EUR 100.00 For Business Accounts Only

IBERIAN DAILY 05 DECEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, INDITEX, TELEFÓNICA, VIDRALA.

The Ibex continues to beat Europe
European stock markets were stable, in a session lacking drivers. In the STOXX, Household and Retail were the best-performing sectors, whereas Energy (despite the rally of Brent crude) and Technology ended with drops >-1.0%. On the macro side, in Spain, the number of Social Security affiliates dropped by 12,000 people in November due to the poor performance of the hotel and restaurant industry, totalling 20.8 M workers. However, the unemployment rate improved unexpectedly after the unexpected drop in the number of unemployed. In the euro zone, December’s SENTIX improved although less than expected, remaining in negative territory. From the ECB, L. de Guindos was satisfied with the good inflation data although he considers that wage pressures could still have an impact. In this regard, I. Schnabel left the door open to new rate rises until mid 2024 In the US, October’s factory orders slowed down more than expected. In China, the non-manufacturing PMI rose more than expected in November, whereas on the geopolitical front, China announced a meeting with Europe next Thursday on geopolitical and economic issues in view of the possible implementation of punitive tariffs on electric vehicle imports. Lastly, the worsening of Israel’s offensive and the attack to a US vessel on the Red Sea by Yemen’s Houthi rebels increase tensions in the Middle East.
What we expect for today
European stock markets would see a sideways opening, with all eyes on the performance of the geopolitical situation. Currently, S&P futures are down -0.24% (the S&P 500 ended up +0.15% vs. the European closing bell). Volatility in the US rose (VIX 13.08). Asian stock markets are falling (China’s CSI 300 -0.96%, Japan’s Nikkei -1.37%).
Today in Spain we will learn October’s industrial output, in the euro zone November’s final services PMI and in the US November’s non-manufacturing ISM.


COMPANY NEWS

INDITEX. Solid performance in 3Q’23 Results and positive indications from the trading update. BUY.
We expect a robust like-for-like sales (results due on 13/12), growing ~+12% on a quarter that will see a decreasing performance (strong start to 3Q and solid demand) and ~+8% growth on the reported level due to the negative FX effect. The gross margin will improve by ~+40% up to 60.5% due to lower procurement, whereas the rest of costs will remain under control, although growing at a slightly higher pace than sales (EBIT margin ~+20bps to 21.4%). We foresee good indications on the 4Q’23 (Nov./ ~11 Dec), with sales growing at double-digit rates and with the confirmation of its 2023 targets (gross margin stability), which should underpin the positive momentum of the share price (up ~+31% in 2023 vs. IBEX 35 and ~+7% vs. peers).