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IBERIAN DAILY 21 NOVEMBER + 3Q’22 RESULTS. PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, CAIXABANK, ELECTRICITY SECTOR.

At the end of today’s report, and during the entire results season, we will include a presentation with previews for the 3Q’22 results to be released over the coming days in Spain.

A transition week for stock markets
The geopolitical tensions on the Polish border and the stronger-than-expected macroeconomic data in the US, which could continue to encourage the Fed to raise rates, marked the stock market performance. Thus, the ibex35 ended last week with slight gains of +0.29% whereas the Dax stood out, climbing +1.32% and the Euro STOXX 50 +1.31%. Thus, in the Euro STOXX, Utilities and Banks were the best performers, with Retail and Real Estate showing the worst relative performance last week. On the macro side, in the US existing home sales slowed down less than expected. On another note, Bostic from Atlanta’s Fed was in favour of raising rates by between 75 and 100bps. In the euro zone, we stress C. Largarde’s speech at the European Banking Congress where she insisted on restrictive rates to tackle inflation. Lastly, COP27 falls short in its forecasts of greater reduction in the emissions targets and global warning although it agreed on the creation of a fund to pay the impact from climate change in the poor affected countries.
What we expect for today
European stock markets would open with drops of as much as -0.5% amid concerns about Covid-19 restrictions in China, as the city Shijiazhuang, near Beijing, is toughening restrictions, when it was expected to test a lifting of restrictions. Currently, S&P futures are down -0.2% (the S&P 500 ended +0.26% higher vs. the European closing bell). Volatility in the US rose (VIX 24.75). Asian markets are mixed (China’s CSI 300 -1% and Japan’s Nikkei +0.16%).
Today in the US we will learn October’s Chicago Fed activity index.


COMPANY NEWS

CAIXABANK. € 9 Bn for shareholders is possible! New T.P. of € 4.70/sh. BUY
We estimate € 8.3 Bn through 2024, -8% below CABK’s estimate, due to the tax on the banking sector, but € 9 Bn (~10% yield) cannot be ruled out thanks to the excess provisions (€ 1.8 Bn) and the fact that the company could sell € 4 Bn of assets with 60% coverage (56% average’14-24), generating around +20bps of FL CET1 (€ 450 M). We raise Net Profit’22-24e by an average of around +11% (+6% average vs. consensus). The share price is factoring in Net Profit’24 around -30% below our estimate, equivalent to 1.1% CoR (above the maximum guidance range during Covid-19) or 14% CoE (vs. 9.5% BS(e)), both readings unjustified due to the bank’s credit quality.