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IBERIAN DAILY 21 JULY + 2Q’21 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, ENCE, LIBERBANK, MAPFRE.

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 2Q’20 results to be released over the coming days in Spain.

MARKETS YESTERDAY AND TODAY

Stock markets rally
All European indices saw gains yesterday, with solid business results and a positive US opening bell where the “buy the dip” worked again and with value leading gains once more. Thus, in the Euro STOXX, all sectors with the exception of Household (that was the best performer in Monday’s correction) ended in positive territory, with Basic Resources and Banks being the best relative performers. On the macroeconomic level, in the US, June’s construction permits fell unexpectedly while housing starts climbed above expectations. In Japan, exports and imports grew more than expected in June, whereas in South Korea exports over the first 20 days of July sped up, boosted by semiconductors. In US Results Halliburton and Philip Morris beat expectations, while Netflix released disappointing EPS and subscription figures.
What we expect for today
European stock markets would open flat with a slightly bullish slant, underpinned by the company results and awaiting news on the ECB meeting tomorrow. Currently, S&P futures are down -0.1% (the S&P 500 ended flat vs. its price at the closing bell in Europe). Volatility in the US decreased (VIX 19.73). Asian markets are rising (China’s CSI +0.8% and Japan’s Nikkei +0.5%).
Today, no relevant macro data will be released. In debt auctions: Germany (€ 1.5 Bn in bonds due 2048) and Portugal (€ 1.25 Bn in 6M & 12M T-bills). In US business results, Johnson & Johnson, Coca-Cola, and M&T Bank, among others, will release their earnings.


COMPANY NEWS

ENCE. Conclusions from conference call on Pontevedra ruling. New T.P. of € 3.60/sh. BUY
ENC did not provide much news or higher visibility on the legal process (which could take up to 4 years if the company appeals before the EU), and it was confident that there will be no measures for a cautionary closure of the factory, although it cannot rule out the possibility. As an alternative, the company is insisting on the project to enlarge the Navia factory (additional 340,000 t; 50% of Navia’s current capacity), where € 450 M of CAPEX would be necessary (42% of ENCE’s EV). The share price is already factoring in the worst-case scenario (immediate closure without considering an enlargement of the Navia factory), which would leave our new T.P. at € 3.60/sh. (+37% upside). Since the ruling was announced the stock has fallen -18% (-16% vs. IBEX), which apart from the closure would mean a recurring pulp price -8% below the average over the past 10 years.

2Q’21 Results highlights and rest of previews.
Among the companies releasing their earnings next week, on the positive side we highlight Mediaset España (release date 27/07), where we expect a quarter marked by the strong recovery of the TV advertising market (+83.5% BS(e) vs. 2Q and +34% vs. 1Q), with TL5 benefitting from the European Football Championships, which in addition to the stock’s recent poor performance (-3% vs. IBEX in the last two months), would lead to a positive share price reaction, and Santander (release date 28 July), where we expect a very good share price reaction and a ~+9% upgrade in Operating Net Profit’21 vs. current levels.