Tuesday 11/08/20

  1. In AUTOMOTIVE-RELATED NEWS, China car sales were up again, Hyundai reveals new electric cars, Nikola gets an order and Uber/Lyft get another kick in the teeth
  2. In HIGH STREET & CONSUMER NEWS, retail sales and footfall recover, Superdry gets a loan, TSB aims to scrap all cashiers and Sunak’s stamp duty threshold move gets interest buzzing
  3. In INDIVIDUAL COMPANY NEWS, we look at the rise of Luxshare and Realme while Kodak suffers a major blow and Advent buys Hermes
  4. AND FINALLY, I bring you the definition of what constitutes “katsu” and a brilliant doggy story…



So China sales stay strong, Hyundai peps up its electric line-up, Nikola gets an order and Uber/Lyft get bad news…

China auto sales up for fourth straight month (Wall Street Journal, Jonathan Cheng) cites the latest figures from the China Association of Automobile Manufacturers which show continued strength in the Chinese automotive market. This was made possible by major stimulus measures from the government and a recovery in demand for commercial vehicles.

There was some interesting chat about electric vehicles in Three new electric cars put Hyundai on a charge (The Times, Robert Lea) where the South Korean carmaker has relaunched its Ioniq model name as an electric sub-brand with three new models. There will be the Ioniq 5 (a crossover) next year for around £40,000, the Ioniq 6 (an exec car aimed at the Tesla Model 3 market) and an Ioniq 7 (a large SUV) to be launched in 2024. * SO WHAT? * This is just another development in the march towards electrification of vehicles on our roads. 25 electric models are due to be launched in Britain this year. It is also interesting to note that 9% of all cars registered in Britain are either pure EVs or plug-in hybrids versus only 2.5% a year ago – impressive stuff.

In Nikola wins order for 2,500 electric garbage trucks (Wall Street Journal, John D.Stoll) we see that the plucky EV company that was also inspired by Serbian-American inventor Nikola Tesla (no points for guessing the name of the other company that was similarly inspired!) has put some substance behind its style as it announced yesterday that it had secured an order for 2,500 bin lorries from refuse giant Republic Services. The company has been

banging on for ages about the interest in its vehicles but has come in for mounting criticism particularly of late for having b*gger all to back it up with. It announced an $86m loss in its first earnings report since its June flotation and investors were questioning where the revenues were going to come from! * SO WHAT? * Nikola’s long term aim is to be on the cutting edge of passenger and heavy trucks that run on batteries or fuel cells and it is good to see that it has now completed one of its three aims for 2020. The other two are deciding which auto maker will be its partner for production of its Badger passenger truck and naming its partner for a hydrogen filling station network it aims to build. Maybe there is some substance to this company after all! Currently it is way off its IPO price, but more announcements like this will no doubt help it recover and potentially go beyond.

Two major ride-hailers hit a big pot hole in Uber, Lyft ordered to classify drivers as employees (Wall Street Journal, Sarah E. Needleman) as a California judge said yesterday that Uber and Lyft should not classify their drivers as contractors – they should be classed as employees and get all the relevant perks and protections that involves (e.g. paid sick leave and unemployment insurance). The companies plan to appeal.  * SO WHAT? * It’s not only ride-hailers that have a vested interest in this – any gig economy company will be watching this very closely. Companies such as Deliveroo and Just Eat Takeaway could also be affected as they use the same arguments to classify their employees as contractors. The final result of this lawsuit will play a major part in the future of the gig economy because if workers are seen in the eyes of the law to be employees, overheads will rise. Increased costs will either mean slimmer margins for the companies or increased costs to passengers – and for a long time now ride-hailers’ cheapness has been a major attraction. 



Retail sales and footfall perk up, Superdry gets a hefty loan, TSB will scrap all cashiers and Sunak’s stamp duty move lifts interest in the property market…

UK consumer spending approaches levels last seen before coronavirus (The Guardian, Richard Partington) cites the latest figures from the British Retail Consortium (BRC) and accountants KPMG which shows that a consumer recovery is occurring as total retail sales increased by 3.2% in July versus the same month a year ago. People spent money on food, furniture and homeware as they spent less on summer holidays – and this consumer spending recovery trend was also confirmed by separate figures from Barclaycard. Eat out to help out scheme increases UK high street footfall (The Guardian, Julia Kollewe) cites the latest figures from retail analysts Springboard which also show that the number of people visiting the high street increased considerably in the first days of the eat-out-to-help-out offer, with smaller towns benefiting the most. * SO WHAT? * OK, so there are going to be detractors and grumblers but I think that Sunak’s scheme to get people back on our high streets looks like it has been pretty successful. I think that it gave some people the incentive to get out there and spend and I would expect it to have a ripple effect on surrounding retailers (although that might be more muted if people purely eat/drink out and then go home).

It’s not all great on the high street though – Superdry secures £70m bank loan as sales slide 32pc (Daily Telegraph, Laura Onita) shows that the ailing fashion store has managed to get an additional loan from HSBC and BNP Paribas to help it recover from the carnage of lockdown. CEO and co-founder Julian Dunkerton voiced his

confidence about Superdry’s turnaround plans and said that trading has actually been above expectations since shopping restrictions were lifted. Online orders shot up by 93% during the July quarter but the company’s full-year results have been delayed until mid-September due to coronavirus uncertainty. * SO WHAT? * This new loan certainly keeps the wolf from the door, but is no guarantee of longer-term success. It’s good for now, though, and gives Dunkerton some breathing room. Time is running out, however, but then again a lot of his rivals are arguably suffering even more than he is currently.

TSB to scrap all cashiers in online shift as footfall slumps (Daily Telegraph, Lucy Burton) shows that TSB plans to put almost 1,000 at risk as the high street lender, owned by Spanish bank Sabadell, said that staff had to either retrain or take voluntary redundancy as the cashier role is going to be phased out. * SO WHAT? * Cost cuts were already happening at TSB pre-covid but, as with many other companies, the outbreak has accelerated existing plans as foot traffic has fallen dramatically – as has the use of cash and ATMs.

Then in Sunak’s stamp duty holiday behind surge in homebuyer interest (The Guardian, Hilary Osborne) we see that figures from the UK’s #1 estate agency chain Hamptons International show that the number of buyers looking for homes has shot up since chancellor Sunak introduced the stamp duty holiday. Homes costing between £500,000 and £750,000 has seen the biggest uptick in interest and many buyers are looking to move outside cities. Another interesting stat here is that 30% of sellers are getting bids from three or more buyers versus 25% last year, meaning that, on average, properties in England and Wales were achieving 98.6% of their asking price. * SO WHAT? * OK it’s actual sales rather than “interest” that’s important here, but then again, just by sheer weight of numbers interest should translate into more sales ultimately. 



China’s Luxshare and Realme power through, Kodak hits a major snag and Advent buys Hermes…

Luxshare rises as China’s homegrown iPhone manufacturer (Financial Times, Kathrin Hille and Qianer Liu) highlights a landmark in the history of Luxshare, which has just announced its purchase of two China-based Foxconn rival Wistron subsidiaries, putting the assembly of the iPhone in the hands of a Chinese company for the first time ever. * SO WHAT? * This is an interesting move given the ongoing US-China tensions. It could also be good for Apple because if Chinese companies are more intertwined with production it could limit the amount of retaliatory flak it gets from the Chinese government. This is a really fascinating article – you should definitely read it if you can.

Talking of successful Chinese tech, Chinese smartphone maker Realme takes on emerging Asian markets (Financial Times, Christian Shepherd) highlights the success of the low-cost newcomer Chinese smartphone maker Realme in Asia’s emerging markets. In the first quarter of this year, its sales shot up by 157% year-on-year. Despite being around for only two years, the brand has broken into the world’s top 10 handsets last year by selling cheap, high-spec smartphones in the south and south-east Asia region. * SO WHAT? * It’s interesting to see Realme’s

growth given that Samsung is fighting desperately to take back market share from Chinese manufacturers in India as it edges closer to Samsung’s #3 position in that market. This just goes to show how important price is in order to get a proper presence in these markets! It sounds like a pretty exciting company!

In other news, Kodak shares fall as planned $765million loan is put on ice (Wall Street Journal, Rachael Levy) shows that the company saw its shares drop by over 25% in trading yesterday on news that the planned loan was suspended while it faces congressional and regulatory scrutiny. The fallen giant of a company got a massive lifeline recently from the US International Development Finance Corp but Kodak now faces a bump in the road to getting its hands on the cash. * SO WHAT? * The judgement will be absolutely key here to Kodak’s future. A positive outcome could mean long-term survival while a negative one could prove to be the final nail in the coffin of a once-great company.

Then in Advent to buy UK parcel delivery group Hermes in €1bn deal (Financial Times, Kaye Wiggins) we see that US private equity firm Advent International has just bought the UK operations of Hermes parcel delivery group and will also take a minority stake in its German business. This looks like an opportune acquisition designed to surf the wave of online shopping. Fun facts: 40% of top UK online retailers use Royal Mail while 36% use DPD and 31% use Hermes, according to Apex Insight. It looks like there is all to play for in a growing market!



…in other news…

I thought I’d leave you today with the official definition of a “katsu” in Katsu isn’t curry! Four kinds of katsu, and three delicious ways to eat them (SoraNews24, Casey Baseel) – from the Embassy of Japan in the UK no less – and the really uplifting doggy story in Stray dog who keeps visiting car dealership is adopted by staff and given a job (The Mirror, Luke Matthews). 😍😍😍

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Some of today’s market, commodity & currency moves (as at 0759hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!

FTSE 100 *Dow Jones *S&P 500 *Nasdaq*DAX *CAC-40 *Nikkei **Shanghai **
6,051 (+0.31%)27,791 (+1.30%)3,360 (+0.27%)10,968 (-0.39%)12,688 (+0.10%)4,910 (+0.41%)22,738 (+1.83%)3,340 (-1.15%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

(markets with an * are at yesterday’s close, ** are at today’s close)