EUR 100.00 For Business Accounts Only

IBERIAN DAILY 03 APRIL (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACCIONA ENERGIA, ACS, CIE AUTOMOTIVE, ENCE, TELEFÓNICA.

Market rally
Most global markets saw gains after the banking crisis eased and the more favourable macro data in the US and Europe. In the Euro STOXX, all sectors ended the week with gains, led by Retail and Banks vs. the worse performance in Financial Services and Food (although both rose close to +2.5%). On the macro side, in the euro zone March’s inflation fell more than expected to 6.9% (vs. the previous 8.5% and 7.1% expected by the consensus), whereas the core figure rose +0.1% to 5.7% (vs. the previous 5.6% and in line with the consensus). February’s unemployment rate fell to 6.6%, as expected. In the UK, the 4Q’22 GDP was raised unexpectedly. In the US, February’s real personal outlays slowed down in line with expectations, suggesting private consumption growth in the 1Q’23 below 2.5% q/qa expected by the consensus, on another note the private consumption deflactor for February moderated more than expected, underpinning lower rate rises by the Fed. In Japan, the Tankan manufacturing index for 1Q’23 moderated more than expected although remaining in positive territory whereas the non-manufacturing index climbed in line with expectations. Lastly, OPEC+ unexpectedly announced a production cut of around 1.1 M b/d starting in May in addition to 2 M b/d thus far, which will last until the end of 2023. The cut will mainly affect Saudi Arabia (-500,000 b/d), Iraq (-211,000 b/d), Emirates (-144,000 b/d) and Kuwait. This follows Russia’s decision of curbing output from March’23 (~500,000 b/d).
What we expect for today
European stock markets would open with drops below 0.5% with the better performance of Energy. Currently, S&P futures are down -0.26% (the S&P 500 ended +0.56% higher vs. the European closing bell). Volatility in the US fell (VIX 17.20). Asian markets are rising (China’s CSI 300 +0.56% and Japan’s Nikkei +0.59%).
Today in the euro zone, UK and Spain we will learn March’s final manufacturing PMI and in the US March’s manufacturing ISM. In debt auctions, Germany and France will place 3M and 9M t-bills.



COMPANY NEWS
ACS, BUY
At Friday’s closing bell the company announced that it has completed the acquisition of the 21.62% stake not held in the US highway SH-288. The price of the deal totals € ~391 M (5% ACS’s current EV and ~4% of our EV), very similar (-3% lower) to the acquisition of the rest of the stake acquired ~57% in two transactions). The deal is subject to the fulfilment of some usual conditions in this type of transactions. Note that the asset, in operation since 2020, consists of 4 toll lanes (managed lanes) with a length of 17 km along the median of the SH-288 in Houston (Texas, US). The initial investment in the project was US$ 1 Bn with the concession lasting 52 years (there are still 46 years left through March of 2068). News of limited impact, as the deal is not a surprise (ACS’s intention of getting hold of 100% was already known), and the price is very similar to that seen in the previous acquisitions.

ENCE, BUY
The company announced at Friday’s session that the Board will propose at the AGM (05/05 in second call) the payment of a € 0.29/sh. final dividend (no dividends were paid out in 2021; we did not expect an additional payment; 8.5% yield) as final dividend’22 (after 4 additional interim dividends) on 18/05 (ex dividend 16/05). Total DPS’22 € 0.84/sh. (24.5% yield). We did not expect an additional payment after March’s payment that was already the fourth on the year. We assume that the bias of this news is positive as in general we welcome the return of money to shareholders when the balance sheet structure is oversized to face profitable growth for its scope. In this regard, we stress that by eliminating the payment of this dividend, ENC’s debt would be close to zero in 2023e (€ 30 M of net cash as of YE022) and that the company already ruled out the historical extension project of the Navia plant by 340,000 t (€ 450 M of capex, the highest level assumed). The share price climbed +1.5% last Friday (+1.2% vs. IBEX).