uber
read more

China Reportedly Sends off Fleet of Ships to South China Sea Island to Halt Construction Facilities of Philippines

China has been charged with sending around 100 of ships together to block the construction work of Philippines on a controversial Island in the South China Sea.

Beijing began to move vessels to Thitu which is the part of Spratly chain, in compliance to the Asia Maritime Transparency Initiative [AMTI] which is operated by the Washington based Centre for Strategic and International Studies.

The fleet of ships together was sent off alongside Subi Reef which consists of vessels of the Navy and coastguard besides a bundle of fishing boats. The report suggests that their appearance was associated as an effort to force the Philippines to stop the work on the disputed island that China also claims at its property.

While the satellite pictures show that the Chinese navy Jianghu V class frigate and Zhaoduan class coastguard intersected Thitu on December 20, at that time the Chinese vessels had topped to 95.

The report also suggested that the Chinese warship was seven nautical miles away from the Philippine navy’s frigate namely the BRP Ramon Alcaraz during that time.

Back in April 2017, the government of Philippines reported that it was supposed to start constructing a beaching ramp mainly on Thitu, commonly known as Pagasa in the Philippines and Chinese Zhongye Island.

After the completion, the beaching ramp will permit the ships of the Philippines to carry materials in order to repair and to extend the runway over the island so that it can adjust bigger aircraft.

The construction work might have been completed by the end of 2018. Meanwhile, Philippines authorities stated that the process had been delayed due to cold weather and rough seas.

The AMTI indicated that the operations of China have also contributed to the delay over construction.

The Defense Secretary of Philippines Delfin Lorenzana addressed on Monday to the Philippine Daily Inquirer that the ramp is intended to be completed during the quarter 1 of the year.

The only issue with the Pagasa is that everything that is required to repair like steel bars, gravel, sand, and heavy equipment, needs to be brought in, Lorenzana mentioned. “In order to bring all these things we require a beaching ramp, so I hope that it will be completed during the 1st quarter of the year, about the beaching ramp, ” he added.

Lorenzana also mentioned that his country should oppose the decision of Beijing to build a rescue center over the Fiery Cross Reef, basically captured by Chinese outpost in the Spratly chain which is also maintained by Philippines and Vietnam.

The AMTI quoting about the satellite images stated that the number of Chinese ships in that area was increased to 24 on December 3, just before the recent construction work began and had increased to almost 95 on December 25 although the number has reduced to 42 by January 26.

Earlier in November, Lorenzana said that China’s ambassador to the Philippines had requested to cancel the proposed work.

Meanwhile, the decrease in the Chinese vessels indicates that the Chinese forces have decided to settle into monitoring pattern and warning after their large initial deployment process failed to satisfy Manila to stop the construction work, the AMTI stated.

Eventually, the plans have regularly faced delays, and their extent is much simpler as compared to those which were taken by China or Vietnam, the report mentioned.

Upon completion, the Philippines will have re-acquired around 8 acres of land in past years in Spratlys, in comparison to 120 acres by Vietnam and 3,200 by China, it concluded.

Rosaria SmithChina Reportedly Sends off Fleet of Ships to South China Sea Island to Halt Construction Facilities of Philippines
read more

Walt Disney Reports Profits Above Forecast

Walt Disney Company on Tuesday reported its earnings for this quarter and had surpassed the estimates of Wall Street. It is believed that the earnings increased due to the growing popularity of theme park business and also the diversification of investments in digital media through the ABC broadcast network. With this news, shares of the company increased by 0.8% and were at $114.70 in after-hours trading.

According to data from Refinitiv, analysts had expected shares to increase by $1.55 on an average. However, Disney reported their first-quarter earnings which ended in December of adjusted earnings of $1.84 per share. The earnings report also added that the company had made a reorg so that it can cater to digital streaming services and the operating income from the media network department rose by 7% and made $1.3 billion when compared to last year. The ABC broadcast unit also saw its profit increase by 40% as a result of revenue generation from affiliate fees, program sales, and advertising.

The popular theme park and the consumer products unit also brought in great revenue for the company with an increase in revenue by 10% and a profit of $2.2 billion compared to last year. The report also mentioned that the Disney theme parks in the US saw an increase in occupancy rates and more spending by guests.

ESPN, Disney Channels and the ABC network are some of the media properties that Disney owns and is looking to become a digital entertainment company on par with the likes of Netflix and Amazon. It is trying to deliver programming to the customers directly and has also started Disney+ and ESPN+ as some of the new streaming services. The company is also saving most of the content for its streaming services and plan to decrease operating income by $150 million this fiscal year. CFO Christine McCarthy said that the company plans to waive license revenue from others.

Bob Iger, the CEO of Disney in a conference call, said that there were up to 2 million subscribers for their streaming service ESPN+ and is twice the number five months ago. The company is also working on a family entertainment streaming service later in the year and is thus not providing programming to Netflix on movies like Captain Marvel. It is also investing in assets and movies from 21st Century Fox to add more variety to its portfolio. The company is heading into the competitive streaming market from a strong position, and that should help the company shares do better and keep the investors happy.

Paula HearnWalt Disney Reports Profits Above Forecast
read more

Snap Shares Soar as User Numbers Beat Estimates

Multimedia messaging service Snap Inc beat analysts’ estimates of plunging user numbers in the last quarter, and the good news has sent the stock price soaring by around 20%. In the days leading up to the announcement, there had been worries that the company would continue to bleed users, but the company announced that the current levels are going to be maintained. Analysts had estimated that more Snap users were going to flock to its rival, the Facebook-owned Instagram, but that has not come to pass.

The Chief Financial Officer of Snap Inc said, “We do not foresee a sequential decline in daily active users in Q1 2019.” In the fourth quarter, the company recorded a total of 186 million active users daily. It beat analysts’ estimates of 184.91 million daily active users. However, at the same time, it should be pointed out that the number is down 1 million from the same quarter a year ago.

The photo messaging app grew in popularity back in the first half of the decade and its unique feature that removes photographs in seconds made it particularly useful for users who are concerned about their privacy. On top of that, the app’s filters that can turn people into a range of objects or even animals made it incredibly appealing to younger users. However, much of its unique features were later incorporated by Facebook’s Instagram, and it ate into Snap’s user base.

Instagram’s rise has been one of the biggest reasons why Snap has not been able to perform that well since its initial public offering back in 2017. Although its shares soared 22% and touched $8.62, it is hard to overlook that its IPO price was $17 back in 2017. However, Snap did not have to face the ignominy of a third straight stock price decline after a quarterly result ever since its controversial redesign. An analyst at Forrester, Jessica Liu, said, “Snap’s biggest issue continues to be that it lacks appeal beyond its core user base and has no visible direction on how to expand or pivot its app beyond that under-35 demographic.”

The app’s next big frontier is to corner at least a portion of the Android market and to that end; Snap has given access to the Android app to a small pool of users as of now. The Android app is vital for any company which wants to gain a toehold in the developing economies. In those geographies, Android phones are far more popular than Apple’s iPhone. Snap’s Chief Executive Officer Evan Spiegel echoed those thoughts regarding the Android app as well. He said, “There are roughly 2 billion people (internationally) who are on Android and do not have Snapchat. If we can take even a small percentage of that, it would make a big difference.”

Paul AlbinSnap Shares Soar as User Numbers Beat Estimates
read more