IBERIAN DAILY 31 MAY (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: ACCIONA, BANKING SECTOR, FERROVIAL, SACYR, SOLARIA.IBEX up against the 9,000 point level
With the US closed for Memorial Day, the week kicked off with gains for most European indices, fuelled by the good session in Asia, where China lifted the restrictions imposed due to Covid-19. Thus, most sectors in the Euro STOXX closed with gains, led by Consumer Goods and Technology, whereas Utilities and Telecoms were the worst relative performers. On the macro side, in Germany and Spain, May’s inflation climbed above expectations. In the euro zone, the economic confidence index rose in line with expectations. The Eurogroup meeting ended with a partial veto on Russian crude oil imports coming by ship (2/3 of the total imported), to be implemented in several months with Germany and Poland ceasing to import crude oil via the Druzhba oil pipeline, with Hungary exempt from the veto. In the US, the Fed member Waller pushed +50bps interest rate hikes until inflation approaches 2.0%. In Japan, April’s industrial output contracted more than expected. In China, the manufacturing and services PMIs rose far above expectations, with the former approaching 50 once again.
What we expect for today
European markets would open with slight drops, where the oil sector would benefit from the hike in Brent crude. Currently, S&P futures are down -0.3% (the S&P 500 was closed for Memorial Day). Asian markets are mixed (China’s CSI 300 +1.3% and Japan’s Nikkei -0.22%).
Today in the euro zone we will learn May’s preliminary inflation, in Germany May’s unemployment and in the US May’s consumer confidence. In debt auctions: Germany (€ 3 Bn in bonds due 2027).
COMPANY NEWS
SOLARIA, BUY
Although we will revise our estimates, the lack of long-term visibility and the delays in the short-term complicate to obtain significant upside particularly if we take into account the recent share price performance (in 2022 +28% in absolute terms, +24% vs. Ibex and +32% vs. sector), partially explaining the poor reception of these targets yesterday (the stock slid -5%). With an initial approximation, assuming an increase of 1,200MW in installed capacity starting in 2027 (+18% vs. 6,200MW currently), pool prices of around € 100 /MWh in 2022/23 and a +10% increase in capex/MW (€ 0.4 M/MW currently), the upside would stand at~+10% vs. current levels despite the optimistic hypotheses.
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.
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.
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.
Solaria Energia y Medio Ambiente manufactures both solar and thermal cells and panels, rolls out turnkey projects for large installations, operates solar plants and generates electricity through its owned plants.
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