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IBERIAN DAILY 09 MAY + 1Q’22 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, ALMIRALL, CAF, GRIFOLS, REPSOL.

At the end of today’s report, and during the entire results season, we will include a presentation with positive and negative results highlights and previews for the 1Q’22 results to be released over the coming days in Spain.

A week marked by the Central Banks
The European stock markets ended the week with losses following the Bank of England’s recession risk warnings (cutting the 2023-24 GDP) and after the Fed confirmed it would raise interest rates by 50bps (although it left the door open to raising them by another 50bps in the next two meetings). Thus, the Ibex 35 ended the week down by around -3%, below 8,400 points, whereas the Euro STOXX fell more sharply (around -4.3%). Within the Euro STOXX, the best-performing sectors were Energy and Telecoms, whereas Household Goods and Insurance were the worst relative performers. On the macro side, we highlight in the US April’s non-farm job creation, which beat expectations, whereas wage returns slowed as expected and the unemployment rate was in line at 3.6% (hinting at a very strong labour market with significant wage pressure). In Germany, March’s industrial output fell more than expected. Separately, the main metalworkers’ union starts wage negotiations demanding an 8.2% increase. In this context, several members of the ECB, including Lane, Holzmann and Rehn left the door open to raising rates in July and 3 times in 2022. In China, exports slowed less than expected and imports did not fell as expected. On the geopolitical front, the G7 is committed to stop importing Russian oil gradually in order not to damage growth too much. In US business results, NRG Energy and Cigna Corp, among others, came in better than expected.
What we expect for today
The European stock markets would open with drops of more than -1.0% that could be reeled in over the session. Currently, S&P futures are down -1% (last Friday the S&P 500 ended unchanged vs. the European closing bell). Volatility in the US increased (VIX 30.19). Asian markets are falling (China’s CSI 300 -0.5%, Japan’s Nikkei -2.4%).
Today we will learn in the EMU May’s Sentix confidence index. In US business results, Exelon, Tyson and Viatris, among others, will release their earnings.

COMPANY NEWS

CAF. Worse 1Q’22 Results in EBITDA margin. BUY.
The company released 1Q’22 Results at Friday’s closing bell that came in above expectations in sales (+5% vs. BS(e) and+6% vs. consensus) and very much in line in EBITDA (+2% vs. BS(e) and -2% vs. consensus), which meant slightly worse-than-expected margins , hit by the transport strike in Spain, a strike of Solaris’s employees and the increase in energy costs. Order intake exceeded € 1.7 Bn (including projects to be signed; vs. € 1.1 Bn BS(e)), meaning 1.5x BtB. Even though EBITDA was very much in line with expectations and order intake saw a good performance, the fact that margins came in below expectations could weigh on the share price, and thus we would expect at least a moderately negative market reaction even following its -15% YtD correction vs. IBEX.

ALMIRALL. Better 1Q’22 Results due to non-recurring revenues. The company maintains the 2022 guidance. BUY.
1Q’22 Results came in above expectations on the operating level (€ 60 M of EBITDA vs. € 50 M and € 52 M consensus) thanks to the greater contribution of non-recurring revenues linked to A.Zéneca and Covis (€ 10 M vs. € 3 M BS(e)). Excluding this effect, sales (-1% vs. -2% BS(e)) and gross margin (66.7% vs. 67% BS(e)) were very much in line with expectations. NFD rose by +4% up to € 253 M (1.1x NFD/EBITDA) vs. € 240 M BS(e)) due to working capital, while the company kept its 2022 guidance unchanged (mid-single digit sales growth and between € 190-210 M of EBITDA vs. € 195 M BS(e) and 202 M consensus). We do not expect a relevant impact from these results after its recent performance (+2% in 2022; +6% vs. IBEX).

ACS, BUY.
Hochtief (50.4% ACS; ~48% of ACS’ EBITDA; 35% of our T.P.) has just released its 1Q’22 results that were very much in line with expectations in sales and slightly higher in EBITDA (+3% vs. BS(e)). Abertis (20% Hochtief) showed a € 5 M contribution to EBITA (vs. -3 in 1Q’21). On the adjusted Net Profit level, results are better, totalling € 118 M (€ 107 M BS(e) and consensus). Net debt came in at € 350 M (€ 556 M of net cash as of YE’21) due partially to the worse performance of prefactoring FCF (€ -56 M vs. 1Q’21) and to the € -364 M invested in the acquisition of CIMIC’s shares (with the completion of the delisting tender offer being pending). Order intake improved by +5% (adjusted for FX) vs. 1Q’21.
We expect a neutral or a moderately negative market reaction for ACS, as despite the good performance of the PL& statement, cash generation worsens slightly vs. 1Q’21. ACS will release its full results at Thursday’s closing bell.