EUR 100.00 For Business Accounts Only

IBERIAN DAILY 27 APRIL (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACCIONA, BBVA, EUSKALTEL, FERROVIAL, IAG, INDITEX, NATURGY, MASMOVIL, PRISA.

MARKETS YESTERDAY AND TODAY

New drops in Europe after the European Council agreement,
The poor confidence data in Germany, along with the lack of accurate details on the recovery fund agreed by the European Union, led to drops in European stock markets. The Euro STOXX saw a mixed close, with Banks and Basic Resources ending with the worst relative performance while Pharma (in positive territory) and Media were the best performers. On the macroeconomic level, in the UK, March’s retail sales came in worse than expected and saw the sharpest fall in its history. In Germany, the IFO business confidence index dropped more than expected in April to 74.3 points (a new record low). In Italy, the government announced a gradual deconfinement starting on 4 May and new aid measures that will bring public deficit to -10.4%. In the US, March’s durable goods orders fell more than expected, although the core component contracted less than expected and April’s final University of Michigan confidence was raised unexpectedly. In Japan, the BoJ announced, as expected, unlimited purchases of sovereign debt and increased corporate debt purchases significantly. In China, corporate earnings fell -34.9% YoY in March. In Mexico, February’s IGAE economic activity index fell less than expected.
What we expect for today
Stock markets would open with gains of around +1.0%. Currently, S&P futures are up +1.0% (the S&P 500 was up +1.32% vs. its price at the closing bell in Europe). Volatility in the US fell (VIX 35.93%). Asian markets are climbing (Japan +2.74% and Hong Kong +1.76%).
Today no relevant macroeconomic references will be released. In US business results, Autonation, PPG and Dr Pepper, among others, will release their earnings.

COMPANY NEWS

ACCIONA. Cuts the single dividend against FY2019 Results by 50%. SELL
The company cut it to € 1.925/sh. (-45% v. 2018; 2.2% yield) and set a maximum period of 12 months for its payment, and thus, the dividend could be paid in 2021. Negative news. On the positive side, this measure will reinforce the group’s balance sheet although to a limited extent. Based on the revision of estimates we intend to carry out assuming our scenario of V-shaped recovery (-20% in EPS’20 and -6% on average over 2021-22), ANA’s NFD/EBITDA’20e would fall from 5.0x to 4.8x (excluding the divestitures expected of € 500 M, which are more complicated now). As for the dividend’20, we do not expect it to raise the DPS to offset this cut; if raised the DPS’20e would stand at € 6.00/sh. (6.9% yield). Since Feb’20 highs, ANA has beaten the IBEX by +6% after Friday’s correction (-5.4%).

INDITEX. We change our recommendation from BUY to SELL after cutting our estimates due to COVID-19.
We change our recommendation from BUY to SELL after cutting our EBIT estimates by -31% on average in 2020/2021 due to the impact from COVID-19 in our scenario of V-shaped recovery. Our new T.P. is € 25.77/sh. (-21% vs. previously, +12% upside). As online sales increase, the market’s attention focuses on margin sustainability in the long-term. Today we release a report where we analyse the implications of greater penetration of the online channel, with all indications pointing to lower margins (depending on the extent of the cannibalisation on physical stores), but with robust sales growth and lower capex needs, which could be partially offset. The stock is trading at P/E’20e and ‘21e of 28x and 21x, respectively.