Report
Research Department
EUR 100.00 For Business Accounts Only

IBERIAN DAILY 27 FEBRUARY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACCIONA, ACERINOX, BANKIA, ENCE, FERROVIAL IBERPAPEL, MEDIASET, MELIÁ HOTELS, NEINOR HOMES, TELEFÓNICA, UNICAJA, VIDRALA, VOCENTO.

MARKETS YESTERDAY AND TODAY
A break in stock markets
Apparently calm returned to stock markets after several consecutive sessions of corrections, although Brazil fell by -7.0%, with its currency weakening due to the first case of coronavirus infection in the country. Thus, in the Euro STOXX, Utilities and Automobiles were the best performers vs. Leisure and Real Estate that saw the biggest drops. On the macroeconomic level, C. Lagarde from the ECB welcomed Germany’s plan of adopting fiscal measures to benefit the economy. In the US new home sales climbed more than expected. In US Results, Lowe´s Cos, JM Smucker and Ameren Corp came in better than expected.
What we expect for today
Stock markets would see new drops >-2.0%, with Brent crude hovering US$ 50.00. Currently, S&P futures are down -1.54% (the S&P 500 closed -1.81% lower vs. its price at the closing bell in Europe). Volatility in the US dropped (VIX 27.56%). The Asian markets that are open are falling (Japan -2.13% and Hong Kong -0.75%).
Today in Spain we will learn February’s preliminary inflation, in the euro zone February’s economic climate index and January’ M3, and in the US revision of 4Q’19 GDP and durable goods orders. In US Results, Best Buy, CenterPoint and NRG Energy, among others, will release their earnings.


COMPANY NEWS
ENCE. 4Q’19 results in line with our estimates, but below the consensus. BUY.
At yesterday’s closing bell the company released 4Q’19 results that were in line with our estimate on the P&L level, but below the consensus (-99% EBITDA vs. 4Q’18 and -82% consensus), although from a NFD standpoint the company beat both (€ 513 M vs. € 588 M BS(e) and € 548 M consensus). In addition to the low pulp prices (-33% vs. 4Q’18), the scheduled shutdown in the Navia factory would have lasted longer than expected, increasing the cash cost to € 426/t in 4Q’19 (vs. € 410 BS(e)), and leaving EBITDA on the quarter at only € 1 M. We understand that these results would be somewhat expected and cannot be extrapolated, but the fact they are below the consensus estimates could mean a negative reaction, despite the stock underperforming the IBEX by -6% YtD.

IBERPAPEL, 4Q’19 results slightly below expectations but very much in line in FY2019. SELL.
The company released at yesterday’s closing bell poor 4Q’19 results, where sales came in slightly below our estimates (-2% vs. BS(e) and -15% below those of the consensus), as well as EBITDA (-4% vs. BS(e); +2.5% vs. consensus) due to worse margins than expected (17.1% vs. 17.5% BS(e) and 21.3% in 4Q’18), which we understand might be due to worse selling prices. Thus, accumulated sales on the year fell -3.4% (vs. -3% BS(e) and +0.7% consensus) and EBITDA by -9.5% (vs. -8.8% BS(e) and -10% consensus). The company reported a net cash position of € 79 M vs. € 92 M as of YE2018, with investments totalling € 13 M on the quarter (we understand that for new paper pulp production facilities) vs. € 3.2 M in 3Q’19. Despite the quarter’s EBITDA coming in slightly below our estimate (we downplay the consensus’ estimate, as it is incoherent and scarce), the annual figure is quite in line, and thus we would expect a neutral or slightly negative market reaction after the stock has underperformed the IBEX by -3.8% thus far this year. There will be a conference call at 12:00 (CET).

MELIA. Better results than expected. MEL is optimistic on the underlying business, but no guidance’20 has been given. BUY
The results beat expectations in EBITDA (€ 477.9 M; -4.2% vs. -6.8% BS(e) and -7.4% consensus) and Net Profit, thanks to the solid cost performance. For 2020 the company is moderately optimistic. It sees signs of recovery in the Dominican Republic (~20% EBITDA) and Mexico (~10% EBITDA), as well as a positive year in European cities and stability in the Spanish resort business. COVID-19 leads the company to be cautious in its forecasts, and thus it has not given any specific guidance. MEL has fallen -14% over the past week (-6.5% vs. the IBEX), and this share price level would be pricing in recurring EBITDA -25% below that of 2019, which in our view appears to be overly negative. Thus, these better-than-expected results should help underpin the stock.
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.

Bankia S.A.

Bankia is a financial institution based in Spain. Co. is primarily engaged in operations in the banking sector. Co.'s business operations are structured into seven areas: Retail Banking, Business Banking, Private Banking, Asset Management and Bancassurance, Capital Markets and Holdings. Co. offers financial products and services to various customer segments, such as individuals, small and medium enterprises, large corporations, as well as public and private institutions. As of Dec 31 2014, Co. had total assets and total customer deposits of Euro233,648,603,000 and Euro106,806,698,000 respectively.

CIE Automotive S.A.

CIE Automotive is the parent company of an industrial group formed by several companies that are engaged in the design, manufacture and sale of automobile component and sub-units on the world market. In addition, Co. is also engaged in the bio-fuels business which is in the initial stages of development and is made up of various companies devoted to the production and distribution of bio-fuels.

Distribuidora Internacional de Alimentacion SA

Distribuidora Internacional De Alimentacion is a supermarket and convenience store group based in Spain. Co. is engaged in the retail trade of food through cut-price self-service supermarkets and franchise establishments. Co. is engaged in the operation of stores located in Spain, France, Portugal, Turkey, Argentina, Brazil and China.

ENCE Energia y Celulosa SA

Ence Energia Y Celulosa is engaged in the manufacture and commercialization of wood pulp and derivatives. Co. divides its activities into the following two business lines: Forest Division: Co. manages timberlands in South America and the Iberian Peninsula. Co. is involved in trading of wood, and supplies solid wood products including: plywood, sawn timber, parquet flooring and glued-edge paneling. Co. is involved in forest and environmental consulting. Pulp Division and Energy Production: Co. is engaged in the production of Eucalyptus globulus-based TCF and ECF paper pulp. Co. is also involved in the generation of electricity through biomass power producing plants.

Ferrovial S.A.

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.

Grupo Catalana Occidente S.A.

Grupo Catalana Occidente is an insurance group based in Spain. Co. is engaged in insurance and reinsurance activities, including commercial, life, disability, and automobile insurance. Co. is also engaged in the sale of annuities and pension funds. Co.'s operations are organized along two businesses: Traditional business (insurance) and Credit Insurance business. Co.'s main markets are located in Spain, Germany, United Kingdom, France and the Netherlands. Co. maintains a presence in more than 40 countries.

Iberpapel Gestion S.A.

Iberpapel Gestion is engaged in the manufacture, wholesale distribution, sale and export of pulp and printing and writing paper. In addition, Co. maintains forestry activities, including the cultivation of timberlands.

Indra Sistemas S.A. Class A

Indra Sistemas is engaged in the design, development, manufacture, assembly, repair, and installation of computer software and applications. Through its subsidiaries, Co. is engaged in consulting, graphic design and multimedia, web design and marketing, internet development and electronic trade, systems integration and hosting geared business to business and business to consumer, as well as in internet financing and electronic marketing. Co. serves defense and security, transport and traffic, energy and industry, telecom and media, finance and insurance, and public administration and healthcare markets. Co. operates primarily in Europe, the United States, Canada, and Latin America.

Inmobiliaria Colonial (COL SM)

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.

Masmovil Ibercom SA

Masmovil Ibercom SA, formerly World Wide Web Ibercom SA, is a Spain-based company primarily engaged in the telecommunication sector. The Company focuses on the sale and distribution services for Internet, Data Center and Telecommunications. The Company's product and services portfolio comprises Internet access through Asymmetric Digital Subscriber Line (ADSL) and Symmetric Digital Subscriber Line (SDSL) technologies, Internet domains and Domains Management and Registration Service through IberDNS application, Web hosting, virtual servers, dedicated servers, telephony services and routers. The Company also offers collocation services through two Internet Data Centers located in Madrid and San Sebastian. It operates through subsidiaries, such as Embou Nuevas Tecnologias SL and Ebesis Sistemas SL, among others. The Company owns a number of brand names, such as Pepephone, Yoigo and Llamaya.

Mediaset Espana Comunicacion SA

Gestevision Telecinco is a television network company based in Spain. Co. heads a group of dependent companies, which form the Telecinco Group. Through its subsidiaries, Co. is engaged in the management and commercial exploitation of a television network. Co.'s television network acquires, produces, and distributes audiovisual content. Co. also sells the network advertising airtime, carried out by its subsidiary. In addition, Co. is involved in the sale of other advertising products; production of news programs; the production and sale of audiovisual property rights; and teleshopping.

Melia Hotels International S.A.

Melia Hotels International is the parent company of a group engaged in the acquisition, management and operation of hotels. Co. operates its hotel network in Germany, Argentina, Brazil, Bulgaria, Cabo Verde, Chile, China, Costa Rica, Croatia, Cuba, Egypt, Spain, United States, France, Greece, Netherlands, Indonesia, Italy, Luxembourg, Malaysia, Mexico, Panama, Peru, Portugal, Puerto Rico, United Kingdom, Dominican Republic, Singapore, Switzerland, Tunisia, Uruguay, Venezuela and Vietnam under the followings brandnames: Paradisus Resorts®, Melia Hotels & Resorts®, TRYP Hoteles® and Sol Hotels & Resorts®.

Neinor Homes SA

Neinor Homes SA, formerly Neinor Homes SLU, is a Spain-based company engaged in the real estate sector. The Company focuses on the design, construction and promotion of residential properties. It develops housing projects in various Spanish cities, such as Malaga, Madrid, Barcelona, Cordoba, Vizcaya, Alicante, Almeria and Gerona.

Obrascon Huarte Lain SA

Obrascon Huarte Lain is an international concession and construction groups based in Spain. Co. maintains significant operations in 30 countries across all five continents. Co. is engaged in hospital and railway construction, transport infrastructure concessions, oil and gas, energy, solids handling and fire protection systems and international contracts. Co.'s operations are organized along four divisions: OHL Concesiones, OHL Construccion, OHL Industrial y OHL Desarrollos. Co. is also engaged in real state project developments of mixed use managed by the international hotel chains.

Prosegur Cash SA

Prosegur Cash SA, formerly Prosegur Cit Holding SA, is a Spain-based company engaged in the provision of security services. The Company's activities are divided into three business areas: Logistics, Cash management and Outsourcing. The Logistics division focuses on the provision of local and international transport services of cash and other valuable goods. The Cash management division offers counting, processing, custody, preparation and delivery of notes and coins, as well as replenishment of automatic teller machines (ATMs). The Outsourcing division includes a number of support financial services, such as automation of retail operations through self-service cash automatization machines (MAEs), ATMs management, as well as branch forecasting, reconciliation, settlement and credit card support services. The Company operates through own branches and joint ventures in Europe, Central and South America, Africa, Asia and Australia. It operates through Contesta Teleservicios SAU.

Talgo SA

Talgo is engaged in designing, manufacturing, repairing and maintaining the railway rolling stock, as well as the manufacturing, assembling, repairing and maintaining the engines, machinery and parts of the railway systems. Co. has an industrial presence in seven countries: Spain, Germany, Kazakhstan, Uzbekistan, Russia, Saudi Arabia and U.S.A. Co. has an active fleet in Europe, Asia and North America that comprises of 94 high-speed trains and more than 1,400 Talgo tilting passenger cars. Also, Co. purchases, redesigns, constructs, leases and sells all types of real estate.

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.

Unicaja Banco S.A.

Unicaja Banco SA is a Spain-based financial institution (the Bank) engaged in the banking sector. The Bank offers services to individual and business customers. Its products and services range includes current and savings accounts, debit and credit cards, consumer and commercial loans, real estate credit, securities brokerage, funds management, leasing, factoring, pension plans, life and non-life insurance, international trade financing, money transfer, as well as treasury, among others. The Bank operates a number of branches in Spain and Morocco. The Bank is controlled by Fundacion Bancaria Unicaja.

Vidrala SA

Vidrala SA is a Spain-based company principally engaged in the glass industry. The Company operates through two segments: Spain and European Union. The Company's activities include the production, distribution and sale of glass bottles and containers used in the food and beverages industries. The Company conducts its own research and development (R&D) operations. It operates production plants and melting furnaces located in such countries, as Portugal, France, Belgium and Italy. The Company owns such subsidiaries as Crisnova Vidrio SA, Inverbeira Sociedad de Promocion de Empresas SA, Gallo Vidro SA, Castellar Vidrio SA, Corsico Vetro SRL, MD Verre SA, Omega Immobiliere et Financiere SA, Investverre SA and CD Verre SA.

Vocento S.A.

Vocento is engaged in the editing, distribution and sale of unit or periodic publications of general, cultural, sport, artistic or any other nature type of information, as well as the printing and sale of printing warehouses and any other activities related to the editorial industry and graphic arts. Co. is also engaged in the establishment, utilization and sale of radio stations, television stations and other types of installations for the emission, production and promotion of audiovisual media, as well as the production, edition and distribution of discs, tapes, magnet phonic tapes, programs, films and all other types of communication media.

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