EUR 100.00 For Business Accounts Only

IBERIAN DAILY 06 MAY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACCIONA, CAF, CELLNEX, GRIFOLS, LIBERBANK, NH HOTELES, RESULTS HIGHLIGHTS, SIEMENS GAMESA.

MARKETS YESTERDAY AND TODAY

Stock markets and oil rally
Stock markets rose sharply as several countries prepare to ease lockdown restrictions. In the Euro Stoxx, the rally was led by Energy and Real Estate, while Food ended up with losses and Travel & Leisure closed with the smallest gains. On the macro side, in Spain the number of unemployed rose by 370,173 (+21% YoY and the largest increase on record), whereas registered employment showed a drop of -548,093 workers. In Germany the Constitutional Court called the legality of the ECB’s public debt purchase programme into question, which could lead the Bundesbank to temporarily cease participating in the purchases, although it will not affect the Covid programme. In the US, April’s non-manufacturing ISM fell significantly less than expected (to 41.8), and to a much lesser extent than its counterpart in the euro zone, which would suggest a contraction of around -5%. In US business results, WestRock and DuPont beat expectations, whereas Incyte released worse earnings than expected and Primier Inc. was in line.
What we expect for today
Stock markets would open with slight drops that could ease throughout the session. Currently, S&P futures are up +0.49% (the S&P 500 ended practically unchanged vs. its price at the closing bell in Europe). Volatility in the US dropped (VIX 33.61%). The Asian markets that are open are climbing (Hong Kong +1.00%).
Today in the euro zone we will learn April’s final services PMI and March’s retail sales and in the US April’s ADP employment survey. In US business results, Discovery, Wendy’s, General Motors and T-Mobile, among others, will release their earnings. Debt auctions: Germany (€ 4 Bn in bonds due 2025).

COMPANY NEWS

Results highlights next week.
Of the companies releasing 1Q’20 results next week, we expect to see a positive impact in Almirall, where sales (excl. Aczone effect) would grow +4% and margins would increase by +40bps to 32% (driven by the hoarding effect/pre-purchases seen in March) and in MásMóvil, where we expect the results to underscore the company’s defensive nature against the impact from Covid-19, showing further growth in sales and EBITDA and an increased client base. On the negative side we would highlight Metrovacesa, not so much on the 1Q’20 P&L statement but on the impact that Covid-19 and the associated economic recession should have on home pre-sales data and on land sales prospects.

SIEMENS GAMESA, SELL
The company has just released poor 2Q’20 results that were slightly above our expectation in sales (-3.4%) and in line with the consensus. However, on the adjusted EBIT level the results were -46% below our estimate and -57% below the consensus. Reported Net Profit fell to € -165 M (vs. € -28 M BS(e) and € -34 M consensus). Net debt stands at € 295 M, slightly worse than our estimate (€ 217 M BS(e)). Order intake fell -11% vs. 2Q’19.
Results came in below expectations in adjusted EBIT, and thus, we could see a poor market reception, especially after its +16% outperformance vs. the IBEX since Feb’20 IBEX highs. With the revision of estimates we plan to carry out in our scenario of V-shaped recovery (after two quarters of deep recession), we would cut our adjusted EBIT’20 by -38% (-4% on average 2021/22) and our T.P. would fall to € 12.50/sh. (-9% potential; -5% vs. previous T.P.). In our scenario of U-shaped recovery (deep economic recession for 2 quarters, moderate recovery in the third quarter and strong in the fourth quarter and 2021) we would cut adjusted EBIT’20e by -54% (-14% on average in 2021-22) and our T.P. would fall to € 11.70/sh. (-13% potential; -10% vs. previous).