EUR 100.00 For Business Accounts Only

IBERIAN DAILY 18 APRIL + 1Q’24 RESULTS. PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, NATURGY, VISCOFAN.

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’24 results to be released over the coming days in Spain.

The Ibex rallies
Europe recovered ground after the strong corrections seen last Tuesday, with sovereign yields tightening and with the Ibex climbing >1.0% after its worst annual session. In the STOXX 600, most sectors ended with gains, led by Consumer Goods and Basic Resources vs. Pharma and Technology that saw the biggest drops. On the macro side, in the euro zone, March’s final inflation confirmed the preliminary data of 2.4% YoY with the core data at 2.9% YoY. In the US the Fed Beige Book depicted greater activity dynamism with optimistic business sentiment but cautious and warning about the difficulties to pass on higher costs to prices. On another note, the government is looking to triple tariffs on China’s aluminium and steel although the Chinese imports only account for 0.6%. In US business results, Prologis was in line, US Bancorp above expectations and Travelers worse than expected.
What we expect for today
Stock markets would open with a slight bullish slant, with better performance from growth following the sharp drop in sovereign yields yesterday. Currently, S&P futures are up +0.39% (the S&P 500 ended down -0.22% vs. the European closing bell). Asian stock markets are climbing (China’s CSI 300 +0.58%, Japan’s Nikkei +0.32%).
Today in the US we will learn April’s Philadelphia Fed index, March’s existing home sales and weekly jobless claims. In US business results, Netflix, KeyCorp and Blackstone, among others, will release their earnings.


COMPANY NEWS

ACS. CMD’24: Growth without risk. BUY
From the CMD’24 we highlight the company’s Net Operating CF estimate’24-26 of around € 3.3 M, which along with divestitures (> € 2 Bn) would mean >€ 2.5 Bn available for the acquisition of concession assets (brownfield and greenfield) and M&A deals to speed up Turner’s expansion (US). We raise our EBITDA and Net Profit estiamtes’24-26 by +5% and +12%, respectively (-6% and -7% vs. consensus) due to the better operating performance (Turner/Cimic), setting our T.P. at € 43.00/sh. (+11% upside). Following the poor recent share price performance (-4% YTD; -9% vs. IBEX) we continue to see upside with the gradual “de-risking” of its businesses (~85% backlog), which would justify higher valuation/multiples, in line with its US peers (>12x EV/EBITDA).

VISCOFAN, BUY
The 1Q’24 results came in below expectations in sales (-6.0% vs. -3.3% consensus), although on the EBITDA level they were in line (-0.4% vs. -0.2% expected), resulting in a higher margin (21.3% reported vs. 20.6% expected), breaking the downward trend and growing +130bps vs. 1Q’23. Ther performance was affected by: (i) normalisation of traditional business volumes, where Asia has improved (mainly China), although South America continues to be weak (due to Brazil), (ii) FX and (iii) lower raw material and energy prices. No reference was made to the guidance’24, and thus we understand it remains unchanged.
Although on the year the stock has performed positively (around +3% vs. the IBEX 35 in 2024), the fact profitability has improved more than expected could mean a positive reaction.

NATURGY. The strong likelihood of a TOB will continue to underpin the share price
After TAQA confirmed to the Spanish regulator that it is in talks with CVC, GIP and Criteria Caixa to launch a TOB on 100% of NTGY, now the focus lies on the potential price. Yesterday the press mentioned €~27/sh. (+18% vs. yesterday’s closing price; +13% vs. our valuation that we expect to lower and +12% vs. consensus). Everything suggests Criteria would remain in the shareholding structure in order to pave the way for Govt. approval, which yesterday stated it will defend Spain’s strategic interests and that it has the regulatory tools necessary to do so. Despite the stock’s rally yesterday (+6%), there would still be upside for the share price up to the deal price mentioned.