EUR 100.00 For Business Accounts Only

IBERIAN DAILY 01 MARCH (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACCIONA, ACCIONA ENERGÍA, ACERINOX, ACS, AMADEUS, BBVA, CELLNEX, COLONIAL, ELECTRICITY SECTOR, ENCE, FCC, GRUPO CATALANA OCCIDENTE, MELIÁ HOTELES, MERLIN, VISCOFAN.

IBEX remains stuck
February ended with improved macro indicators (today we will learn euro zone inflation), sharp rises in most European indices (yesterday the gains were moderate) and with the IBEX lagging, staying just above 10,000 points. On the macro side, in Spain February’s inflation fell in line with expectations to 2.8% YoY (due to the falling energy and food prices), with the core figure reaching 3.4%. In Germany, January’s retail sales fell unexpectedly. In the US, personal outlays rose in line with expectations (although falling slightly in real terms), whereas the core consumption deflator for January slowed as expected to 2.8% YoY. January’s pending home sales fell more than expected. From the Fed, R. Bostic was in favour of cutting rates in the summer whereas M.Daly admitted no rush in cutting rates although he would not wait until meeting the inflation target and A. Goolsbee requested caution about inflation data. In China, the manufacturing PMI fell slightly, as expected, in February (49.1), whereas the Caixin climbed slightly more than expected (50.9) and the non-manufacturing PMI rose, beating expectations.
What we expect for today
European stock markets would open with gains of up to +0.5%. Currently, S&P futures are up +0.10% (the S&P 500 ended +0.48% higher vs. the European closing bell). Asian stock markets are climbing (China’s CSI 300 +0.57%, Japan’s Nikkei +1.90%).
Today in the euro zone we will learn February’s inflation, February’s final PMI and January’s unemployment rate, in Spain February’s manufacturing PMI, in the US February’s manufacturing ISM and in Brazil the 4Q’24 GDP.



COMPANY NEWS

ACCIONA. The drop in the renewable business drags down the group’s EBITDA. BUY.
Sales’23 grew +52% up to € 17.02 Bn, above consensus expectations (+42% growth), with the good performance of Infra (+28%), the contribution of Nordex and growth in other businesses (+2.8%) that offset the -18% drop in Energy sales. EBITDA came in at € 1.98 Bn (-42% vs. 2022). NFD totalled € 6.55 Bn (vs. € 5.25 Bn in 2022), with a 3.31x NFD/EBITDA ratio (vs. 2.54x in 2022). As for the 2024 guidance, the company foresees double-digit EBITDA growth (ex capital gains from asset rotation) vs. +18% BS(e) and around +9% consensus. ANA announced a € 4.85/sh. DPS (+8% vs. 2022; 4.7% yield), slightly above expectations (consensus and BS(e) € 4.73/sh.). The share price has slid -22% vs. IBEX YTD.

ACCIONA ENERGÍA, BUY
2023 EBITDA came in at € 1.29 Bn (-22.3% vs. 2022 and vs. -22.6% consensus), with a contribution from the International business that rose +37.3% to € 547 M, and dragged down by the business in Spain. NFD totalled € 3.73 Bn (vs. € 2.02 Bn in 2022), reflecting the heavy investments made over the period and the dividend payment. The NFD/EBITDA ratio stood at 2.9x vs. 1.22x in 2022. The company has proposed a dividend of € 157 M (€ 0.48/sh., -31% vs. 2022, 2.4% yield) against 2023 results. As for the outlook for 2024, the company expects € 1.1 Bn of EBITDA before capital gains and €~1.4 Bn with capital gains, compared to € 1.42 Bn BS(e) and € 1.29 Bn consensus. ANE also expects a CAGR’24-28 of mid-to-high single digits. The FY2023 results are basically in line with expectations, the dividend has been cut and the guidance’24 is not very attractive.

ACERINOX, BUY
The results were far below expectations in EBITDA (€ 96 M vs. € 114 M BS(e) and € 132 M consensus) due to adjustments from stock regularisation (€ 65 M). If we were to include this amount, the figure would have beaten expectations, although we think it is reasonable for the consensus to have assumed some sort of impact in this regard, making it more difficult to read these results. As for the outlook, the company expects 1Q’24 EBITDA to be slightly better than in Q4 (€ 96 M), which we see as attainable against a backdrop of recovering demand and nickel prices. The consensus assumes € 669 M of EBITA’24 (ex-Haynes), and thus in order to reach this level we should see a year that improves as it progresses. Apart from the quarterly figures (which we do not think are a game changer), we believe the messages of recovering demand could act as a driver.

ACS, BUY
At the closing bell the company released 4Q’23 results in line on the operating level (EBITDA -0.1% vs. +2% BS(e) and -0.9% consensus) and with net cash above expectations (€ 400 M vs. €~130 M BS(e)) based on better operating cash flow than expected. Most of these results were already known following the release of Hochtief’s results (75.7% ACS; 64% EBITDA’23) and those of Abertis (~45% ACS; 6% EBITDA’23), although the contribution to EBITDA from the rest of the divisions was slightly above expectations (+3% vs. BS(e)). With all this in mind, we expect the reception to be neutral/positive, after the stock rose +6.3% since the favourable ruling on the AP-7. At 12:00 (CET) the company will present its FY2023 results

AMADEUS, BUY
After yesterday’s closing bell, the company communicated there is no interest in acquiring Shif4, the US payment processing company listed on New York stock exchange. Note that yesterday the share price fell -7% in absolute terms after rumours that AMS would be interested in acquiring this company, which would be a relevant deal in terms of size (Shift4’s EV around € 7.9 Bn, around 27% of AMS’s EV), focused on a business that we assume accounts for >5 of AMS’s current sales.
MARKET IMPACT
This news should lead to a positive market reaction today (the ADR yesterday climbed +5% after the communiqué).

CELLNEX, BUY
Results in line with expectations in both sales and EBITDA, meeting its 2023 guidance. Sales’23 grew +15.8%, with infrastructure service sales (91% total) growing +16% (+10% organic; +3% escalators, +4% BTS and +3% co-locations and others). Adjusted EBITDA totalled € 3 Bn (+14% vs. 2022), with +6.4% organic growth. In terms of cash, the company generated € 1.54 Bn of RLFCF (at the low end of the guidance range: € 1.5-1.6 bn, in line with consensus estimates). NFD rose slightly to € 20.10 (from € 19.73 Bn in 2022), leaving a 6.68x NFD/EBITDA ratio. Solid results but we foresee a limited impact as the attention will be drawn to the company’s CMD on 05/03 where it will unveil its new strategy.

INMOBILIARIA COLONIAL, BUYTotal rents show +6% growth (slowing vs. the +7% seen in 9M’23 and +8% in 1H’23). LfL rents have grown +8% (+8% in 9M’23) thanks to the indexation. Recurring EPS rose +7% to € 0.32/sh. (vs. guidance of € 0.30-0.31 and € 0.31 BS(e)), with an increase of +15% to recurring financial costs. As for the appraisal, LfL GAV fell -9% on the year (vs. -10% BS(e)) due to yield expansion. LTV rose +120bps vs. Dec’22 to 39.9% (47% EPRA). The results are solid on the operating level and have slightly beaten the recurring EPS guidance, although the appraisal shows a significant drop that worsens the leverage ratios. Although the maturity calendar and the fixed-rate debt protect the company in the short and medium term, leverage is high, and against the current interest rate backdrop, this is still one of the market’s main worries, and thus asset sales will be especially important. In this regard, the company has indicated that it aims to sell € 500 M worth of assets in 2024 (of which € 150 M would already have been signed at similar prices to the appraisal. With all this in mind, we think the stock will continue to move depending on the market’s interest rate expectations, and we do not expect a significant rally until these expectations change their trend, despite having fallen -23% in 2024. On the other hand, another driver would be a significant reduction to leverage through asset sales (at reasonably good prices).

ENCE, BUY
Yesterday with the market open the company released results above expectations in both sales and EBITDA. In the pulp division, sales’23 fell -12.6% due to a sharp fall in average prices (-23.6%), which drags down volume growth (+18.4%). EBITDA dropped -66% vs. 2022 to € 46.2 M, with cash cost’23 standing at € 525.5/t (-4.9% vs. 2022) and at 455.2 in 4Q’23 (-32.9% vs. 4Q’23). EBITDA in the energy division came in at € 42.6 M (vs. € 109.8 M 2022), including € 26.7 M from the sale of two 140MW photovoltaic projects (made public in the 2Q’23 and 3Q’23). NFD totalled € 179.6 M, better than our estimate and vs. € 30 M of net cash as of YE’22, meaning a 3.1x NFD/EBITDA ratio. The share price saw a negative reaction to these results, sliding -3.6% (vs. -0.7% IBEX).

FCC, BUY
4Q’23 Results showed an operating performance in line with expectations (EBITDA € 398 M vs. € 405 M BS(e)), with sales (+9.5 vs. +9.8% BS(e)) and EBITDA margins very much in line (16.8% vs. 16.9% BS(e)). NFD fell -19% to € 3.1 Bn (2.0x NFD/EBITDA vs. 2.5x in 9M’23), fully in line with our estimate (around € 3 Bn; 2.0x NFD/EBITDA). 4Q’23 Results showed in general a robust performance, which leads us to maintain our positive stance on the stock. With this in mind, we do not foresee a relevant impact from these results following its good recent performance (+8.8% in 2024; +7.8% vs. IBEX). Conference call today at 9:00 (CET).

GRUPO CATALANA OCCIDENTE, BUY
Yesterday the company released results showing € 551.8 M of Net Profit’23 (+13.1% vs. +9.1% BS(e)) and +3.7% in recurring Net Profit, due to restructuring costs incurred in 2024 and accounted in 4Q’22. In the Traditional business, premiums followed the previous trend, growing +7.8% vs. 2022, the combined ratio remains at 92% and recurring Net Profit rose +1.3% YoY. In Credit insurance premiums grew +4.3%, the CR came in at 74.1% (72.3% in 2022) and recurring Net Profit rose +3.1%. The Funeral business contributed € 11 M. As usual, positive results, with a strong dynamic continuing in revenues and with no significant deterioration in margins, despite the inflationary pressures and the rise in commercial defaults in Credit. GCO rose +9% in 2023 (vs. around +8% sector) and +20% since Oct’23, although it continues to be clearly undervalued (