EUR 100.00 For Business Accounts Only

IBERIAN DAILY 16 JANUARY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACCIONA, ACS, TELEFÓNICA.

MARKETS YESTERDAY AND TODAY

Trade war truce signed
Finally, the US and China signed a trade agreement that contains sanctions in case of failure to comply with exchange, intellectual property and trade issues. The Euro STÖXX reacted to the news with slight drops, with defensive sectors such as Utilities and Personal Household Goods being the best performers vs. cyclical sectors such as Basic Resources and Autos, which saw the biggest drops. On the macro side, in Spain, December’s final inflation confirmed the preliminary 0.8% YoY figure, in line with core inflation, which remained unchanged vs. the previous figure of 1.0%. In the Euro zone, the industrial output recovered somewhat less than expected in November. In the United Kingdom, December’s inflation slowed. In the US, production prices increased somewhat less than expected in December, whereas the Empire manufacturing index for January recovered above expectations. The Fed’s Beige Book depicted lacklustre growth, underpinned by the strength of consumption and without significant wage pressures. In monetary policy, P. Harker pointed out that the measures taken to stabilise the repo market had worked well. On another note, the phase two of the trade agreement would have started according to the vice-president while Trump threatened Europe with tariffs to automobiles if European leaders do not condemn Iran for breaching 2015 nuclear agreement. Finally, the political trial to Trump will start next Tuesday. In China, home prices continued to moderate its rise to 6.8% YoY vs. 7.35 previously although the number of cities where prices register monthly progress increases for the first time in 8 months. In Japan, core machinery orders grew in November more than expected. In US business results, BlackRock and Bank of America came in better than expected, and Goldman Sachs and US Bancorp released disappointing figures.
What we expect for today
Stock markets would open with slight gains of +0.1%. Currently, S&P futures are up +0.16% (the S&P 500 closed -0.17% lower vs. its price at the closing bell in Europe). Volatility in the US rose (VIX 12.42%). Asian markets are rising (Japan +0.07% and Hong Kong +0.04%).
Today in Germany we will learn December’s final inflation, in the Euro zone the ECB minutes, in the US, weekly jobless claims, December’s retail sales, January’s Philadelphia Fed index, November’s business inventories and January’s NAHB real estate confidence index.

COMPANY NEWS

ACCIONA. Pipeline through 2024 priced In. SELL.
The greater visibility provided by ANA in the past few months on its Energy division as regards short- and medium-term growth (with ~1,800 MW to be installed through 2021) and its project pipeline (~9.000 MW globally) has allowed us to price in to our estimates and valuation a CAGR’19e-24e of +6.5% in consolidated installed capacity, which added to other factors with a lesser impact leads us to raise our T.P. by +19% to € 97.20/sh. (implied EV/EBITDA’20e of 9.6x vs. 10.6x for its peers). Following the +28% rally from the past 12 months (~+20% vs. IBEX35), we see no upside potential (-0.5%), and thus we maintain our SELL recommendation. The dividend yield’19 stands at 4.1%.