EUR 100.00 For Business Accounts Only

IBERIAN DAILY 15 APRIL + 1Q'21 RESULTS. PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACERINOX, CAF, ENAGÁS, IAG, REPSOL.

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 1Q’21 results to be released over the coming days in Spain.

MARKETS YESTERDAY AND TODAY

The beginning of the 1Q’21 results season spurs markets
Stock markets rose as the session progressed in the US, where the large banks released profits above expectations, fuelling value vs. growth. Thus, within the Euro STOXX, Energy and Travel & Leisure (after the EU countries reached a preliminary agreement on a Covid-19 vaccination passport for travelling in the summer) were the best relative performers vs. the drops posted by Utilities and Insurance. On the macro side, in the US, import prices increased more than expected in March, whereas the Beige Book showed that the US economy is growing at a moderate rate (vs. modest growth previously), with prices rising significantly. In Japan, H. Kuroda, from the BoJ, warned that the economy is recovering, but at a modest pace, due to the effects from the pandemic. Separately, the IMF warned that Europe should increase public spending by 3.0% GDP to back economic recovery. In US business results, JP Morgan, Wells Fargo, First Republic Bank and Goldman Sachs came in above expectations.
What we expect for today
The European stock markets would open flat, with banks backed by the positive results releases in the US. Currently, S&P futures are up +0.02% (the S&P 500 ended down -0.5% vs. its price at the closing bell in Europe). Volatility in the US increased (VIX 16.99). Asian markets are trading with mixed results (China’s CSI 300 -1.3% and Japan’s Nikkei +0.1%).
Today in Germany we will learn March’s final inflation and in the US weekly jobless claims, retail sales and industrial output for March, Empire manufacturing and NAHB real estate index for April. In US business results, Pepsico, Bank of America, BlackRock and Citi Group, among others, will release their earnings. In debt auctions: Ireland (€ 750 M in 6M t-bills in addition to the announcement of a 20Y syndicated bond).


COMPANY NEWS

ACERINOX, BUY.
According to the press, ACX’s CEO would have outlined that the 2021 prospects are positive, suggesting that output would have risen by +8% in the 1Q’21 and that the order backlog is +80% above last year’s levels. He stated that the outlook is better than in previous quarters, stressing the favourable situation in the US (around 90% EBITDA’20e), where he expects the protectionist measures to remain unchanged, in addition to the stimulus plan proposed by Biden.
Positive news that underscores that 2021 has kicked off to a good start and that visibility for the coming years is high. These comments lead us to believe that the company will be able to at least meet its 1Q’21 guidance, which meant “some improvement” vs. the 4Q’20 (when it reported € 131 M of EBITDA). We see room to raise our estimates and T.P. up to around € 13.00/sh., yielding >+10% upside, which along with the positive newsflow expected, lead us to keep our positive stance on the stock.

CAF, BUY.
Yesterday the company announced that in the end the contract awarded to CAF and Bombardier (now a subsidiary of Alstom) by SNCF to supply trains for the Paris commuter line (RER B) for €~2.5 Bn will go forward under the initial terms, to be executed by Alstom (~60% of the total) and CAF (~40%).
Note that Alstom, after acquiring Bombardier’s rolling stock manufacturing division, had withdrawn its bid on this contract (despite its already having been awarded), which raised uncertainty on if it would be executed in the end.
Positive news, as the 40% of the contract corresponding to CAF (€~1 Bn) represents 11% of its backlog as of YE2020 (this contract was not included). However, as always in this kind of contract, the key will lie in the margins CAF is able to obtain.