IBERIAN DAILY 05 OCTOBER (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: ACS, CELLNEX, ELECTRICITY SECTOR, IBERDROLA, LIBERBANK, PROSEGUR, UNICAJA.MARKETS YESTERDAY AND TODAY
Stock markets fall after Trump’s positive
The Trumps’ testing positive for Covid-19 led to drops on the main stock markets, although the drops were reeled in somewhat despite the disappointing US employment data. In the Euro STOXX, Construction and Utilities were the best-performing sectors, aided by the inflation readings in the eurozone, which were worse than expected. Meanwhile, Travel & Leisure (fears of new restrictions), Retail and Energy (dragged down by the falling Brent prices) were the worst performers. From the ECB, L. de Guindos stated that the euro zone will not reach the pre-pandemic GDP levels until late 2022. In the US, September’s non-farm employment showed slightly slower recovery than expected, whereas the unemployment rate is already below 8.0%. In Japan, the services PMI rose less than expected in September.
What we expect for today
Thanks to the improvement in Trump’s health, to the solid outlook on a possible stimulus package in the US that the President also insisted on and despite the rise in Covid-19 cases in NY, Paris and the UK, European markets would open with gains of around +0.5%, with the ES50 distancing itself from support levels. Currently, S&P futures are up +0.7% (the S&P 500 was up +0.3% vs. its price at the closing bell in Europe). Volatility in the US increased (VIX 27.63). Asian markets are rising (Japan +1.2%, Hong Kong +1.5%), with continental China closed.
Today in the euro zone we will learn the final services PMI, August’s retail sales, October’s Sentix index and the Eurogroup will hold its videoconference for October. Debt auctions: Netherlands (€ 3 Bn in 3M and 12 M t-bills), Germany (€ 1.5 Bn in 6M t-bills) and France (€ 5.7 Bn in 3M, 6M and 12M t-bills).
COMPANY NEWS
ACS. Talks between Vinci and ACS over the sale of Cobra. BUY.
The company announced at Friday’s opening bell that ACS has received an indicative and non-binding offer by VINCI (DG) for its industrial division Cobra totalling € 5.2 Bn EV (out of which € 2.8 Bn would be paid in cash minimum) vs. €~4 Bn in our valuation of ACS (~25% of ACS’ EV), which would imply +14% in our T.P. (€ 29.19/sh.; +25% upside). For this reason, we believe that ACS’ +25% increase on Friday would be pricing in the undervaluation of the group in general and not only that of the division targeted by the operation. It should be noted that the deal has not been closed yet, as a revision process (due diligence) by DG will have to be carried out over the next few months.
ACS Actividades de Construccion y Servicios is a holding company. Through its subsidiaries, Co.'s activities are divided into the following areas: Construction, engaged in the construction of civil works, and residential and non-residential building construction; industrial services, engaged in the development of applied engineering services, installations and the maintenance of industrial infrastructures in the energy, communications and control systems sectors; services, groups together environmental services, the outsourcing of building maintenance services, logistics and transport services; and concessions, mainly engaged in transport infrastructure concessions.
Cellnex Telecom SA is a Spain-based company engaged in the wireless telecommunications (telecom) business. Its activities are divided into three segments: Broadcasting infrastructure, Telecom site rental, as well as Network services and other. The Broadcasting infrastructure division comprises distribution and transmission of television (TV) and frequency modulation (FM) radio signals, operation and maintenance (O&M) of radio broadcasting network, as well as over-the-top (OTT) radio services, among others. The Telecom site rental division provides access to wireless infrastructure, primarily through infrastructure hosting and telecom equipment co-location, mainly for mobile network operators and other wireless and broadband telecom network operators. The Network services and other division offers connectivity services for a variety of telecom operators and radio communication, among others. The Company also develops 5th generation mobile networks (5G) through Alticom BV.
Iberdrola is a holding company. Through its subsidiaries, Co. operates in four segments: network business, which includes all the energy transmission and distribution activities, and other regulated activity originated in Spain, the U.K., the U.S. and Brazil; deregulated business, which includes electricity generation and sales businesses as well as gas trading and storage businesses carried on by Co. in Spain, Portugal, the U.K. and North America; renewable business, with activities related to renewable energies in Spain, the U.K., the U.S. and the rest of the world; and other businesses, including the engineering and construction businesses and the non-power businesses.
Unicaja Banco SA is a Spain-based financial institution (the Bank) engaged in the banking sector. The Bank offers services to individual and business customers. Its products and services range includes current and savings accounts, debit and credit cards, consumer and commercial loans, real estate credit, securities brokerage, funds management, leasing, factoring, pension plans, life and non-life insurance, international trade financing, money transfer, as well as treasury, among others. The Bank operates a number of branches in Spain and Morocco. The Bank is controlled by Fundacion Bancaria Unicaja.
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