IBERIAN DAILY 09 APRIL (ANÃLISIS BANCO SABADELL)
NEWS SUMMARY: ACERINOX, APPLUS, MERLIN, NATURGY, PRISA.MARKETS YESTERDAY AND TODAY
No agreement at the Eurogroup summit, which will continue today
Profit-taking on the European stock markets, with all eyes on the Eurogroup summit, which will continue today. In the US, Congress is studying a package of additional measures to mitigate the economic impact from COVID-19 that could total US$ 500 Bn. In the Democratic Party primaries, B. Sanders quitted the race for president, clearing the way for J. Biden to face D. Trump in November’s presidential election. Within the Euro STOXX, Technology and Autos led gains, whereas Energy and Food were the worst relative performers. On the macro side, F. Villeroy underscored the obligation of the ECB to keep rates low for a long time, claiming that inflation will remain at lows for quite some time after the crisis. In France, the GDP slid by -6% in the year’s first quarter. The OECD warns about the biggest drop in economic activity ever amid global lockdown. In Mexico, the industrial output fell more than expected in February. From the Fed, C. Evans announced that unemployment will increase sharply and could even hit levels of 20%.
What we expected for today
Stock markets would see a bullish opening in a session that will depend to a great extent on the outcome of the Eurogroup summit (expectations are not very high). Currently, S&P futures are down -0.29% % (the S&P 500 ended 1.34% higher vs. its price at the closing bell in Europe). Volatility in the US fell (VIX 43.35%). Asian markets are mixed (Japan -0.52% and Hong Kong +0.67 %).
Today, the Eurogroup summit will continue and the OPEC+ will meet. On the macro side, in the United Kingdom we will learn February’s industrial output, in Germany the trade balance, in Brazil, March’s inflation, in the US, the unemployment subsidies data, March’s production prices, wholesale inventories and the University of Michigan consumer confidence index. Today, the Italian Treasury will issue 3Y, 7Y and 15Y bonds (€ 4.5 Bn, € 3 Bn and € 750 M, respectively).
COMPANY NEWS
MERLIN PROPERTIES. Covid-19 Measures
The company announced several measures as a result of the situation brought by Covid-19: (i) Dividends against 2019 Results. From the amount proposed as final dividend against 2019 Results worth € 0.32, expected to be paid in May (out of which € 0.174 correspond to the refund of the issue premium), the Board has decided to postpone the decision on part of the issue premium (€ 0.174). In this regard, the Board will make a decision depending on the performance of the impact from the pandemic on the business. The percentage of the issue premium represents a 2.2% yield; (ii) The Board will cut its remuneration by 25% and the CEO and the entire management team will give up any variable remuneration, as well as the (LTIP) share plan against 2020 results; (iii) CAPEX: Its capex programme under development will be revise to prioritise advanced projects and visible rents vs. those projects at a lower phase of development and that can be deferred; (iv) It confirmed S&P’s and Moody’s credit ratings, outlining it has more than € 1.1 Bn in cash and no relevant maturities until 2022. The LTV stands at 40%. These measures are not surprising given the exceptional situation we are faced with, and we believe that the implementation of a strategy to keep capital is reasonable. We think that the company is well-positioned to face the pandemic although the asset appraisal will most likely fall in 2020 due to yield expansion and worse prospects of rent growth. The stock is trading at a -49% discount to NAV.
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.
Applus Services SA is a Spain-based company that provides inspection, testing and quality assurance services. The Company's activities are divided into five segments: Applus+ RTD, which provides non-destructive testing services mainly to the oil industry; Applus+ Velosi-Norcontrol, which offers solutions for technical assistance, supervision, inspection, quality control testing, certification and consulting services mainly to industrial, electrical, oil and telecommunications facilities; Applus+ Laboratories, which focuses on laboratory testing, system certification and product development services within aerospace, industrial and consumer goods sectors, among others; Applus+ Automotive, which is responsible for the vehicle roadworthiness testing services, and Applus+ IDIADA, which delivers design, engineering, testing and certification services mainly to car manufacturers. The Company operates in Europe, Africa, Asia and the Americas.
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.
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