EUR 100.00 For Business Accounts Only

IBERIAN DAILY 27 MARCH (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACCIONA, ACS, AENA, ATRESMEDIA, BANKING SECTOR, CAIXABANK, PROSEGUR.

MARKETS YESTERDAY AND TODAY

Stock markets manage to close in the black
The European stock markets managed to end in the black, backed by the increase in the S&P500, which was up +4.00% at closing bell in Europe. Separately, the G20 leaders issued a communiqué announcing that the G20 will do whatever it takes to overcome the coronavirus pandemic. However, the Eurogroup disappointed once again, as it did not reach an agreement over a fiscal package financed with ESM funds or coronabonds, calling for a new summit in two weeks. On the positive side, the European Parliament approved a provision of € 38 Bn. On the health front, Madrid expects to hit the peak of infections this week-end after a two-week lockdown. Meanwhile, China, where the virus outbreak seems to be under control, will close its borders starting today. Within the Euro STOXX, Industrials and Construction were the best relative performers whereas Telecoms and Basic Resources were the worst-performing sectors. On the macro side, in the Euro zone, the ECB monthly report underscored the positives of its current pandemic emergency purchase programme (PEPP) in the current scenario. In the United Kingdom, the BoE maintained reference interest rates at lows of 0.1%, claiming that it could expand asset purchases to a greater extent if it is necessary. Separately, retail sales came in worse than expected. In the US, weekly jobless claims showed an unprecedented increase, whereas the GDP came in as expected and the trade deficit was reduced by 9.1% in February. In China, business profit fell by more than -38% in February.
What we expect for today
Stock markets would open lacking a clear direction in a session of consolidation following the sharp increases from the past few days and the disappointing Eurogroup summit. Currently, S&P futures are falling slightly (the S&P 500 ended +1.2% higher vs. its price at the closing bell in Europe). Volatility in the US fell (VIX 61%). The Asian markets are rising (Japan +3.9% and Hong Kong +0.9%).
Today we will learn in the US the personal income and outlays data, and in Mexico, the trade balance.


COMPANY NEWS

AENA, BUY.
At yesterday’s closing bell, the company unveiled further details on the current situation of Covid-19 and the measures being implemented to adapt to the current environment. AENA announced that the current situation of traffic means a -45.5% decline in airline traffic vs. last year (as a reverence, last Wednesday 24/03 saw -97% less traffic than the same day in 2019). In view of this situation of traffic and the low current visibility, the company communicated that the 2020 guidance is not valid (that meant +2% traffic growth) and it considers that assuming a new estimate is not feasible for the moment. In order to minimise the impact from this low occupancy derived from the state of alarm, AENA proposed some measures to reduce cash outflows based on the renegotiation of services contracts (effect on cash of approx. € 43 M on a monthly basis, 2.1% annual FCF) and the temporary suspension of the investment programmes (effect on cash of approx. € 52 M, 2.6% of annual FCF). On another note, the company outlined that its current liquidity position totals € 2 Bn (€ 1.35 Bn in cash and credit lines, as well as € 650 M in promissory notes not issued). Additionally, AENA suggested it is in advanced talks with several financial institutions to obtain new credit lines and loans, expected to be signed over the coming years. Lastly, the company outlined that the AGM will be held as soon as possible, and at that time it will analyse the different options in terms of dividend (€ 7.58/sh., 6.7% yield). Positive news given the visibility given in terms of the company’s current operation. Although we believe that the traffic figures given by AENA are not positive, they are in line with the current environment where most airlines are barely operating flights in view of the restrictions adopted by the authorities. However, we welcome the fact that the company specified the cost-saving measures that will reduce monthly cash outflows to around € 110 M (5.5% of liquidity). Lastly, we stress the fat that AENA is seeking additional financing sources (that we assume should not be highly complicated given its current low debt level, 2.3x NFD/EBITDA), which should add calm to the share price thanks to its current liquidity. With this in mind, we believe this is a preventive measure and is not in any event explained by an urgent need of cash.

CAIXABANK. Cuts DPS’19 AND 20 ands raises 2021 capital guidance. BUY
The company yesterday announced that: (i) it has postponed sine die the AGM scheduled on 02/04; (i) cut DPS’10 to € 0.07/sh. (-53% vs. the level previously announced; 3.7% yield), which will be paid on the 15th of April. 24.6% pay-out; (iii) It has cut pay-out’20 to 30% maximum (vs. >50% guidance and around 55% BS(e) and consensus); (iv) set a new CET1’21 guidance of 11.5% (vs. 12%; +1% previous level and 12% in Dec’19); and (v) maintained the pay-out guidance >50% from 2021 and announced its intention of returning the excess capital >12% as extraordinary dividend or share buyback. The group reiterates that its solvency and liquidity position is not questioned, justifying the decision by using capital to grant lending Covid-19. This news should have a limited impact on the share price, as the cancellation/reduction of dividend in the sector is already priced in.