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Auto & Transport Roundup: Market Talk

19 Jul 2017 8:20 am

0721 GMT - Daimler gains 0.5% to EUR64.47, outperforming the DAX index despite news the automaker will spend EUR220 million on updating engine software on more than three million diesel vehicles to improve emissions. The impact of the move is "marginal" for the company's valuation, analysts at Equinet say. Other automakers notch gains after falling Tuesday due to the euro strengthening against a range of currencies; Volkswagen gains 0.7% and BMW adds 0.4%.(william.wilkes@wsj.com)

0718 GMT - Shares in budget airline Wizz Air are up after the carrier reported Q1 results and said net profit should come at the top end of its forecast range of EUR250 million to EUR270 million. Shares trading 1.31% higher early in London. (robert.wall@wsj.com)

0708 GMT - Citi keeps its buy recommendation on toggle payment-in-kind bonds by Schaeffler, seeing headwinds in the car market may be temporary. The German car parts maker itself stressed that two-thirds of the year-on-year decline in 2Q automotive Ebit in was driven by temporary factors. These include research and revelopment costs from additional e-mobility projects and temporary supply chain problems. Citi is generally marketweight on the issuer. (tasos.vossos@wsj.com, @tasosvos)

0702 GMT - Wizz Air is adapting its cabin-bag policy and dropping the fee for some carry-on bags to be more in line with rivals such as Ryanair. But CEO Jozsef Varadi says the lost revenue from those fees will be made up elsewhere, including by boosting sales of priority boarding which would guarantee the bag doesn't get moved into hold luggage once overhead bins are full. (robert.wall@wsj.com)

0658 GMT - Germany's DAX is seen opening 0.2% higher around 12,449 says Lang & Schwarz, with a weaker euro likely to nudge the exporter-heavy index higher after currency-driven falls seen Tuesday. Daimler is in focus after the company said it would tweak engine software on more than three million vehicles to improve emissions. The company says the update would cost around EUR220 million. Market attention turns to the European Central Bank's policy announcement and press conference on Thursday. (william.wilkes@wsj.com)

0656 GMT - Wizz Air CEO Jozsef Varadi says strong unit revenue performance in its first quarter, which is driving the budget airline to guide analysts to the top of its full-year profit forecast, is persisting in the crucial second quarter. The outlook beyond then is limited, Mr. Varadi says, though he cautions that airlines have been adding capacity, or seats for sale, into the market for the winter season, which would again put pressure on ticket prices.(robert.wall@wsj.com)

0211 GMT - Keppel Telecommunications & Transportation (K11.SG) is trading at over 7-month lows after the company and other shareholders decided to shelve plans to sell their combined 60% stake in telecom firm M1 (B2F.SG), saying that the offers didn't meet their minimum criteria and parameters. Keppel T&T owns a 19% stake and any divestment would have raised the possibility of a special dividend to shareholders. The stock is down 2%. M1 shares are down 6.9% at S$1.96. (venkat.pr@wsj.com)

0201 GMT - China Communications Construction's (1800.HK) shares get a boost by a plan to reduce its stake in Shanghai Zhenhua Heavy Industries (600320.SH) for 5.7 billion yuan ($844.7 million), with the stock rising 2.3% to a 2-month high. The move will cut CCC's stake in the maker of heavy-duty port equipment to 16%, as it seeks to streamline its operations. Daiwa notes that the disposal would only reduce CCC's profit by up to CNY150 million ($22.2 million) a year, which is insignificant compared with the broker's estimate of CCC's net earnings of CNY20 billion-CNY25 billion. (joanne.chiu@wsj.com; @joannechiuhk)

0147 GMT - Kenanga Research says Malaysia's reconditioned vehicle provider Boon Koon (7187.KU) may be back on an uptrend. The broker says yesterday's strong move--closing up 20% at a 9-year high of MYR0.545--signals a resumption of Boon Koon's prior upward movement after a three-month pause. Trading volume Tuesday was more than 10-fold the daily average and follows news that non-executive director Chiau Beng Tiek recently increased his stake by 12 million shares or 4.3%. Earlier in the year, Boon Koon's share price broke out of prolonged rangebound trading around MYR0.17, and subsequently rallied to as high as MYR0.505 before consolidating sideways. Kenanga now expects follow-through buying towards MYR0.60, followed by MYR0.655. (yantoultra.ngui@wsj.com; @yantoultra)

0122 GMT - Stagnant sales growth won't do Dongfeng Motor (0489.HK) shares any favors today. The Chinese car maker sold 252,050 vehicles in June, 1.4% higher than a year earlier and in line with the scant growth of the prior 2 months. For 1H, the increase was 3.5% and sales were 44% of the company's 2017 target. Given flattish sales, Credit Suisse expects Dongfeng's 1H earnings to be flat. Shares have jumped 30% this year. (john.wu@wsj.com)

0056 GMT - Cathay Pacific's (0293.HK) weak 1H results should further weigh on a stock which has pulled back a bit since hitting 11-month highs last week. CEO Rupert Hogg says performance was capped by strong competition putting intense and increasing pressure on passenger yields. Daiwa also notes the passenger-traffic growth decelerated on most routes last month. (joanne.chiu@wsj.com; @joannechiuhk)

0034 GMT - Malaysian package delivery services firm GD Express Carrier (0078.KU) may climb higher after hitting its highest close of MYR0.705 in more than a month, according to RHB Research. The broker says buying momentum may have returned. RHB sees immediate resistance at the MYR0.82 level, followed by MYR0.90. Shares of GD Express have climbed 67% year-to-date driven by bright prospects for the logistics industry as e-commerce takes off in the country. (yantoultra.ngui@wsj.com; @yantoultra)

(END) Dow Jones Newswires

July 19, 2017 04:20 ET (08:20 GMT)

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