Macro: Sandcastle economics
Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.
Access both platforms from your single Saxo account.
Adyen outlook, Disney surprise, and India’s steel demand
Peter Garnry
Chief Investment Strategist
Summary: Adyen shares are up 32% as investors are both relieved and optimistic on the future post Adyen's Investor Day presentation. Disney shares were up 4% in extended trading as the company revealed additional cost savings of USD 2bn and beating estimates on Disney+ subscribers. ArcelorMittal missed estimates on Q3 revenue while EBITDA is in line, but more interestingly the company has put out a forecast for India's steel consumption which is expected to double by 2032.
Adyen shares up 30% on Investor Day outlook
As we flagged in our Tuesday equity update, yesterday’s Adyen Investor Day was a moment of truth for the company and its shareholders. How much would management take down medium-term expectations for revenue growth and EBITDA margin. The key takeaway is that investors liked the Investor Day presentation in which financial objectives were clarified to “grow net revenue annually between the low-twenties and high-twenties percent until 2026” which is a slight downgrade from previous growth expectations. EBITDA margin expectation is set to above 50% by 2026 which is down from 65% in their previous target, and finally capex is set to up to 5% of net revenue. Shares are up 32%.
Here are some the key takeaways from the Investor Day presentation:
- Steadily rising NPS score
- Rapid internationalization
- The payments landscape has become more complex
- Used Burberry as an example of helping them cut complexity from 20 payment service providers to 1
- Slowing their hiring pace in H2 2023
- Q3 processed volume up 21% y/y
If Adyen can maintain the growth and EBITDA margin they are guiding then the equity valuation is not stretched at all compared to previous growth cases in the equity market.
Disney accelerates cost savings
Disney shares rose 4% in extended trading as the company’s fiscal fourth quarter results beat on earnings per share, but more importantly announced that it is on track to deliver additional cost savings of $2bn which will improve profitability. Its Disney+ subscriber base also rose more than expected to 150.2mn vs est. 147.4mn. Disney’s 58% decline in its share price since the peak in 2021 is grabbing the attention of value investors and with the business stabilizing the question is whether big value investors will begin making a move.
ArcelorMittal is bullish on India
ArcelorMittal, Europe’s largest steelmaker, reported weaker than estimated revenue in Q3 while EBITDA was in line with estimates. More interestingly, the company announced its long-term forecast for India’s steel demand which is expected to double by 2023. The company says that India’s per-capita steel consumption is 81 kilograms which is significantly lower than the global average of 230 kilograms indicating material upside to steel consumption in India.
While China today is the key commodity consumer the world will rapidly change over the next 10 years as China’s commodity consumption share will moderate as India’s will rise rapidly as the country urbanizes.
Latest Market Insights
Quarterly Outlook 2024 Q3
Sandcastle economics
-
-
Bonds: What to do until inflation stabilises
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.
-
Equities: Are we blowing bubbles again
Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.
-
FX: Risk-on currencies to surge against havens
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.
-
Commodities: Energy and grains in focus as metals pause
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)