EUR 100.00 For Business Accounts Only

IBERIAN DAILY 09 JUNE (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, ARCELOR MITTAL, GRIFOLS, MÁSMÓVIL, TELEFÓNICA.

MARKETS YESTERDAY AND TODAY

A pause for a break
The week got off to a calm start following the strong rally seen last week. In the Euro STOXX Banks and Utilities saw the biggest gains vs. Technology and Retail that were the worst relative performs. On the macroeconomic level, C. Lagarde from the ECB bet on the proportionality of the stimulus packages in view of the current risks. Meanwhile, the World Bank foresees a -5.2% decline in 2020 GDP (with only Asia reporting growth). In the euro zone, June’s Sentix index recovered less than expected although it still backs rises in IFO. In Germany, April’s industrial output slowed down more than expected. In Spain, the BoS announced worse prospects of -9.0% in its central-case scenario for 2020 (between -16% and -21.8% in the 2Q’20 vs. -5.2% in the 1Q) with a recovery of 7.7% in 2021 (vs. -9.4% and 7.0% by the European Commission). In France, the government will extend the job protection scheme for Covid-19 at least for 2 years. In the US, the Fed will cut the minimum level of loans in its aid programme for SME and it will extend the maturity. In China, car sales climbed in May 1.9% YoY, fuelled by luxury cars (28% YoY).
What we expect for today
The European stock markets would open with slight gains of +0.5% following yesterday’s good session in the US. Currently, S&P futures are down -0.17% (the S&P 500 closed up by +0.62% vs. its price at the closing bell in Europe). Volatility in the US rose (VIX 25.81%). Asian markets are mixed (Japan -0.67% and Hong Kong +1.33%).
Today we will learn in the Euro zone the final 1Q’20 GDP figure. In Spain, the INE’s housing prices for 1Q’20, in Mexico May’s inflation. In debt auctions: Netherlands (€ 3 Bn in bonds due 2030), Germany (€ 3 Bn in bonds due 2027) and Spain (€ 7 Bn in 6M and 12M T-bills).


COMPANY NEWS

GRIFOLS. Will account an impact of -13% on EBITDA due to Covid-19 (already priced in). BUY.
The company announced at yesterday’s closing bell that in 2020 it will account a negative impact of € 200 M (13% of EBITDA’20 BS(e), which stands -1% vs. the consensus) on gross revenues due to Covid-19. The adjustment would be due to a temporary loss of production efficiency in its factories caused by a lower supply of plasma. GRF has implemented a cost containment plan focused on operating non-structural costs in order to reduce this impact to € 100 M in 2020 (6.5% of EBITDA’20). Negative news of limited impact. Even if the company did not have a cost containment plan, the impact on our T.P. would be lower than -1%, as this effect is temporary and should not affect long-term growth dynamics (+6% CAGR’19-22 in sales BS(e)). Separately, according to the company, plasma donations have already begun to recover and its 6-month safety stock guarantees the supply. On the negative side, GRF would have estimated an impact of zero due to Covid-19 (in line with BS(e)). Thus, since February’s highs, the stock has slid by -20% (+1% vs. the IBEX), whereas in the last month it has underperformed the IBEX by -23%, meaning that in our view, any negative impact should already be priced in at the current levels.