IBERIAN DAILY 08 JUNE (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: ACERINOX, GLOBAL DOMINION, INDITEX, RED ELÉCTRICA, REPSOL.Concerns about the slowdown
The market continues to price in the impact from the monetary disruption on the economic cycle, which was already quite shaken in Europe. Thus, within the Euro STOXX, sales prevailed, with only Energy and Basic Resources ending in the black. By contrast, Household and Consumer Goods saw the biggest drops. On the macro side, in Germany, April’s factory orders contracted more than expected. In Spain, April’s industrial output rose unexpectedly. In the Euro zone, June’s SENTIX confidence index recovered more than expected, although it remains in negative territory. In the US, April’s trade balance saw a more significant deficit reduction than expected. In the UK, today Boris Johnson will sign a draft to replace the Northern Ireland protocol agreed with the EU. In Japan, the 1Q’22 GDP was raised slightly (thanks to private consumption), although it recorded a -0.1% contraction QoQ. The World Bank cut its global GDP’22-23 growth outlook by -1.2pp and -0.2pp to 2.9% and 3.0% and warned on risks of stagflation.
What we expect for today
European stock markets would open flat, with a slight bullish slant. Currently, S&P futures are down -0.3% (the S&P 500 ended up +0.95% vs. the European closing bell). Volatility in the US fell (VIX 24.02). Asian markets are mixed (China’s CSI 300 -0.1% and Japan’s Nikkei +0.9%).
Today we will learn in Germany April’s industrial output, in the Euro zone the final 1Q’22 GDP, and in the US, April’s final wholesale inventories. In debt auctions: Germany (€ 4 Bn in bonds due 2032).
COMPANY NEWS
INDITEX. 1Q’22 results above expectations in sales and below in EBIT due to provision in Russia. Strong start to 2Q’22. BUY.
The company’s 1Q’22 results beat expectations in sales (+36.4% vs. +26.8% BS(e) and +26.9% consensus) and in gross margin (+20bps to 60.1% vs. -10bps BS(e) and consensus range of 0/-50bps). EBIT came in somewhat below the consensus estimate (+81.7% vs. +78.0% BS(e) and +84.5% consensus) because the company has fully provisioned for estimated expenses in Russia/Ukraine (€-216 M); adjusted for this effect, it would have been well above estimates (~+120% vs. 1Q’21). The start to the year remains strong, with +17% growth in sales between 1 May and 5 June at constant currencies and 90% of stores open as of today. Lastly, the company maintains its guidance’22 of a gross margin of +/-50bps vs. 2021. This indication, added to its recurring EBIT performance, should translate into a positive share price reaction, especially considering that the stock has fallen by -22% YTD.
Acerinox is the parent company of a group engaged in the manufacture and sale of flat and long stainless steel products, and stainless steel wires. Co.'s major products include slabs, billets, black coils, plates, hot-rolled coils, hot-rolled sheets, flat bars, hot-rolled re-bars, hot-rolled black bars, engraved sheets, cold-rolled coils, cold-rolled sheets and circles. Co. also provides long stainless steel products, such as wire rods, angles, hot rolled flat bars, hot rolled re-bars, reinforced bars in coils, cold rolled re-bars, hot rolled black bars, cold drawn bars, and smooth turned bars. In addition, Co. offers wires, welding wire bars, and bars for electrodes.
Global Dominion Access SA is a Spain-based company primarily engaged in the construction and engineering sector. The Company's activities are divided into two segments: Multi-technological Services, which offers design, implementation and maintenance of fixed and mobile telecommunications networks, manages sales and distribution processes for telecommunications carriers, as well as renders of inspection, maintenance, repair and renovation services for industrial and energy firms, and Solutions and EPCs, which executes turnkey Engineering-Procurement-Construction (EPC) projects, provides construction, repair and renovation of industrial heating installations, as well as develops processes and other technological and business solutions in numerous sectors. Its services are provided in three areas: Technology and Telecommunications (T&T), Industry and Renewable energies. It operates worldwide in Europe, the Americas, Asia and Africa. The Company is a subsidiary of CIE Automotive SA.
Red Electrica is engaged in the transmission of electrical energy, the operation of the system and the management of the transmission network in the Spanish electricity system. In addition, through its subsidiaries, Co. is engaged in the acquisition, holding and management of foreign securities, co-ordination of international exchanges, provision of telecommunications services for third parties, provision of consultancy, engineering and construction services outside the Spanish electricity system, securing of funds, carrying out of financial transactions and provision of financial services.
Repsol is an oil and gas company. Co. is engaged in all the activities relating to the oil and gas industry, including exploration, development and production of crude oil and natural gas, transportation of oil products, liquefied petroleum gas (LPG) and natural gas, refining, the production of a wide range of oil products and the retailing of oil products, oil derivatives, petrochemicals, LPG and natural gas, as well as the generation, transportation, distribution and supply of electricity. Co. operates in more than 40 countries. Co.'s operations are divided into four segments: Upstream, Downstream, LNG and Gas Natural Fenosa.
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