IBERIAN DAILY 10 JUNE (ANÃLISIS BANCO SABADELL)
NEWS SUMMARY: ACS, ACCIONA, AENA, OHL, MÃSMÓVIL, NATURGY.MARKETS YESTERDAY AND TODAY
Profit taking
The main European indices shed between -1% and -2% following the heavy gains from the past weeks. In the Euro STOXX, Retail, Technology and Pharma were the only sectors ending in positive territory, with Banks and Travel & Leisure leading the falls. On the macroeconomic level, I. Schnabel from the ECB outlined that the institution will study whether the current inflation target of 2.0% is adequate. In the euro zone, the final 1Q’20 GDP was raised to -3.1% YoY from -3.2% previously. Separately, the EU finance ministers meeting ended without specific conclusions as regards the European Reconstruction Fund. In Spain, the Spanish Statistics Institute home prices moderated to 3.2% YoY in the 1Q’20. In Germany, April’s exports fell more than expected. In Mexico, May’s inflation climbed to 2.84% YoY from 2.15% previously. In China, May’s inflation increased less than expected, while production prices contracted more than expected.
What we expect for today
Stock markets would open with gains of +0.5%. Currently, S&P futures are up +0.54% (the S&P 500 closed practically unchanged vs. its price at the closing bell in Europe). Volatility in the US rose (VIX 27.57%). Asian markets are climbing (Japan +0.18% and Hong Kong +0.33%).
Today, the OECD will release its economic outlook. In France we will learn April’s industrial output, in the US the FED’s interest rate meeting and May’s inflation, and in Brazil May’s inflation. In debt auctions: Portugal (€ 1.5 Bn in bonds due 2027 and 2030), Italy (€ 10 Bn in 12M T-bills), Greece (€ 1.3 Bn in 12M T-bills), and Germany (50Y syndicated bond issuance).
COMPANY NEWS
AENA. The reopening of borders to tourism will be the main driver of the stock. BUY.
We cut our T.P. to € 148.00/sh. (+9.4% upside, -2% previously) although we maintain our BUY recommendation in view of the positive newsflow we expect as the deconfinement measures are lifted and the existing doubts on the business are dispelled. This should allow the company to pay, at least, part of the dividend announced (we expected € 3.79/sh., +3% yield vs. € 7.58/sh. pre Covid-19). Although the company’s liquidity position should allow it to pay the full dividend, out of prudence, we expect the dividend to be cut. With this in mind, despite the stock’s good performance since March’s lows (+20% vs. Ibex), AENA remains a solid option to bet on the recovery of tourism at a low risk (given its low debt levels and reduced operating risk vs. airlines and hotels).
NATURGY, SELL
According to the press, GIP (20% NTGY since 2016, that acquired its stake at € 19/sh; -8% vs. last close) would have offered its stake in NTGY to TOTAL, interested in raising its presence in the Spanish market. According to this source, the sale could be carried out with a premium of as much as +25% (€ 21.80/sh.).
This news has in principle a positive slant, if the market believes the premium rumoured, where we have doubts mainly in terms of valuation, even if TOT acquires this 20% stake it would not hold the control of NTGY. In any case, if the operation is conducted on the open market (in principle complicated bearing in mind the restriction to take positions during the pandemic), we would also see upward pressure in the share price. We would assign a higher weight to the fact that one of the shareholders that bet on NTGY to a greater extent decides to exit the company, as it would convey a message of exhausted equity story to the market, which should be restored by an industrial shareholder such as TOT to create value. Other shareholders in NTGY: La Caixa 20.4%, Rioja 20%, F. Godia 5%, Sonatrach 4%, and Capital Research 3%.
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.
ACS Actividades de Construccion y Servicios is a holding company. Through its subsidiaries, Co.'s activities are divided into the following areas: Construction, engaged in the construction of civil works, and residential and non-residential building construction; industrial services, engaged in the development of applied engineering services, installations and the maintenance of industrial infrastructures in the energy, communications and control systems sectors; services, groups together environmental services, the outsourcing of building maintenance services, logistics and transport services; and concessions, mainly engaged in transport infrastructure concessions.
Aena SME SA, formerly Aena SA, is a Spain-based company primarily engaged in the airports operation. Its activities are divided into four segments: Airports, which comprises Aeronautical subdivision, responsible for the management of airports, jetways, security, handling, cargo and fuel services, among others, as well as Commercial subdivision, including duty-free and specialty stores, restaurant services, car rental, as well as banking services and advertising; Services outside the terminal, which manages real estate assets, such as parking lots, warehouses and lands; International, which comprises operations of Company's subsidiary, Aena Desarrollo Internacional SA, that invests in other airport owners principally in Mexico, Colombia and the United Kingdom; and Others, encompassing corporate activities. It manages tourism, hub and regional airports, as well as heliports and general aviation areas. Furthermore, its destination range comprises Europe, the Americas, Asia and Africa.
Masmovil Ibercom SA, formerly World Wide Web Ibercom SA, is a Spain-based company primarily engaged in the telecommunication sector. The Company focuses on the sale and distribution services for Internet, Data Center and Telecommunications. The Company's product and services portfolio comprises Internet access through Asymmetric Digital Subscriber Line (ADSL) and Symmetric Digital Subscriber Line (SDSL) technologies, Internet domains and Domains Management and Registration Service through IberDNS application, Web hosting, virtual servers, dedicated servers, telephony services and routers. The Company also offers collocation services through two Internet Data Centers located in Madrid and San Sebastian. It operates through subsidiaries, such as Embou Nuevas Tecnologias SL and Ebesis Sistemas SL, among others. The Company owns a number of brand names, such as Pepephone, Yoigo and Llamaya.
Gestevision Telecinco is a television network company based in Spain. Co. heads a group of dependent companies, which form the Telecinco Group. Through its subsidiaries, Co. is engaged in the management and commercial exploitation of a television network. Co.'s television network acquires, produces, and distributes audiovisual content. Co. also sells the network advertising airtime, carried out by its subsidiary. In addition, Co. is involved in the sale of other advertising products; production of news programs; the production and sale of audiovisual property rights; and teleshopping.
Obrascon Huarte Lain is an international concession and construction groups based in Spain. Co. maintains significant operations in 30 countries across all five continents. Co. is engaged in hospital and railway construction, transport infrastructure concessions, oil and gas, energy, solids handling and fire protection systems and international contracts. Co.'s operations are organized along four divisions: OHL Concesiones, OHL Construccion, OHL Industrial y OHL Desarrollos. Co. is also engaged in real state project developments of mixed use managed by the international hotel chains.
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