IBERIAN DAILY 28 JULY + 2Q'23 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: ACCIONA, ACCIONA ENERGÍA, ACS, BBVA, CAIXABANK, COLONIAL, ENCE, FERROVIAL, FLUIDRA, MERLIN PROPERTIES, SACYR, TALGO, VISCOFAN.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 2Q’23 results to be released over the coming days in Spain.
The Ibex at 3-year highs after the ECB decision
The ECB did not bring any surprises, raising rates by 25bps up to 4.25%, the highest level since 2008. Although Lagarde left the door open to bigger rate hikes, the tone was more dovish, questioning the decision in September, which will depend on upcoming data. In the Euro STOXX, most sectors saw gains, led by Media and Technology vs. the worse relative performance of Energy and Real Estate. On the macro side, in the US, the first reading of the 2Q’23 GDP climbed more than expected to 2.4% YoY, underpinned by dynamic private consumption and recovery of investments in capital goods. Core capital goods orders rose unexpectedly in June. In Japan, the BoJ meeting left rates unchanged, although the more flexible curve control programme was a surprise. This allowed the 10Y bond yield to fluctuate around +/-5%, more of a reference than a fixed limit. July’s Tokyo inflation rose +0.1% to 3.2%, and the core figure rose to 3.0%. In US business results, McDonalds’s, Intel and T-Mobile came in better than expected, Mastercard in line.
What we expect for today
European stock markets would partly correct the overbuying, especially after the strong US data. Currently, S&P futures are up +0.22% (the S&P 500 ended -1.08% lower vs. the European closing bell). Volatility in the US rose (VIX 14.41). Asian stock markets are mixed (China’s CSI 300 +1.53%, Japan’s Nikkei -1.93%).
Today in Germany and Spain we will learn July’s inflation. In US 2Q’23 Results, Aon, Procter & Gamble, Loews and Colgate, among others, will release their earnings.
COMPANY NEWS
ACCIONA, BUY
1H’23 Results came in above expectations in EBITDA (+13 vs. BS(e) in comparable terms) but slightly worse in debt although highly marked by Acciona Energía’s results (83% ANA and 80% of ANA’s EBITDA’22 de) and impacted by the change of Nordex’s consolidation method (from equity method to global in 2Q, € +1 M in EBITDA; no impact on valuation). In addition to the positive surprise from Acciona Energía’s EBITDA (+17% vs. BS(e) and +10% vs. consensus), the rest of divisions (ex-Nordex) improve our estimates (+3% vs. BS(e) ANA ex-energy), meaning +53% growth vs. 1H’22 (clearly beating the “robust double-digit” guidance for 2023). In this regard, the Infrastructure division reported € 233 M of EBITDA (+7% vs. BS(e); +55% vs. 1H’22), based on a turnover +37% above 1H’22 levels and a higher margin (+70bps vs. 1H’22 up to 6.4%). The backlog rose +4% vs. 2022, totalling € 22.96 Bn. The highlight of these results (after analysing those of ANE) is the significant growth reported by the Infrastructure division, even above expectations. However, we believe that Nordex’s integration (although in principle known) adds complexity and volatility to ANA’s accounts, which could offset the good news in Infra to some extent. As we foresee a rather neutral market reaction in ANE, we would not expect a very different reaction for ANA. ANA share price has underperformed the IBEX by -35% YtD. Conference call at 10:00h (CET).
ACCIONA ENERGÍA, BUY
1H’23 Results came in far above expectations in EBITDA (+17% vs. BS(e) and +10% vs. consensus) although worse in Net Debt (€ 3.47 Bn vs. € 3.2 BS(e)) due to higher CAPEX and worse working capital. The company cut its guidance, with its EBITDA forcast’23 now ranging between € 1.2 Bn and € 1.3 Bn (vs. 1.5-1.6 Bn previously vs. 1.28 BS(e) and € 1.40 Bn consensus) and its installed capacity target’25. at ~18 GW (vs 20 GW prev. and 18.8 GW BS(e)). However, the company confirmed the 1.8GW to be installed in 2023 (in line with our estimate). Mixed results, as the EBITDA expected is now better but net debt is higher, along with the guidance cut was at least partially expected. Following its -38% YtD correction vs. IBEX, we believe that these results should be widely priced in, although we do not rule out the possibility of some negative market reaction. Conference call at 10:00 (CET).
BBVA. 2Q’23 Results above expectations and € 1 Bn buyback (2.3% yield). BUY.
The bank reported € 2.03 Bn of Net Profit (+21% vs. 2Q’22), c.+11% vs.consensus (+14% vs. BS(e)) due to the performance of the core Operating Profit that improved by +25% vs. 2Q’22 (+2% vs. consensus in NII and fee revenues and 2% better in costs). Stable NPL and CoR in all countries (better in Turkey) with the group’s CoR at 105bps, in line with the guidance and expectations. By countries, better performance in Spain, Turkey and LatAm, and in line in Mexico. CET1 ratio at 13% (in line BS(e) and -14bps vs. 1Q’23) and 12.67% including the € 1 Bn buyback announced today. The bank also raised its 2024 targets, meaning BS(e) RoTE’24 of c.17% (vs. 14% prev. and 17% in 1H’23). We expect a positive market reaction.
CAIXABANK. Better 2Q’23 Results in Net Profit (+11% vs. cons) with a € 500 M buyback announcement (1.7% Yield).
Better results in NII (+6.5% vs. cons/ 14.3% deposit beta) and provisions (-27.8% vs. cons). Results below expectations in fee revenues (-4.6% vs. cons). Very much in line in costs. The cost risk came in at 0.27% (last 12 months vs. 0.26% as of 1Q’23), very much in line with the guidance’23
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.
ACS Actividades de Construccion y Servicios is a holding company. Through its subsidiaries, Co.'s activities are divided into the following areas: Construction, engaged in the construction of civil works, and residential and non-residential building construction; industrial services, engaged in the development of applied engineering services, installations and the maintenance of industrial infrastructures in the energy, communications and control systems sectors; services, groups together environmental services, the outsourcing of building maintenance services, logistics and transport services; and concessions, mainly engaged in transport infrastructure concessions.
Banco Bilbao Vizcaya Argentaria is an international financial group, engaged primarily on providing banking services and consumer finance to private individuals and businesses in Spain and Portugal; providing real estate activity in Spain; providing services to international companies and investment banking, capital markets and treasury management services to clients; and providing the banking, insurance and pension businesses in Mexico and the U.S., as well as in South America.
Caixabank is an investment company based in Spain. Co. is involved in investment portfolio management activities across two areas: Services and Financial Business and Insurance. In the services area, Co. provides investment solutions for companies involved in the infrastructure, energy, services and entertainment sectors. In the financial business and insurance area, Co. is engaged in the investments for international banks, insurance and specialist financial services. Co. focuses most of its banking investments in India, China, the U.S., and Central and Eastern Europe with a particular interest in retail banking. Co. is also involved in the disinvestments activities.
Ence Energia Y Celulosa is engaged in the manufacture and commercialization of wood pulp and derivatives. Co. divides its activities into the following two business lines: Forest Division: Co. manages timberlands in South America and the Iberian Peninsula. Co. is involved in trading of wood, and supplies solid wood products including: plywood, sawn timber, parquet flooring and glued-edge paneling. Co. is involved in forest and environmental consulting. Pulp Division and Energy Production: Co. is engaged in the production of Eucalyptus globulus-based TCF and ECF paper pulp. Co. is also involved in the generation of electricity through biomass power producing plants.
Ferrovial is a transportation company based in Spain. Co. is engaged in operations in the transportation sector. Co. specializes in the design, construction, management, administration and maintenance of transport infrastructures. Co.'s services range also includes the maintenance of parking lots, and land-, sea- and air-based transport networks. Co. is also engaged in the promotion and operation of short-stay parking lots, parking regulation and management services and promotion and sale of residents' parking.
Fluidra is engaged in the manufacture and commercialization of accessories and specific products for swimming pools, irrigation, and water treatment and purification systems.
Merlin Properties SOCIMI SA is a Spain-based company engaged in the operation of a real estate investment trust (REIT). The Company focuses on the acquisition, management and rental of commercial properties located in the Iberian Peninsula, primarily in Spain. The Company's activities are divided into the following segments: Office buildings, operating a portfolio of office space; High-street retail, engaged in leasing retail stores; Shopping centers, engaged in managing department stores; Logistics, operating logistics warehouses and distribution centers, and Others. The Company's other activities include property management services rendered to third parties.
Sacyr is the parent company of a group engaged in the acquisition, development and construction of urban properties for their subsequent rental or resale. Co. primarily leases and sells office buildings and complexes, housing units, and shopping centers. Co. is also engaged in the operation of urban car parking facilities. Co. offers services related to the real estate industry such as technical assistance in energy savings, inventory management, architectural design, telecommunications management, property maintenance, as well as gardening and landscaping. Co. also provides consulting services in the real estate fund management sector.
Talgo is engaged in designing, manufacturing, repairing and maintaining the railway rolling stock, as well as the manufacturing, assembling, repairing and maintaining the engines, machinery and parts of the railway systems. Co. has an industrial presence in seven countries: Spain, Germany, Kazakhstan, Uzbekistan, Russia, Saudi Arabia and U.S.A. Co. has an active fleet in Europe, Asia and North America that comprises of 94 high-speed trains and more than 1,400 Talgo tilting passenger cars. Also, Co. purchases, redesigns, constructs, leases and sells all types of real estate.
Viscofan is the parent company of the Viscofan Group. Co. is divided into two major operational subgroups. The companies comprising the Naturin GmbH subgroup are engaged in the manufacture and distribution of artificial casings (small and big diameter collagen and plastics) for the meat industry. Through its wholly-owned subsidiary IAN, S.A., Co. also manufactures and distributes canned vegetables (asparagus, olives and tomato).
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