IBERIAN DAILY 15 JUNE (ANÃLISIS BANCO SABADELL)
NEWS SUMMARY: ACCIONA, ACERINOX, ARCELOR MITTAL, BANKING SECTOR, BANKINTER, IBERDROLA, MÃSMÓVIL, NATURGY, TELEFÓNICA, UNICAJA.MARKETS YESTERDAY AND TODAY
Attempt at a rally, with curves ahead
The session worsened as it went in most European stock markets, which closed with slight gains following the drops over the past few days. In the Euro STOXX, Basic Materials and Autos showed the best relative performance, compared to Retail and Financial Services, which fell the most. On the macro side, in the euro zone, April’s industrial output fell less than expected to -28.0% YoY. In the UK, April’s GDP contracted more than expected to -20.4% MoM, as well as industrial output ( -28.5% YoY vs. -19.9% expected). In Spain, May’s inflation was raised slightly to -0.9% YoY. The BoS released the public debt figure, which reached 98.9% of GDP (expected to reach 120% in 2021). The CEOE (Spanish Confederation of Business Organisations) called a macro-summit of large companies for the reconstruction of the country after the Covid-19 crisis while the government rectified and it will now open the Schengen borders on the 21st of June (with the exception of Portugal) vs. 1st of July initially expected with an aid plan for the automobile sector of € 3.75 Bn. In the US, May’s import prices fell less than expected, whereas export prices rose in line with expectations. June’s University of Michigan consumer confidence rose more than expected. In China, May’s industrial output speeded up less than expected while retail sales slowed down less than expected. On another note, home prices moderated to 4.9% YoY and the total social financing climbed in May more than expected. China reported the highest increase in Covid-19 cases since mid April and closed Xinfadi, the largest food market in Beijing.
What we expect for today
European markets would open with losses of around -2.0%, dragged down by financials and cyclical stocks in view of the news of new coronavirus outbreaks in the US and China. Currently, S&P futures are down -2.03% (the S&P 500 closed -0.32% lower vs. its price at the closing bell in Europe). Volatility in the US rose (VIX 36.09%). Asian markets are sliding (Japan -1.99% and Hong Kong -1.25%).
Today, in the US we will learn June’s Empire manufacturing index. Debt auctions: Germany (€ 4 Bn in 6M t-bills), Netherlands (€ 4 Bn in 3M and 6M t-bills) and France (€ 8.5 Bn in 3M, 6M, 9M and 12M t-bills).
COMPANY NEWS
MÃSMÓVIL, BUY
MAS made public at Friday’s closing bell the following agreements on its FttH network:
(i) New wholesale bitstream agreement with Orange to share over 2.2 M newly-built real estate units between 2020 and 2023 (vs. MAS’ current 13.6 M own UI) in new areas and reinforcing its current footprint. MAS pledged to build 0.5 M of these UI (with an option for additional 0.275) while Orange will deploy the rest. This agreement will not entail an increase in CAPEX vs. its current guidance (€ 295 M MAS’ guidance vs. € 309 M BS(e)), and it could mean recurring savings of around € 5 M annually (0.9% EBITDA’20e) if MAS reaches a reasonable market share in Orange’s network. Both MAS and Orange pledged to the wholesale bistream use in the new network deployed by the other player for a 20-year period.
(ii) A bid from an infrastructure fund to take a majority stake in a NetCo that will have 1.078 M FttH real estate units of MAS. An international infrastructure fund and MAS will jointly set up a new infrastructure company (NetCo) where MAS will have a minority stake (between 40% and 49.9%). This NetCo will acquire up to 1.078 real estate units from MAS (0.245 M already built and the rest to be deployed until 2023) for between € 385-414 M. MAS will make an initial capital contribution of € 60 M and it will provide the operation, maintenance and transmission services. Additionally, MAS will receive between € 215-245 M of net cash flow, where € 131-144 M are expected to be obtained at the end of 2020. This NetCo has obtained the commitment from a third player in Spain to use most of its network.
Positive news, as MAS increases its own footprint (with lower associated expenses and with a possible positive impact of around 0.9% EBITDA’20e) and it also sells part of its network at an appealing valuation (around € 370/access vs. € 233/access in May’19 deal; 933,000 accesses for € 217.5 M), which will allow it to reduce its leverage by around -8%.
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.
Acerinox is the parent company of a group engaged in the manufacture and sale of flat and long stainless steel products, and stainless steel wires. Co.'s major products include slabs, billets, black coils, plates, hot-rolled coils, hot-rolled sheets, flat bars, hot-rolled re-bars, hot-rolled black bars, engraved sheets, cold-rolled coils, cold-rolled sheets and circles. Co. also provides long stainless steel products, such as wire rods, angles, hot rolled flat bars, hot rolled re-bars, reinforced bars in coils, cold rolled re-bars, hot rolled black bars, cold drawn bars, and smooth turned bars. In addition, Co. offers wires, welding wire bars, and bars for electrodes.
Bankinter is the parent company of a group engaged in banking activities. Services provided include: investment banking; capital market services; financial services insurance; international services such as foreign exchange transactions and travelers' checks; wholesale corporate banking; and retail and private banking services. Co. offers its products and services through the following channels of distribution: branch network; telephone banking, interactive (software) banking; agents; and Internet banking. As of Dec 31 2014, Co. had assets totalling Euro57,332,974,000 and deposits totalling Euro29,966,129,000.
Iberdrola is a holding company. Through its subsidiaries, Co. operates in four segments: network business, which includes all the energy transmission and distribution activities, and other regulated activity originated in Spain, the U.K., the U.S. and Brazil; deregulated business, which includes electricity generation and sales businesses as well as gas trading and storage businesses carried on by Co. in Spain, Portugal, the U.K. and North America; renewable business, with activities related to renewable energies in Spain, the U.K., the U.S. and the rest of the world; and other businesses, including the engineering and construction businesses and the non-power businesses.
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.
Telefonica is engaged in the provision of public or private telecommunications services, including ancillary or complementary telecommunications services or related services. Co.'s fixed business includes: traditional fixed telecommunication services, Internet and broadband multimedia services, data and business-aplications services, and wholesale services for telecommunication operators. Co. also provides a range of mobile and related services and products to consumer and business customers, including mobile voice services, value added services, mobile data and Internet services, wholesale services, corporate services, roaming, fixed wireless, and, trunking and paging.
Unicaja Banco SA is a Spain-based financial institution (the Bank) engaged in the banking sector. The Bank offers services to individual and business customers. Its products and services range includes current and savings accounts, debit and credit cards, consumer and commercial loans, real estate credit, securities brokerage, funds management, leasing, factoring, pension plans, life and non-life insurance, international trade financing, money transfer, as well as treasury, among others. The Bank operates a number of branches in Spain and Morocco. The Bank is controlled by Fundacion Bancaria Unicaja.
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