EUR 100.00 For Business Accounts Only

IBERIAN DAILY 01 APRIL (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, CIE AUTOMOTIVE, LIBERBANK, NEINOR HOMES, SIEMENS GAMESA, UNICAJA.


MARKETS YESTERDAY AND TODAY

Technology and the defensive sectors rally awaiting more catalysts
The European stock markets fell gradually as the session progressed, closing with slight losses despite a bullish US opening (fuelled by the rally in the Technology sector). Within the Euro STOXX, Technology and the most defensive sectors (Household Goods, Utilities and Pharma) led gains, whereas Basic Resources saw the biggest losses. On the macro side, in the US, February’s ADP employment survey and March’s pending home sales came in worse than expected. In the United Kingdom, the final 4Q’21 GDP was raised slightly. In his speech in Pittsburg, President J. Biden presented its 8-year infrastructure plan worth € 2.25 Tn, which would be funded through tax rises (with the corporate tax going from 21% to 28%) and which he expects to be approved before the summer. The plan was already priced in by the markets, and the announcement had hardly any effect on the stock or debt markets. In Japan, March’s Tankan indicator came in above expectations. In China, March’s Caixin Manufacturing PMI fell slightly unexpectedly, although it remains in expansion territory.
What we expect for today
The European stock markets would open with moderate gains, assimilating Biden’s messages. Currently, S&P futures are flat (the S&P 500 ended -0.3% lower vs. its price at the closing bell in Europe). Volatility in the US fell (VIX 19.40). Asian markets are rising after falling for three consecutive days (CSI 300 +0.5% and Japan +0.7%).
Today we will learn in the US March’s ISM Manufacturing index, Feruary’s construction expenses and the weekly jobless claims data, in Spain and the Euro zone, March’s final Manufacturing PMI, and in Brazil, February’s industrial output. Also, the OPEC+ will hold its meeting.


COMPANY NEWS

NEINOR. BUY.
HOME’s and QBT’s shareholders approved yesterday the merger between the two companies, with wide support in both cases. HOME will make a €~56 M rights issue to absorb QBT (equivalent to ~7% post dilution) and will assume €~280 M of liabilities, most of which have already been refinanced. The exchange ratio will be 1 HOME share x 25.965 class A QBT shares. The merger will be effective after all due authorisations are obtained. Positive news as it was unclear whether the merger would be approved in the end, with a 3.5% gap in the exchange ratio at yesterday’s closing price. We believe that the merger with QBT could create value, but this is not priced in at HOME’s current trading levels. In terms of NAV per share, the merger would have a positive impact of +8% before synergies according to our estimates (and a more significant impact after operational and fiscal synergies). QBT’s excessive debt levels, with an LTV ratio of 51% in a company that was unable to completely overcome all of its legacy problems, the recession caused by Covid-19 and the agreement with the lending banks have led to an attractive selling price for HOME.