IBERIAN DAILY 08 APRIL (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: AEDAS HOMES, ALMIRALL, INDRA, REPSOL, TELEFÓNICA.Rally on the markets thanks to the two-week ceasefire
European stock markets began the session with gains, then losing ground and ending with losses, with no announcement of a deal to end the ultimatum. Late last night it was learned that Iran and the US agreed to a two-week ceasefire that includes opening the Strait of Hormuz, while Israel, which supports the ceasefire, will continue to attack Lebanon. In the STOXX 600, most sectors (15/20) ended with losses, led by Technology and Pharma, with the best performers being Media and Chemicals. On the macro side, in the euro zone, March’s final services PMI was raised slightly to 50.2. April’s Sentix investor confidence fell sharply to a 12-month low, where we highlight the risk of a recession stemming from the war in Iran. In the UK, March’s final services PMI was lowered to a six-month low due to the risk of stagflation stemming from the war. In the US, February’s durable goods orders fell more than expected for the third straight month, although the core capital goods component rose more than expected. In geopolitics, on Friday Pakistan will begin peace talks between US-Israel and Iran.
What we expect for today
European stock markets would open with gains of more than +5.0%, with strong performance from cyclicals. Currently, S&P futures are up +2.6% (the S&P 500 ended +0.8% higher vs. the European closing bell). Asian markets are rising (China’s CSI 300 +3.2%, Japan’s Nikkei +5.27% and South Korea’s Kospi +6.6%).
Today in the euro zone we will learn February’s retail sales, in Germany February’s industrial orders and in the US the Fed’s meeting minutes.
COMPANY NEWS
AEDAS HOMES. Dropped coverage.
As of today, we discontinue coverage of the stock due to its low remaining free float (~3.2%) following the recent TOB by Neinor Homes, which now controls 96.8% of the company.
REPSOL. We downgrade our recommendation to UNDERWEIGHT from OVERWEIGHT
We change our recommendation to UNDERWEIGHT due to the negative potential (-3% at yesterday’s closing price) and despite the appealing shareholder remuneration (around 8% between cash and buybacks), and we estimate a T.P. of €~23.19/sh., which we will confirm with the trading update to be released this week. The share price would already be factoring in part of the potential improvement to production in Venezuela (tripling production in the country within 2-3 years, around +11% to ~650 kboe/d with the JVs), the liquidity event or the conflict in Iran (depending on the ceasefire agreed, but with a more short-term than long-term impact on Brent crude prices, gas prices and the refining margin).
Aedas Homes is engaged in the housing development business in Spain. The company has a portfolio of approximately 1.5 million square meters of land that it develops for residential purpose. Co. develops multifamily homes for the housing market in Madrid, Catalonia, Levante and Majorca, Costa del Sol and Seville.
Almirall is engaged in the acquisition, manufacture, storage, sale and mediation in the sale of pharmaceutical specialties and products and all manner of raw materials used to prepare pharmaceutical specialties and products. Also, Co. acquires, manufactures, storages, sales and mediates in the sale of cosmetics, chemical, biotechnological and diagnostic products for human, veterinary, agrochemical and food-industry use, as well as all manner of utensils, complements and accessories for the chemical, pharmaceutical and clinical industries. In addition, Co. is engaged in the acquisition, sale, lease, subdivision and development of land lots, land and properties of all kinds.
Indra Sistemas is engaged in the design, development, manufacture, assembly, repair, and installation of computer software and applications. Through its subsidiaries, Co. is engaged in consulting, graphic design and multimedia, web design and marketing, internet development and electronic trade, systems integration and hosting geared business to business and business to consumer, as well as in internet financing and electronic marketing. Co. serves defense and security, transport and traffic, energy and industry, telecom and media, finance and insurance, and public administration and healthcare markets. Co. operates primarily in Europe, the United States, Canada, and Latin America.
Repsol is an oil and gas company. Co. is engaged in all the activities relating to the oil and gas industry, including exploration, development and production of crude oil and natural gas, transportation of oil products, liquefied petroleum gas (LPG) and natural gas, refining, the production of a wide range of oil products and the retailing of oil products, oil derivatives, petrochemicals, LPG and natural gas, as well as the generation, transportation, distribution and supply of electricity. Co. operates in more than 40 countries. Co.'s operations are divided into four segments: Upstream, Downstream, LNG and Gas Natural Fenosa.
Telefonica is engaged in the provision of public or private telecommunications services, including ancillary or complementary telecommunications services or related services. Co.'s fixed business includes: traditional fixed telecommunication services, Internet and broadband multimedia services, data and business-aplications services, and wholesale services for telecommunication operators. Co. also provides a range of mobile and related services and products to consumer and business customers, including mobile voice services, value added services, mobile data and Internet services, wholesale services, corporate services, roaming, fixed wireless, and, trunking and paging.
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