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IBERIAN DAILY 28 JANUARY + 4Q'20 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACERINOX, BANKIA, PRISA.

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 4Q’20 results to be released over the coming days in Spain.

MARKETS YESTERDAY AND TODAY

The IMF and the delays drag down the markets
After the IMF cut its growth forecast for the euro zone (and Spain, especially) for 2021 and warning of the excesses on the markets, the financial risk and the doubts surrounding emerging markets, the drops from the opening bell in European indices aggravated following the negative opening of the US. The euro zone saw drops of around -1.5%, where Germany’s DAX was the worst-performing index. In the Euro STOXX, all sectors with the exception of Household, Telecommunications and Real Estate ended in negative territory, with Banks and Basic Resources being the worst relative performers. On the macroeconomic level, in the US, the Fed meeting led to few surprises, with Powell warning of some slowdown in recovery, and it is still too early to talk of possible tapering. In US Results Apple, Facebook, AT&T, Nasdaq and Abbott Laboratories came in better than expected, Boeing and Tesla worse.
What we expect for today
The opening in Europe would show drops of up to -1.0% with the ES50 and IBEX in search of their support levels of 3,450 and 7,650. Currently, S&P futures are down -0.3% (the S&P 500 closed down -0.59% vs. its price at the closing bell in Europe). Volatility in the US rose (VIX 37.21%). Asian markets are falling (CSI 300 -2%, Japan -1.3%).
Today in the euro zone we will learn the economic climate indicator, in Spain the 4Q unemployment rate, in Germany January’s inflation and in the US the first reading of the 4Q’20 GDP and December’s new home sales. In debt auctions: Italy (€ 8.75 Bn in bonds due 2026, 2031 & FRN 2026). In US Results, Comcast, Mastercard, American Airlanes and McDonalds, among others, will release their earnings today.


COMPANY NEWS

ACERINOX: A better-than-expected operating scenario leads us to upgrade our estimates and T.P. BUY.
A better-than-expected operating scenario in 4Q’20 (strong demand, low inventories and higher prices) and the improved outlook for 2021 lead us to upgrade our estimates (+8% 2021/23e) and T.P. to € 11.00/sh. (+21% upside and +21% vs. previous T.P.). We believe that the operating newsflow will continue to be positive, while its main risk is the possible revision of the protectionist measures in the US, although we expect it to maintain control on Asian manufacturers. Moreover, we could see news on a strategic alternative in Bahru that would be an additional catalyst. The company will generate ~8.4% of operating FCF yield on average in 2021-23e, which ensures a robust financial position (2.4x ND/EBITDA’20e and a favourable dividend (~5% yield). The stock is trading at ~8x EV/EBITDA’21e vs. ~10x historically.

BANKIA. Very solid results, above expectations in all business margins. Warm reception. BUY.
The company has presented very good results, above expectations in all business lines, especially Core Revenues. The acceleration in mortgage production and the dynamism in Investment Funds supports this. Costs were in line (allowing the company to end the year in the low end of its guidance range of -2%), and with it the improvements in PPP. CoR stands at ~65bps, allowing the bank to end the year at 77bps, in line with its guidance and better than the ~85bps expected. Very strong performance in CET1 to 15.48% including around +30bps from software (above expectations) and vs. 14.79% in 9M’20. Conference call at 9:00 (CET).

PRISA, SELL
According to El Confidencial, Vivendi would have notified both PRS and the Govt. of its aim to raise its stake to 20% (it currently holds 9.9% following the acquisition of 7.6% after HSBC’s placement last Thursday and the remaining 2.3% on Friday). Note that in order to raise its stake above 10% the company needs the blessing of the Government, which last year modified a law to prevent foreign groups from being able to control companies considered strategic. Other main shareholders: Amber 29.8%, Telefónica 9.4%, Polanco 7.6%, Santander 4.1%.
MARKET IMPACT
Positive news that could continue to back the stock’s solid performance (although we do not think it will buy on the market, but rather in blocks, as on last Friday, and the additional 10% would mean ~5.5 months of trading, assuming the entire volume is purchased). The main obstacle would be the possible rejection from the Govt. or the consideration that Vivendi could have a shareholding alliance with Amber, which would force them to launch a TOB on 100%, which could destroy Vivendi’s plans.