IBERIAN DAILY 10 MAY + 1Q’22 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: ACS, MELIÁ HOTELS, TALGO.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.
Fears grip the market
Heavy losses in Europe on fears surrounding the Fed’s ability to rein in inflation (to be released tomorrow) without ending in a recession. In the Euro STOXX, all sectors ended with losses, with Energy and Technology being the worst performers and Household Goods and Utilities the best performers. On the macro side, in the euro zone the Sentix confidence index for May fell slightly more than expected. In the US, from the Fed R. Bostic does not foresee the need for interest rate hikes of more than 50bps. In Japan, household consumption rose in March more than expected. In US business results, Exelon, Viatris and Duke Energy released disappointing earnings while Tyson Foods beat expectations.
What we expect for today
European stock markets would see gains of 0.5% with the better performance of growth, benefiting from the ease in yields in sovereign debt. Currently, S&P futures are up +0.7% (yesterday the S&P 500 ended -0.87% lower vs. the European closing bell). Volatility in the US rose (VIX 34.75). Asian markets are mixed (China’s CSI 300 +1.2% and Japan’s Nikkei -0.5%).
Today in Germany we will learn May’s ZEW index. In US business results, Sysco, Norwegian Cruise, Fox Corp, Occidental Petroleum and Electronic Arts, among others, will release their earnings. In debt auctions: Netherlands (€ 3 Bn in bonds due 2026) and Germany (€ 3 Bn in bonds due 2027).
COMPANY NEWS
MELIÁ. Good 1Q’22 results and positive outlook but already priced in in the short-term. We change our recommendation to SELL.
The company has released better 1Q’22 results than expected in sales (thanks mainly to a € 8 M one-off derived from Govt. subsidies), affected by Omicron, with March seeing a strong recover. EBITDA came in slightly below expectations. In 2Q’22, the company expects March’s trends to continue, with gradual recovery in the corporate and MICE segments, emerging from losses. Easter saw a record performance (both in RevPAR and ADR) of resort hotels and in April (standalone), RevPAR hit 2019 levels. Summer bookings (in resort hotels) exceeded 2019 levels, thanks mainly to improved ADR. We expect a lacklustre share price reaction following the stock’s performance in 2022 (+33% vs. Ibex) and change our recommendation to SELL, as it is trading only -8% vs. pre Covid levels and the business has not yet recovered these levels.
ACS Actividades de Construccion y Servicios is a holding company. Through its subsidiaries, Co.'s activities are divided into the following areas: Construction, engaged in the construction of civil works, and residential and non-residential building construction; industrial services, engaged in the development of applied engineering services, installations and the maintenance of industrial infrastructures in the energy, communications and control systems sectors; services, groups together environmental services, the outsourcing of building maintenance services, logistics and transport services; and concessions, mainly engaged in transport infrastructure concessions.
Melia Hotels International is the parent company of a group engaged in the acquisition, management and operation of hotels. Co. operates its hotel network in Germany, Argentina, Brazil, Bulgaria, Cabo Verde, Chile, China, Costa Rica, Croatia, Cuba, Egypt, Spain, United States, France, Greece, Netherlands, Indonesia, Italy, Luxembourg, Malaysia, Mexico, Panama, Peru, Portugal, Puerto Rico, United Kingdom, Dominican Republic, Singapore, Switzerland, Tunisia, Uruguay, Venezuela and Vietnam under the followings brandnames: Paradisus Resorts®, Melia Hotels & Resorts®, TRYP Hoteles® and Sol Hotels & Resorts®.
Talgo is engaged in designing, manufacturing, repairing and maintaining the railway rolling stock, as well as the manufacturing, assembling, repairing and maintaining the engines, machinery and parts of the railway systems. Co. has an industrial presence in seven countries: Spain, Germany, Kazakhstan, Uzbekistan, Russia, Saudi Arabia and U.S.A. Co. has an active fleet in Europe, Asia and North America that comprises of 94 high-speed trains and more than 1,400 Talgo tilting passenger cars. Also, Co. purchases, redesigns, constructs, leases and sells all types of real estate.
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