Before the bell: KBC impresses

Apple’s rebound gave Wall Street a strong trading day. In Frankfurt, several big names took a hit, and a legendary figure in the Belgian business world has passed away.

Wall Street had a good day. The S&P 500 gained 0.7%, and the Nasdaq closed 1.2% higher. Apple (+5.1%) soared after CEO Tim Cook announced at the White House that the company would invest an additional 100 billion dollar in the United States. With that move, he hopes to soften the sharp rhetoric of the US president towards Apple, which manufactures its iPhones in China and India. Retailers Walmart (+4.1%) and Amazon (+4%) also had a strong session. Disney (-2.7%) was not rewarded, despite posting solid results. Earnings per share rose 16%, and revenue from streaming was up 6%. Last year, Disney’s streaming division posted an operating loss of 19 million dollar in the second quarter; now it reports a profit of 346 million dollar. Not bad, although Netflix (+2.7%) still dominates the streaming landscape. On European markets, average gains barely reached a quarter of a percent. In Frankfurt, Beiersdorf (-8.4%), Zalando (-9%), and Bayer (-9.9%) lost significant ground after disappointing outlooks.

This morning, Japanese stocks are up 0.7% on average, and Hong Kong shows a 0.5% gain. Sony (+4.7%) and TDK (+3.5%) are among the top performers, along with Alibaba (+2.4%) and BYD (+1.9%). Meanwhile, KBC has announced a 10% increase in quarterly profit—better than expected. Xior and Jensen-Group also report today. Internationally, results are expected from Eli Lilly, Pinterest, Rheinmetall, SBM Offshore, Softbank, The Trade Desk, and Toyota.

The blow of the day

A sudden 10% drop for Bayer—that hurts in my model portfolio. Somewhat stubbornly, I’ve already topped up my position, or at least sold a put option. I may do it again in the near future. I’m still convinced there’s value in the German chemical giant, which is also a major pharmaceutical player. The share price had already recovered nicely this year, but I believe there’s more upside. Core earnings per share rose 31% to 1.23 euro, and net financial debt fell 9%. However, the company still posted a net loss of 199 million euro due to fresh provisions for lawsuits and damages related to Roundup, the weed killer that continues to haunt Bayer’s share price.

A strong quarter and a strong year for the bank from here

Turns out those high Bolero fees are good for something. KBC saw its quarterly profit rise 10% and raised its full-year forecast. Over the past three months, the “bank from here” earned 1.02 billion euro in net profit for its shareholders. Net interest income rose 9.4%, while insurance premiums (+8.5%) and fees (+7.1%) also increased. While everyone is only now talking about artificial intelligence and how it will make companies more efficient, KBC was already ahead of the curve. A great quote from Johan Thijs: “Operationally, Kate now independently resolves 7 out of 10 customer questions in our core markets. That corresponds to the workload of over 300 full-time employees.” You’d think the Dutch might start wondering about the weak performance of their bank ABN AMRO. As for me? I’m glad I keep diversifying. Alongside the unfortunate Bayer, I also hold monoholding KBC Ancora in my (model) portfolio. That one also suffered a major setback in 2008–2009, but in principle, the share should do well today. Then again—on the stock market, you never know. And that’s okay. I invest primarily in businesses, not stocks. In the long run, the share price will follow. What matters most is that the company performs well.

Did you know…

that Tony De Pauw passed away this week? Together with CEO Joost Uwents, he was the driving force behind WDP (Warehouses De Pauw), the Belgian regulated real estate company that went public 26 years ago. Since then, it grew its portfolio from 100 million euro to 7 billion euro. In that time, the stock price more than septupled, and WDP has increased its dividend every single year. Much respect.

This article was translated from Dutch and was originally published on Spaarvarkens.be.