EUR 100.00 For Business Accounts Only

IBERIAN DAILY 14 DECEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACCIONA, ACS, IAG, GRUPO CATALANA OCCIDENTE, PRISA, RENEWABLES SECTOR, REPSOL.


MARKETS YESTERDAY AND TODAY

Greater expectations of fiscal plan in the US vs. Brexit
The stock markets ended the week with losses (although reeling some back in at the closing bell), with all eyes set on Brexit. The President of the EC, Ursula von der Leyen, warned that she believes a no-deal Brexit is now the most likely outcome although negotiations will continue until Christmas, ignoring once more the deadlines set. On another note, although there are doubts on its approval, a stimulus plan worth US$ 908 Bn proposed by the Treasury Secretary S. Mnuchin would be presented at the US Congress, which was already backed by the Republican leader at the Senate. In the Euro STOXX (with most sectors in the red), Industrials and Media were the best relative performers, whereas Insurance and Banks were the worst performers. On the macro side, in the US November’s production prices rose less than expected, whereas U. of Michigan consumer sentiment for December beat expectations in both the current conditions and expectations components. In Japan, October’s final industrial output speeded up to 4.0% YoY.
What we expect for today
Despite the increasing number of Covid-19 cases in Germany that led Merkel to announce new tough restrictions and the more likely no-deal Brexit, the presentation of the fiscal stimulus plan in the US and the placing on the market of Pfizer’s vaccine (the FDA has approved Pfizer’s vaccine, the administration of which could start from today, Moderna’s is expected shortly) would help indices to open in positive territory. Currently, S&P futures are up +0.45% (the S&P 500 closed +0.5% higher vs. its price at the closing bell in Europe). Volatility in the US rose (VIX 23.31). Asian markets are climbing (CSI 300 +0.4%, Japan +0.25%).
Today in the euro zone we will learn October’s industrial output.



COMPANY NEWS

PRISA. SELL.
According to El Economista, PRS would be speeding up the spin-off process of its businesses (Media and Eductation) awaiting new offers for its Media division. In this regard, and although a firm offer has not been presented, it has been mentioned that Jaime Castellanos and Borja Prado would be readying an offer of up to € 350 M (although according to the news article, Borja Prado would have denied an interest in the transaction).
We recall that in mid November’20, the board of directors of PRS already rejected the offer submitted by Blas Herrero (Kiss FM) and a group of investors (this offer was opened to the participation of PRS’ current shareholders) to get hold of PRS’ Radio and Press business for more than € 200 M (this amount was not confirmed by PRS vs. € 282 M BS(e)).
Although the bid has apparently limited potential (Borja Prado himself would have denied his interest, according to the news), it continues to underscore that following the strong correction in the advertising market, media businesses arise interest (the share price has soared +134% from September’20 lows, although it is still down -37.5% in 2020). The possible bid of € 350 M (+24% vs our valuation of € 282 M AND 44% of the company’s NFD) would mean EV/EBITDA’19 of 4.6x and 21e 9.2x vs. 3.7x and 7.4x BS(e) respectively.
Thus, the price is good, but it should be noted that our current valuation is highly affected by Covid-19 and that although PRS’ debt levels remain high (€ 792 M of NFD and 6.7x NFD/EBITDA ratio post acquisition of Santillana Spain and refinancing), the recent refinancing buys the company some time and, in our view, does not force it to make quick asset sales.