EUR 100.00 For Business Accounts Only

IBERIAN DAILY 18 FEBRUARY + 4Q’20 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACCIONA, ARCELOR MITTAL, CELLNEX, COLONIAL, PRISA, OHL, REPSOL, RESULTS HIGHLIGHTS.

At the end of today’s report, and during the entire results season, we will include a presentation with positive and negative results highlights and previews for the 4Q’20 results to be released over the coming days in Spain.

MARKETS YESTERDAY AND TODAY

Stock markets halt their rally
Profit taking on European stock markets, with the worst performers being those that had been doing the best (DAX -1.1% and MIB -1.3%). In the Euro STOXX, value held up, with Energy the best-performing sector, although this time followed by Food. The biggest losses came in Retail and Personal Household Goods. On the macro side, in the UK January’s inflation rose +0.1% higher than expected in the general figure, with core inflation remaining at 1.4%. In the US, production prices, retail sales and industrial output (all from January) rose much more than expected. In general, they suggest rising inflation and 1Q’21 personal consumption growing at more than the 2.3% QoQ expected by the market. In the monetary meeting minutes, the Fed admitted significant vulnerabilities in financial stability and confirmed that its members continue to see tapering as a distant possibility, given that the economy is far from optimal. In US business results, Garmin beat expectations, NiSourse was in line and Hilton disappointed.
What we expect for today
We expect the European indices to see a slightly bearish opening, with the Energy sector acting as a safe haven as crude oil prices increase. Currently, S&P futures are down -0.15% (the S&P 500 closed up +0.3% vs. its price at the closing bell in Europe). Volatility in the US dropped (VIX 21.5). Asian markets are falling (CSI 300 -0.75%, Japan -0.2%).
Today in the euro zone we will learn February’s consumer confidence and in the US January’s building permits and housing starts, weekly jobless claims and February’s Philadelphia Fed index. In debt auctions: Ireland (€ 750 M in 6M t-bills) and Spain (€ 5.5 Bn in bonds due 2024, 2027, 2031 and 2040). In US business results, Ventas, PPL, Walmart and Cabot Oil, among others, will release their earnings.


COMPANY NEWS

CELLNEX. Update following a frenzied year of M&A. We raise our T.P. to € 59.70/sh. BUY.
We update our estimates after the recent M&A activity in which CLNX has doubled its number of towers to ~120,000 and the backlog to € 101 Bn. With the inclusion of these acquisitions we raise our sales’21 estimate by +18.2% and EBITDA’21 by +22.2%. For 2022 (and onward) we raise our estimates by +65.2% and +77.6% in sales and EBITDA, respectively. With these new estimates, including the € 7 Bn capital increase (~31% of market cap, expected for April’21) with a -30% discount vs. market price and an additional € 11 Bn of tower acquisitions (according to the pipeline given), we reach a new post-money T.P. of € 59.70/sh. (+27% upside).

ACCIONA, SELL
The company has announced that the Board of Directors will meet today to study the approval of the IPO of its renewable energy parent company. No further details were given, although ANA has stated that on the meeting’s conclusion more information will be given (we understand this will come with the FY2020 results presentation).
Note that ANA’s renewable energy division currently has 10,500 MW installed worldwide (8,443 MW consolidated, of which 53% is in Spain), accounting for 73% of EBITDA’20e and 67% of group EV. Likewise, it has a pipeline of 15,000 MW, of which 5,000 MW is expected to be installed before 2024.
Positive news, as we believe that the spin off of the Renewable energy business will draw strong interest from investors and could help maximise the price of this division. Although the company has not specified the type of placement, we understand that it could be an IPO that would allow it to raise capital to speed up the pace of growth in this division, and that ANA would continue to control the subsidiary (>50%). As far we are concerned, we will pay close attention to any additional information provided on the possible operation to revise our valuation accordingly, as this could have significant implications on the company’s plans and growth capacity in renewables going forward. Given that the company does not break down the division’s debt, we cannot estimate the latter’s equity value. The stock has outperformed the IBEX by +5% thus far this year.

4Q’20 Results highlights and rest of previews.
Among the companies releasing their earnings next week, on the positive side, we stress Grupo Catalana Occidente (release date 25/02), where we expect a warm reception considering the favourable underlying performance (vs. the trends seen in 9M’20), which would underscore the growing contribution from the Traditional business (whose recurring result’20 would account for 80% of the total vs.