Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Strategic trade
Trade view / 13 August 2015 at 7:09 GMT

#SaxoStrats: Peugeot to shake off China concerns

Instrument: UG:xpar
Price target:
Market price:

French carmaker Peugeot has gained more than 60% this year, despite losing 10% during the last week on concerns about the Chinese economy. 

Cost cutting drove H1 margins wider (EBITDA margin gained around 4% from H2’14) and while they may not widen further, tailwinds from EUR weakness and European household spending growth should drive earnings higher

Furthermore, the stock looks cheap relative to other European carmakers and the CAC index.

Peugeot price action (five-year):
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Source: Saxo Bank 

Management and risk description

Key risks include further turmoil in China, demand slowdown in Europe.


Entry: at market.

Stop: trailing stop at 3.05 and a step of 0.31.

— Edited by Michael McKenna

For more on equities click here.

Non-independent investment research disclaimer applies. Read more
fxtime fxtime
Any long needs to factor fx risk still ! The yuan has fallen in value again and China seems to be looking for a much greater depreciation of their currency. Each drop so far has been stopped by Chinese ''market circuit breakers'' and not by general supply demand pricing models. I know the trade above is priced in euros but the premise of the trade is due to devaluation in China. Medium to long term Peugeot will undoubtedly benefit though.
Mads Koefoed Mads Koefoed
Certainly, and had this not been part of our core equity portfolio, we would perhaps have set-up the trade in another way, possibly even as a spread trade against the CAC.
Peugeot is more or less exposed to China than german automakers?
Guess they are very much exposed in terms of EBIT
So why not buy german automakers like Vw at these prices?
Mads Koefoed Mads Koefoed
Peugeot sold for €3.8 in China and South Asia (based on FY'14), 7% of total revenue. Volkswagen got 18.8% of its revenue from Asia-Pacific.
18.7% of BMW's revenue is in China.
What about Fcau (Fiat Chrysler automobiles)? Fcau is not selling a car in China and next October there will be Ferrari Ipo. Then in January Fcau shareholders will be getting ferrari shares
Valuing Ferrari betwwen 10 and 12 billion euros Fcau ex ferrari would be practically free!


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