EUR 100.00 For Business Accounts Only

IBERIAN DAILY 24 MAY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACCIONA, ACCIONA ENERGÍA, CELLNEX, IBERDROLA, REPSOL, SACYR.

Market welcomes NVIDIA’s results but deflates towards the closing bell
The improved sentiment following NVIDIA’s solid 1Q’24 results spurred European stock markets, although the euphoria faded towards the closing bell. In the STOXX 600, the best-performing sectors were Technology (positive contagion from the US) and Industrials, whereas Utilities and Real Estate were hit the hardest. On the macro side, in the euro zone there were mixed readings for May’s PMIs, with the manufacturing index rising more than expected to 47.4 and the services index disappointing by remaining at the previous 53.3. The composite PMI reached a 12-month high thanks to the recovery in Germany. Meanwhile, May’s consumer confidence improved less than expected. In the US, weekly jobless claims fell more than expected, new home sales contracted unexpectedly in April and May’s services and manufacturing PMIs rose more than expected. In this regard, R. Bostic (Atlanta Fed) admitted that the monetary policy is not slowing activity levels like in the past. In Mexico, 1Q’24 GDP growth was raised one tenth of a percent to 0.3%. In Japan, April’s core inflation slowed in line with expectations, although the general figure fell less than expected. In US business results, Medtronic and Ralph Lauren were in line.
What we expect for today
Stock markets would open with drops of -0.50%, with profit taking in technology and with bond proxies hit by the hike in debt yields. Currently, S&P futures are up +0.16% (the S&P 500 ended -0.99% lower vs. the European closing bell). Asian stock markets are falling (China’s CSI 300 -0.51%, Japan’s Nikkei -0.96%).
Today in Germany we will learn the final 1Q’24 GDP, in the UK April’s retail sales and in the US April’s preliminary durable goods orders. In US business results, Autodesk, among others, will release its earnings.

COMPANY NEWS

SACYR. € 222 M capital increase at € 3.33/sh. BUY.
The company has announced a capital increase of € 222 M (8.7% market cap) at € 3.33/sh. (-8.7% discount vs. yesterday’s closing price) without pre-emptive subscription rights through an accelerated private placement for qualified investors. The chairman/CEO M. Manrique (1.2% capital), J.M. Loureda (7.3%) and M. Lao (5.1% capital) have participated in the deal with different contributions (90-day lock-up period). The proceeds will be earmarked for growth in concession projects, a segment where the company has been able to generate value for shareholders historically, maintaining the target of obtaining the “investment grade”. On the valuation level, our T.P. (€ 4.15/sh.) would stand at € 4.08/sh. post-increase (-1.7% vs. previous), which would leave +13% upside over TERP (€ 3.62/sh.). The deal will reduce recourse NFD up to € 100 M and minority interests will be hit with a -8.7% dilution.

ACCIONA ENERGÍA / ACCIONA, BOTH BUY
Highlights from the 1Q’24 Trading Statement made public at yesterday’s closing bell by ANA/ANE:
(i) Energy (~80% of the EV; ANE holds an 83% stake): Installed capacity grew up to 13,717MW (+195MW vs. 2023) and the company keeps its target of building 1.7GW in 2024 (200-250MW in 2Q’24 and 1.25GW in 2H’24). Consolidated production grew +9.4% (+13.7% Spain and +5.4% international) thanks mainly to new assets in operation and Renomar’s consolidation (April’23); furthermore, the better water resources in Spain is negatively offset by lower wind production (some assets were not operated due to the low prices). The average load factor fell to 29.5% vs. 31.3% in 1Q’3. Average captured prices came in at € 57.50/MW (vs. € 81.40/MW in 1Q’23) due mainly to the drop in wholesale prices in Spain. Investments in 1Q’24 totalled € 480 M, keeping the target of € 1.8-1.9 Bn after asset rotation. With the performance of production and prices reported (below expectations), the company foresees a lower EBITDA level than that announced in its 2024 outlook (€ 1.1 Bn before capital gains and around € 1.4 Bn with capital gains vs. € 1.29 Bn consensus), not specifying any figure and admitting that it expects a better second half of 2024 vs. 1H’24.
(ii) Infrastructures (~9% of the EV): good business performance in both volume and profitability thanks mainly to Australia and LatAm. The backlog grows +1.6% vs. 2023 up to € 24.91 Bn (€ 34.35 Bn aggregated backlog consolidated by the equity method, +0.9%).
(iii) Real Estate (~6% of the EV): 82 homes have been delivered (far above 1Q’23 levels) and 87 units have been presold. The pre-sales backlog came in at 1,398 units, equivalent to € 516 M of sales. GAV totals € 1.87 Bn (+3.7% vs. 2023).
(iv) Bestinver (~2% of EV): Average assets under management rose +11% to € 6.09 Bn, due mainly to the profitability.
(v) Nordex (~6% of EV; results already released): Excellent start to the year, with orders growing >100% to 2,086 MW, revenues up +29.3% and an EBITDA margin of 3.3% (vs. -9.4% in 1Q’23), leading the company to reiterate its guidance of a margin between 2% and 4%.
(vi) Expectations for 2024: The company states that with the current energy price outlook and lower production than expected to date, the EBITDA’24 outlook is lower than the previous one (“single-digit growth without capital gains and double-digit with capital gains”), though this is unspecified. The net investment guidance is maintained at €~2.5 Bn and leverage at around 3.5x NFD/EBITDA.
Negative news for ANE (~80% of ANA’s EV) regarding the EBITDA’24 forecasts (unquantified), which are passed on directly to ANA, with a solid outlook for the rest of the businesses. Despite the fact that the reasons for the cut to EBITDA are unsurprising (lower prices and lower production levels resulting from a stoppage of wind production due to the price), the impact could be negative in spite of both companies’ poor performance on the year: ANE -36% vs. IBEX and ANA -20% vs. IBEX.