EUR 100.00 For Business Accounts Only

IBERIAN DAILY 30 MAY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACERINOX, AEDAS HOMES, CELLNEX, ELECTRICITY SECTOR, REDEIA, TELEFÓNICA.


Markets back in the red
It was a session of corrections at both sides of the Atlantic, with sovereign yields widening significantly and with the Ibex below 11,200 points. Thus, in the STOXX 600, all sectors saw drops, led by Basic Resources and Utilities vs. Retail and Insurance that were the best relative performers. On the macro side, in the euro zone, M3 climbed in line with expectations for the fifth consecutive month whereas corporate and household lending continues to show minimum recovery. In Spain, April’s retail sales rose to 2.7% from 1.6% YoY in March. In Germany, May’s inflation climbed in line with expectations to 2.4% YoY although the core data speeded up to 3.1% YoY (vs. 2.9% previously), with the annualised 6-month average backing levels of around 3.5% over the coming months. The European Commission will delay the decision on electric vehicle levies until 10 June, after the elections. In the US, the Fed’s Beige Book showed modest growth, but with a slightly negative slant and moderate inflationary pressures.
What we expect for today
Stock markets would open with drops of around -0.5% that would ease throughout the session. Currently, S&P futures are down -0.57% (the S&P 500 ended down -0.17% vs. the European closing bell). Asian stock markets are sliding (China’s CSI 300 -0.53%, Japan’s Nikkei -1.30%).
Today in the euro zone we will learn April’s unemployment rate and May’s business confidence, in Spain May’s inflation and in the US the second reading of the 1Q’24 GDP, April’s pending home sales and weekly jobless claims.

COMPANY NEWS

REDEIA. Green shoots in sight... awaiting a reasonable regulatory framework for networks. We change from SELL to BUY.
Even if in the short term the stock is negatively affected by the falling regulatory remuneration from pre-1998 amortised assets, starting in 2026e the trend should reverse with the new 2026-2031 regulatory framework for electricity transmission networks. We think there should be some visibility on this matter in 2H’24 after the public consultation on the methodology review begins; among other changes, we would expect an improvement to financial remuneration (from the current 5.58% to ~6.5%/7% BS(e)), which would price in the heavy investments RED would already have begun to make. This, along with the high dividend yield with strong visibility (5% yield’25e) leads us to upgrade our recommendation from SELL to BUY, with a T.P. of € 19.50/sh. vs. the previous € 16.88/sh. (+14% and +20% upside).

AEDAS HOMES. No surprises in the results. Announces payment of extra DPS. BUY
The company had already released the main KPIs for the year, and thus there are no surprises: Sales € 1.15 Bn (+24%), EBITDA € 173 M (+5%), Net Profit € 109 M (+4%). In FY23/24 the company delivered 2,839 units (+4%) at an average price +3% higher, but the gross margin fell -380bps to 22.4% due to higher construction costs and interest. Thus, EBITDA rose +5%, with the margin falling -280bps to 15.1%. Presales reached 2,503 units (+15% vs. 2022/23). Presales coverage is 67% as of March’25 and 37% for March’26, which is a reasonably good level (although lower than last year). In the AGM, the Board of Directors will propose a dividend charged to 2023/24 results of € 0.24/sh. (-79%, vs. € 0.20 BS(e), 1.2% yield) and another extraordinary one of € 2.01/sh. (10% yield). Total DPS’23-24e € 3.54/sh. (22.6% yield).