EUR 100.00 For Business Accounts Only

IBERIAN DAILY 07 SEPTEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, ELECTRICITY SECTOR, FERROVIAL, REPSOL.

Markets in wait-and-see mode ahead of the ECB meeting
It was a transitional session for the European stock markets, with all eyes on the ECB meeting on Thursday and the energy summit on Friday. Most European indices posted slight gains (except for the Dax, which rose by almost +0.9%), with the Ibex lagging behind somewhat this time and the US stock market ending in the red. Thus, within the Euro STOXX, most indices ended with gains, led by Autos and Chemicals, vs. the worse relative performance of Energy and Utilities. On the macro side, in Germany, factory orders decreased more than expected. Separately, among the measures that the EU would agree on to tackle the energy crisis is to limit the price of Russian gas, taxes on windfall profits of all types of energy companies (except those that use gas) and aid to needy families. In the US, August’s services ISM climbed above expectations to April’s highs whereas the price component fell somewhat more than expected, although it remains at levels consistent with inflationary pressure. Separately, T. Barkin, from the Richmond Fed, was in favour of high restrictive rates until inflation begins to ease. In China, the trade surplus fell more than expected in August, with a sharp slowdown in growth of imports and exports.
What we expect for today
European stock markets would open with losses of around -0.5%, and the hardest-hit sectors would be those linked to basic materials due to falling steel, basic metal and oil prices. Currently, S&P futures are down -0.28% (the S&P 500 ended down -0.67% after the European closing bell). Volatility in the US rose (VIX 26.91). Asian markets are mixed (China’s CSI 300 +0.1% and Japan’s Nikkei -0.75%).
Today we will learn in the Euro zone the final 2Q’22 GDP, and in the US July’s trade balance and the Fed Beige Book. In debt auctions: Germany (€ 1.5 Bn in bonds due 2038).


COMPANY NEWS

REPSOL, BUY.
REP has agreed the sale of 25% of the Exploration and Production business to EIG. The deal would have come at US$ 4.8 Bn, with US$ 3.4 Bn corresponding to shares and US$ 1.4 Bn to net debt. This transaction means valuing the Upstream division at € 19 Bn (100% EV).
Very positive news, as the price at which the transaction has been closed means the high end of the range being considered on the market (between € 14-18 Bn for 100% EV) and would be above our valuation (€ 13.18 Bn), which would mean around +12% on our current T.P. The sale of the minority 25% stake would raise € 3.36 Bn, meaning around -46% NFD. The deal makes strategic sense (it allows almost all the renewable CAPEX to be funded) and is opportunistic (selling at oil and gas price highs).