IBERIAN DAILY 06 FEBRUARY (ANÃLISIS BANCO SABADELL)
NEWS SUMMARY: ACS, ARCELOR MITTAL, METROVACESA, SIEMENS GAMESA, TALGO.MARKETS YESTERDAY AND TODAY
Better news on the coronavirus front
Rumours of a coronavirus vaccine having been found and a positive reception of the US data helped stock markets rally. Within the Euro STOXX, all sectors posted gains once again, led by Basic Resources and Autos vs. defensive sectors such as Real Estate and Telecoms, which saw the smallest increases. On the macro side, in the Euro zone, January’s final services PMI came was raised slightly despite a sharp deterioration in Spain (52.3 vs. 54.9 previously). Separately, retail sales contracted more than expected in December. In the US, January’s ADP employment survey rose unexpectedly, whereas January’s non-manufacturing ISM recovered somewhat more than expected and hints at growth of 1.9% QoQ annualised in 1Q’20 vs. the consensus estimate of 2.0%. On another note, the Senate acquitted D. Trump on all articles of impeachment. In Brazil, the Central Bank cut, as expected, the reference interest rate by 25bps to 4.25%. In US business results, Merck came in as expected, and General Motors, QUALCOMM and Fox News much better than expected.
What we expect for today
Stock markets would open with gains of +0.5% amid rises in the crude oil price. Currently, S&P futures are +0.51% higher (the S&P 500 closed +0.28% higher vs. its price at the closing bell in Europe). Volatility in the US dropped (VIX 15.15%). The Asian markets that are open are climbing (Japan +2.38% and Hong Kong +2.79%).
Today in the Euro zone, we will learn the ECB monthly report, in the US the (preliminary) 4Q’19 non-farm productivity and weekly jobless claims. In US business results, Twitter, Snap-on, Estee Lauder, Philip Morris and Kellogg, among others, will release their earnings. As for auctions, Spain will issue € 5.5 Bn in bonds due 2023, 2026 and 2030 and I/L 2030 and France € 9 Bn in bonds due 2029, 2034, 2039 and 2066.
COMPANY NEWS
ARCELOR MITTAL: Results came in better than expected. Good news in debt and 2020 prospects. BUY.
The 4Q’19 Results came in better than expected (US$ 925 M EBITDA vs. 839 M BS(e) and 856 M consensus) thanks to the US (25% EBITDA) and Mining (25%). The NFD came in at US$ 9.3 Bn, clearly below expectations (US$ 10.059 Bn BS(e) and ~10.1 Bn consensus) thanks to the good working capital performance. Furthermore, the company expects to end 2020 with around US$ 7 Bn of NFD, also better than expected. On another note, the operating prospects unveiled are positive, with +1%/+2% growth in global apparent demand (vs. +1.1% in 2019) but especially favourable in its main markets (Brazil, the US and Europe), where the company sees a positive price environment. The group raised its DPS by +50% to US$ 0.30 vs. 0.20 expected. We expect a positive reaction.
METROVACESA, BUY.
According to the CNMV’s registries, Inversora de Carso (Carlos Slim) has amassed a 3.0% stake in MVC. The Mexican tycoon, who has owned Realia since 2015, also announced he had acquired a 3% stake in another real estate developer, Quabit, two months ago. Positive news as it suggests that Slim sees value in a company that has been severely punished on the stock markets in the past two years. We do not know Slim’s intentions, although we see a TOB as unlikely, at least at the current prices, since we believe that MVC’s largest shareholders, that is Banco Santander (49%) and BBVA (20.8%), would not be willing to sell at the current price levels. MVC was listed on the stock exchange two years ago and the share price has since slid -40%.
Accesso Technology Group is engaged in the development and application of ticketing, mobile and eCommerce technologies, and virtual queuing solutions for the attractions and leisure industry. Co.'s solutions include accesso LoQueue, accesso Passport, accesso Siriusware and accesso ShoWare. Co. primarily has operations or customers in the U.K., the U.S., Canada, Italy, Germany, Australia, Brazil, and Mexico.
ACS Actividades de Construccion y Servicios is a holding company. Through its subsidiaries, Co.'s activities are divided into the following areas: Construction, engaged in the construction of civil works, and residential and non-residential building construction; industrial services, engaged in the development of applied engineering services, installations and the maintenance of industrial infrastructures in the energy, communications and control systems sectors; services, groups together environmental services, the outsourcing of building maintenance services, logistics and transport services; and concessions, mainly engaged in transport infrastructure concessions.
Metrovacesa SA, formerly Metrovacesa Suelo y Promocion SA, is a Spain-based real estate developer. The Company specializes in construction and sale of sustainable housing, both single-family and multi-family residential properties. Its activities also include promotion, urbanization and parceling of real estate in general, as well as real estate management for own benefit or on behalf of third parties. Its asset portfolio includes more than 6 million square meters of building land across Spain, as well as already developed properties in cities, such as Malaga, Almeria, Cordoba, Barcelona and Madrid, among others.
Talgo is engaged in designing, manufacturing, repairing and maintaining the railway rolling stock, as well as the manufacturing, assembling, repairing and maintaining the engines, machinery and parts of the railway systems. Co. has an industrial presence in seven countries: Spain, Germany, Kazakhstan, Uzbekistan, Russia, Saudi Arabia and U.S.A. Co. has an active fleet in Europe, Asia and North America that comprises of 94 high-speed trains and more than 1,400 Talgo tilting passenger cars. Also, Co. purchases, redesigns, constructs, leases and sells all types of real estate.
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