EUR 100.00 For Business Accounts Only

IBERIAN DAILY 02 JULY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: IBERDROLA, OHLA.

Trade talks in the spotlight
With all eyes on trade talks (the US seems to be prioritising the elimination of legal barriers against large US tech companies), European stock markets were mixed (DAX -0.8%, IBEX flat and FTSE 100 +0.3%). In the STOXX 600, the best-performing sectors were Consumer Goods and Retail, with Industrials and Banks posting the biggest drops. On the macro side, in the euro zone, June’s final manufacturing PMI was raised +0.1%, with Spain rising significantly (the only one above 50) and Italy falling. As for inflation, it rose +0.1% in June to 2.0% YoY (in line), whereas the core figure remained at the previous 2.3%, with service inflation remaining high (at 3.3%). In Germany, the number of unemployed in June rose less than expected, keeping the unemployment rate at 6.3%. In France, the no-confidence vote did not succeed after Le Pen’s party abstained. In the US, June’s manufacturing ISM improved slightly more than expected, although the orders and employment headings worsened slightly. May’s construction spending fell once again more than expected, while JOLTS job openings for May rose unexpectedly. Separately, Trump’s budget law was approved by the minimum number of votes (51 in favour vs. 50 against, including three Republicans), and today it should be passed by the House of Representatives.
What we expect for today
European stock markets would open with gains of around +0.5%, with cyclicals performing better. Currently, S&P futures are up +0.24% (the S&P 500 ended +0.36% higher vs. the European closing bell). Asian markets are mixed (China’s CSI 300 +0.05% and Japan’s Nikkei -0.50%).
Today in Brazil we will learn May’s industrial output and in the US June’s ADP private employment survey.



COMPANY NEWS

OHLA. Favourable result in Sidra Hospital arbitration. OVERWEIGHT.
Yesterday the company announced that, regarding the arbitration on the Sidra Hospital (Qatar), the International Chamber of Commerce has announced that the construction consortium (55% OHLA) will have to pay Qatar Foundation the amount of € 24.3 M (€~13.4 M attributable to OHLA), with the pending decision on costs and interests before 31 October’25. The construction consortium has € 40 M of cash to face this ruling, and OHLA has confirmed that it has made a provision, and thus there will be no impact on its P&L statement. Note that Qatar Foundation was claiming € 958 M from the consortium, which in turn had requested € 329 M from Qatar. Positive news, as it eliminates the main short-term risk we saw in the stock. Our valuation included a cash outflow from this project of € -147 M (~40% of the net claims attributable to OHLA), and thus with the decision on costs and interests still pending, the impact on our T.P. is +28% to € 0.45/sh. (+48% upside), once again with strong upside, and thus we upgrade our recommendation to OVERWEIGHT.