EUR 100.00 For Business Accounts Only

IBERIAN DAILY 10 MARCH (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, AENA, EBRO FOODS, GRIFOLS, IBERDROLA, INDITEX, NATURGY.

MARKETS YESTERDAY AND TODAY

Consolidating levels
The market continued to pay attention to the debt yields, which tightened significantly in a session where the main indices in the euro zone ended in positive territory, led by the technology sector that rallied at both sides of the Atlantic. Thus, in the Euro STOXX, Technology and Retail were the best performers vs. Banks and Basic Resources that saw the biggest drops. On the macro side, the OECD revised its global growth forecast to 5.6% in 2021 from 4.2% previously, with the biggest rises in the UK, Brazil, Mexico and Spain. In Germany, January’s exports rose unexpectedly, fuelled by China’s demand. In China, February’s inflation fell less than expected, whereas production prices increased above expectations.
What we expect for today
European stock markets would open with losses of -0.5%, dragged down by the financials and oil companies, among others. Currently, S&P futures are down -0.35% (the S&P 500 was down -0.49% vs. its price at the closing bell in Europe). Volatility in the US fell (VIX 24.03). Asian markets are rising (CSI 300 +0.9%, Japan +0.05%).
Today in the US we will learn February’s inflation. In debt auctions, Italy (€ 6 Bn in 12M T-bills), Greece (€ 625 M in 3M T-bills), Germany (€ 4 Bn in bonds due 2026) and Portugal (€ 1.25 Bn in bonds due 2027 and 2030).


COMPANY NEWS

ACS. Awaiting the sale of Cobra, value & strategic implications. BUY.
The sale of Cobra to Vinci (€ 5.2 Bn EV, +23% vs. our valuation) would increase our T.P. by as much +10% (from € 29.80/sh. to € 32.80/sh.), opening the door to several strategic options (with the total collection in cash, ACS’s net cash’21e would stand at € 1.5 Bn with a ~80% weight of Construction in EBITDA). ACS could raise the weight of concessions (toll roads) and/or renewables (collaboration options with VINCI for the development of its renewable pipeline of 25GW, not included in our valuation), along with more remote options (extraordinary DPS, raising its stake in Hochtief or CIMIC). The confirmation of the sale should be a catalyst, (ACS is trading at a -20% discount vs. peers, having slid -10% since January’s highs), as despite the possibility of some changes in the consolidation scope, at our valuation, the market is pricing in a -30% cut to the price agreed.

INDITEX. Poor 4Q’20 results, hit hard by restrictions.
Our first impression is that the 4Q’20 results are worse than expected in sales (standalone), falling -25.4% vs. -23.8% BS(e) and -18.8% consensus (BLG) and with EBIT -54.2% vs. -42.2% BS(e) and -26.1% consensus. The quarter was weak due to the restrictions stemming from Covid-19, which have tightened since mid-December. Online sales grew +77% on the year. As for the start of 1Q’21, the figures are also poor, although in line with forecasts (February -15%, March -4%) for the same reasons (21% of stores closed in February), although we can see a strong improvement as stores begin to open. In this regard, ITX estimates that by mid-April all its stores could be open. The company will propose a DPS of € 0.70/sh. (vs. € 0.62/sh. BS(e), 2.4% yield).