EUR 100.00 For Business Accounts Only

IBERIAN DAILY 08 MAY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACCIONA, ARCELOR MITTAL, CELLNEX, FERROVIAL, GRIFOLS, INDITEX, MÁSMÓVIL, MELIÁ HOTELS.

MARKETS YESTERDAY AND TODAY

New steps forward
European stock markets continued to post gains in a session that improved towards the end, highly influenced by the results presentations. In the Euro Stoxx, the best-performing sectors were Retail and Basic Materials vs. the losses in Pharma and Autos. On the macro side, in Germany and France March’s industrial output fell more than expected (-11.4% and -16.2% YoY), although the biggest impact will be seen in April. In the UK, the BoE kept the reference rate (currently at 0.1%) and the size of the purchase programme the same, but it left the door open to increasing it in upcoming meetings to £ 645 Bn. Separately, the BoE expects a -14% drop in economic activity in 2020, the largest drop in Europe. In the US, weekly jobless claims rose more than expected, although at a slower pace than the past few weeks (with the number of unemployed totalling 22.65 M). Separately, Non-Farm productivity fell less than expected, fuelling labour costs above expectations. On another note, the government announced that the US and China are working to implement the Phase I trade deal. In Mexico, April’s general and core inflation increased at a lower rate, as expected. In Japan, household expenditure contracted less than expected in March to -6.0% YoY. In US business results, Dropbox, Goodrich, Liberty Media and Monster Beverage came in better, Paramount worse and GoPro in line with expectations.
What we expect for today
Stock markets would open with gains of as much as +1.0%, fuelled by news on the relationship between the US and China and awaiting the US job data. Currently, S&P futures are up +1.16% (the S&P 500 ended down -0.61% vs. its price at the closing bell in Europe). Volatility in the US fell (VIX 31.44%). Asian markets are rising (Japan +2.28% and Hong Kong +1.04%).
Today in Spain we will learn industrial output and in the US non-farm job creation, unemployment rate and salary gains (all for April). In US business results, Revlon, Sabre and Verasteam, among others, will release their earnings. In ratings, Moody’s will review that of Italy (Baa3, stable), where we do not expect any changes.

COMPANY NEWS

MELIA. Worse-than-expected 1Q’20 Results We cut our recommendation to SELL.
Results came in worse than expected on the operating level and Net Profit. The worse performance in EBITDA is explained by costs. Given the low visibility, MEL did not unveil any 2020 guidance, although it outlines that April and May will be the hardest months in terms of revenues with almost all of its hotels closed. After these weak results and the lack of visibility we cut our estimates significantly (-40% in 2020/22e) and our T.P. to € 4.00/sh. (-55% vs. previous T.P.), yielding a limited upside of +4% that lead us to downgrade our recommendation to SELL. From February’s highs, when the impact from Covid-19 started, the share price has slid -54% (-20% vs. IBEX) after rallying +53% from lows.

CELLNEX. Robust results and in line. We raise our estimates and T.P. to € 55.80/sh. BUY.
Good results and in line, underscoring the high visibility and business robustness, as well as the company’s resilience to keep its delivery even against a very adverse backdrop as we are currently seeing given the impact from Covid-19, which is allowing it to maintain organic growth (PoPs +5%, +7.1% in RLFCF). We raise our estimates to include the latest acquisitions, upgrading our T.P. to € 55.80/sh. (+24%, 13.8% upside), after assuming a new battery of acquisitions worth € 13 Bn (with a € 4.6 Bn rights issue). Thus, we reiterate our BUY recommendation, in an environment of global uncertainty where the significant visibility and business robustness is marked to market to a greater extent. Furthermore, the scenario of ultra low rates would mean tailwind that would underpin CLNX’s equity story.

ACCIONA, SELL
At yesterday’s closing bell, the company released slightly worse than expected 1Q’20 Results in LfL EBITDA (-2.8% vs. BS(e) and consensus) although slightly better in net debt (-2.1% vs. BS(e); 4.1x NFD/EBITDA 12 months). On another note, the company announced a new EBITDA gidance’20e (-15% vs. 2019) that offers a poor comparison vs. our estimates (-7% in V-shaped economic recovery including the cost savings announced) and those of the consensus (-3%), although the impact on valuation would be limited.
We expect a slightly negative reaction given the results and the guidance announced. ANA has outperformed the IBEX by +21% YTD. In our scenario of V-shaped recovery we will cut our T.P. by -5% to € 92.00/sh. (+9% upside). We reiterate our SELL recommendation.

FERROVIAL. 1Q’20 Results in line on the operating level and better in cash. The company will pay final dividend’19. BUY.
1Q’20 Results in line in Toll Roads (75% T.P.) and hit by Covid-19 to a lesser extent in Construction (3%. T.P.). Good performance of cash ex-infra, which improved to € 1.645 Bn (vs. € 1.314 Bn BS(e)) thanks to the favourable evolution of working capital (€ +26 M). Furthermore, the company kept the payment of the final dividend’19 (€ 0.312/sh.; 1.4% yield), positive following the doubts after the cancellation of ETR407 and Heathrow dividends. Despite the fact that the share price has outperformed the IBEX by +7% since February’s highs when the impact from Covid-19 started, we expect a positive reaction. With the revision of estimates we plan to carry out, -27% in EBITDA’20 in our scenario of V-shaped recovery, our T.P. would fall