Report
Research Department
EUR 100.00 For Business Accounts Only

IBERIAN DAILY 19 NOVEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACERINOX, AMADEUS, ATRESMEDIA, BBVA, CAF, IAG, LAR ESPAÑA, TÉCNICAS REUNIDAS, TELEFÓNICA, VISCOFAN.

MARKETS YESTERDAY AND TODAY

Profit-taking on the Ibex
The European stock markets fell by 0.5%, with no significant drivers other than the strong gains accumulated, inflation doubts and Covid-19 outbreaks. Thus, within the Euro STOXX, quality sectors such as Household Goods and Technology stood out vs. value stocks, where Energy (crude oil continues to fall) and Banks saw the biggest drops. On the macro side, in Spain, Funcas lowered its GDP estimate to 4.8% (-1.4pp) for 2021 and to 5.7% (-0.4pp) for 2022. In the US, weekly jobless claims fell somewhat less than expected, whereas November’s Philadelphia Fed index increased sharply, returning to May’21 levels. From the Fed, J. Williams warned about both general and core inflation hikes due to the disruptions in the supply chain. Separately, the House of Representatives will vote on (and pass) the fiscal package today (Build Back Better) worth US$ 1.75 Tn after the CBO warned that it will generate an additional US$ 367 Bn of annual deficit over the next 10 years. In Turkey, the Central Bank cut reference rates by -100bps as expected (1W repo rate at 15.0%), which depreciated the lira to above 11.20 lira/USD. In China, Alibaba presented lower sales than expected and cut its sales guidance.
What we expect for today
European markets would open with gains of less than +0.5%. Currently, S&P futures are up +0.36% (the S&P 500 was up +0.13% vs. its price at the closing bell in Europe). Volatility in the US increased (VIX 17.59). Asian markets are rising (China’s CSI 300 +1.1% and Japan’s Nikkei +0.5%).
Today there will be no relevant macro releases.

COMPANY NEWS

BBVA. Strategic Plan’24: Strong value potential if the plan is met, but we think it is overly ambitious. SELL
In 2024 the bank hopes to reach 14% RoTE (vs. the current ~12% and 9-10% BS(e) and consensus in 2023), leveraging growth in clients and higher-margin businesses, sustainability and efficiency through digitalisation. BBVA has set intermediate targets in Spain, Turkey and Mexico, which we see as attainable/beatable in revenues, slightly ambitious in costs and optimistic in CoR in emerging markets. With all this in mind, a RoTE of 14% means €~6.3 Bn of Net Profit’24 BS(e) (+30% vs. consensus’23), with a yield’24 of 9%, according to the new payout policy announced yesterday (40-50%). With these numbers the company would also accumulate € 5.0-6.5 Bn of excess capital (13-17% of market cap) through 2024, which would allow it to continue with the share buyback and undertake M&A moves. Summing up, the plan is ambitious regarding profitability, and we think will be difficult (due to the currency risk as well) for the market to price it in immediately. In the short term we think the stock will continue to be exposed to the volatility from the emerging market risk, as was the case yesterday when the stock shed -5.51% after the announcement of the -100bps cut to interest rates in Turkey.
Underlyings
Acerinox SA

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.

Amadeus IT Group SA Class A

Amadeus is a transaction processor for the global travel and tourism industry. Co. provides transaction processing power and technology solutions to both travel providers (including full service carriers and low-cost airlines, hotels, rail operators, cruise and ferry operators, car rental companies and tour operators) and travel agencies (both online and offline). Co. acts both as a worldwide network connecting travel providers and travel agencies through a processing platform for the distribution of travel products and services (through the Distribution business), and as a provider of a portfolio of IT solutions which automate certain business processes (through the IT solutions business).

Atresmedia Corporacion de Medios de Comunicacion SA

Atresmedia Corporacion De Medios De Comunicacion is a television and radio broadcasting company based in Spain. Co. is engaged in the indirect management of television and radio services, which include the broadcasting, creation, production and distribution of television and radio programming, and the sale of advertising time. Group companies mainly carry on business activities relating to the production, copying and broadcasting of sounds and images, and TV and Internet home shopping. Co. provides National and World Digital Television Services. Co. is the parent company of Grupo Antena 3.

Banco Bilbao Vizcaya Argentaria S.A.

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.

Construcciones Y Auxiliar De Ferrocarriles, S.A.

International Consolidated Airlines Group SA

International Airlines Group is an international scheduled airline and global premium airlines. Co.'s principal place of business is London with significant presence at Heathrow, Gatwick and London City airports.

Lar Espana Real Estate SOCIMI SA

Lar Espana Real Estate SOCIMI SA is a Spain-based company primarily engaged in the operation of retail Real Estate Investment Trusts (REITs). The Company specializes in acquiring, managing and renting real estate assets within the Spanish market. Its business activities are divided into three segments: Shopping Centers, Offices, as well as Logistics. The Shopping Centers area is responsible for operation of a number of shopping malls, namely Txingudi, Las Huertas, Albacenter, Anec Blau, Hiper Albacenter, and Nuevo Alisal, among others. The Offices segment invests in office properties, such as Arturo Soria, Cardenal Marcelo Spinola, Egeo and Eloy Gonzalo. The Logistics division focuses on managing logistics warehouses, including Alovera I and Alovera II. The Company also owns a plot for residential properties development. It is a parent of a number of entities, such as Lar Espana Inversion Logistica SA, Gran Via Centrum Holdings SAU, Global Noctua and Puerta Maritima Ondara.

Tecnicas Reunidas SA

Tecnicas Reunidas is a general contractor company based in Spain. Co. engages in the engineering, design, and construction of industrial facilities for refining and petrochemical, oil and gas, power, and infrastructure and industries sectors worldwide. Co. constructs nuclear plants, conventional thermal plants, and renewable energy and cogeneration facilities for power sector; refineries and facilities for petrochemicals; water treatment, desalination, waste management, air, land, and marine transport facilities; and liquefaction, and storage facilities, as well as oil and gas fields and pipelines. Co. also provides engineering, management and operating services for industrial plants.

Telefonica SA

Telefonica is engaged in the provision of public or private telecommunications services, including ancillary or complementary telecommunications services or related services. Co.'s fixed business includes: traditional fixed telecommunication services, Internet and broadband multimedia services, data and business-aplications services, and wholesale services for telecommunication operators. Co. also provides a range of mobile and related services and products to consumer and business customers, including mobile voice services, value added services, mobile data and Internet services, wholesale services, corporate services, roaming, fixed wireless, and, trunking and paging.

Viscofan S.A.

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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