EUR 100.00 For Business Accounts Only

IBERIAN DAILY 10 JUNE (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, BANKINTER, PUIG BRANDS, TELEFÓNICA.


US employment data remains strong
It was a positive week for stock exchanges, marked by the rate cut in Europe, with the Ibex returning to 2015 highs and with sovereign yield widening significantly after the US job data. Thus, in the STOXX 600, Technology and Pharma were the best performers vs. the corrections of Energy and Basic Resources. On the macro side, in the euro zone, the final 1Q’24 GDP confirmed the 0.4% YoY data, as expected. In the European elections, pro-EU parties have held on to the majority, but the far right is gaining strength thanks especially to Germany and France, where E. Macron has decided to call Parliamentary elections on 30 June. In Germany, the industrial output fell, as opposed to expectations. In the US, job creation and wage gains came in above expectations in May although the unemployment rate also climbed more than expected.
What we expect for today
Stock markets would open with slight drops and with growth and small caps performing worse, apart from the possible effect from the European elections. Currently, S&P futures are up +0.07% (the S&P 500 ended down 0.23% vs. the European closing bell). Asian stock markets are climbing (China’s CSI 300 is closed, Japan’s Nikkei +0.95%).
Today in the euro zone we will learn June’s Sentix index.

COMPANY NEWS

BANKINTER, BUY
The weekend press includes an interview to BKT’s CFO and new head of Digital Banking, Jacobo Díaz, where we highlight: (i) He expects 2025 and 2026 revenues to be higher year after year. We and the consensus also expect this performance but foreseeing a +0.4% CAGR’23-26 vs. +1.5% consensus. (ii) As for rates, the CFO expects a new rate cut in autumn and most likely an additional one in late 2024 or early 2025 depending on the performance of inflation. He believes that rates could reach 2.5% levels at the end of the 2H’25. Against this backdrop, lower rates will benefit lending growth (we foresee a +1.3% CAGR’23-26 vs. +3.6% consensus). (iii) In terms of customer spread, the CFO considers that the current 300bps are sustainable in the long-term, whereas we foresee 260bps in the long-term. (iv) He reiterated that the 2024 results will be better than those seen in 2023 and the 2025 results will exceed 2024 figures. Both we and the consensus are slightly more conservative: -1-5% CAGR’23-26 in Net Profit vs. -1.6% consensus. With this in mind, he considers that the >15% ROTE is “much more sustainable that one could believe”. We welcome the CFO’s long-term optimism but we believe that before marking it to market the delivery will be necessary in 2025. We foresee a 13.5% ROTE’26 and 16.8% in 2024 vs. 13.6% and 17.4%, respectively expected by the consensus. Assuming a >15% ROTE from 2026 would have a +11% impact on valuation to € 9.2-9.4/sh. levels (+17% upside). We reiterate that the current levels of 1.4x P/TE and following the +27% performance in the past 3 months (+12% vs. sector), the share price could yield limited upside.

PUIG BRANDS. A premium company in a resilient sector. We initiate coverage with a € 28.70/sh. T.P. BUY.
Puig is positioned in the premium beauty sector with significant growth prospects (~+7% according to Euromonitor) thanks to its portfolio of 17 Love Brands. The company is present in Fragrances and Fashion (~72% sales, Fashion