IBERIAN DAILY 01 DECEMBER (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: ACCIONA, DIA, EUSKALTEL, IBERPAPEL, LIBERBANK, NH HOTELES, UNICAJA.MARKETS YESTERDAY AND TODAY
The market pauses for a break
European markets closed with slight drops. Growth stood out, which is starting to take the lead vs. value after the adjustments of valuations seen in the last few weeks. Thus, in the Euro STOXX, Retail and Financial Services were the best performers vs. Energy (given crude oil fluctuations) and Banks, which saw the biggest losses. On the macroeconomic level, in Spain, November’s preliminary inflation climbed slightly more than expected although the general inflation clearly remains in negative territory, while in Germany it came in far below expectations. In the euro zone, the Eurogroup meeting approved the ESM reform to give more power to the instrument in bank bailouts and will establish a “safety net” in case of bank bankruptcies starting in 2022. On another note, the IMF warned that new stimuli will be necessary to offset the second wave of Covid-19 while C. Lagarde was in favour of postponing debt control. In the US, October’s pending home sales slowed down unexpectedly. The president-elect J. Biden proposed J. Yellen as Treasury Secretary, although the position must be ratified by the Senate.
What we expect for today
We expect a bullish opening to the session (around +0.5%), with worse performance by value due to Energy, which is down -0.9%. Currently, S&P futures are up +0.8% (the S&P 500 closed up +0.24% vs. its price at the closing bell in Europe). Volatility in the US decreased (VIX 20.57). Asian markets are rising (CSI 300 +1.7%, Japan +1.4%).
Today in the euro zone we will learn November’s final manufacturing PMI and inflation, in Germany November’s unemployment, and in the US November’s manufacturing ISM and construction expenses. Powell will appear before Congress. In debt auctions: Spain (€ 3 Bn in 6 & 12M T-bills) and Belgium (€ 600 M in 3M T-bills).
COMPANY NEWS
DIA. Announces conversion of € 500 M of debt into capital. SELL
Yesterday DIA announced the conversion of € 500 M of debt (51% market cap and ~25% of NFD’20e) into capital, corresponding to the loan and bonds due April’21 from DEA Finance. It also announced an extension to the maturity of the loans (€ 902 M) until Dec’25 (vs. previous March’23). In principle, this is good news, as it eliminates the financing risk in the short-term, while also lowering its gearing ratio (~4.3x ND/EBITDA’20e vs. ~5.7x with no conversion). The key will be the conversion price, and assuming a -30% discount, dilution for shareholders would be -43%, while L1R would increase its stake by 11% to ~86%. Taking this conversion price as a reference, our T.P. would stand at €~0.11/sh. (which includes an improvement of >+15% following the company’s good performance in 3Q’20).
Acciona is the parent company of a construction group. Co. is engaged in general construction activities in the areas of civil engineering and buildings, including railways, marine and hydraulic works, motorways and airports, town planning, conduits, pavements, parking lots, and industrial and urban buildings. In addition, Co. is engaged in the provision of real estate services, the operation of parking lots, telecommunications, services, ecology and alternative means of energy. Co.'s operations are organized in six business divisions: Infrastructures, Real Estate, Energy, Water, Environmental & Urban Services and Logistic & Transport Services.
Euskaltel SA is a Spain-based company engaged in the provision of integrated telecommunication services. The Company's activities are divided into three segments: Residential, Business, as well as Wholesale and Other. The Residential segment provides fixed and mobile telecommunication services, broadband and wireless Internet, as well as digital television (TV) as a single service and in packages. The Business division primarily offers fixed and mobile telephony, as well as Internet access for enterprises. The Wholesale and Other area serves wholesale customers and is responsible for the delivery of communication services, such as infrastructure leasing, information technology (IT) outsourcing, as well as sell of installation material and electronics. The Company operates in the Basque Country, Spain.
Iberpapel Gestion is engaged in the manufacture, wholesale distribution, sale and export of pulp and printing and writing paper. In addition, Co. maintains forestry activities, including the cultivation of timberlands.
NH Hotel is engaged in the operation and management of hotels throughout Spain, the Benelux countries, Germany, and South America.
Unicaja Banco SA is a Spain-based financial institution (the Bank) engaged in the banking sector. The Bank offers services to individual and business customers. Its products and services range includes current and savings accounts, debit and credit cards, consumer and commercial loans, real estate credit, securities brokerage, funds management, leasing, factoring, pension plans, life and non-life insurance, international trade financing, money transfer, as well as treasury, among others. The Bank operates a number of branches in Spain and Morocco. The Bank is controlled by Fundacion Bancaria Unicaja.
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