EUR 100.00 For Business Accounts Only

IBERIAN DAILY 22 DECEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, APPLUS, CIE LOCOMOTIVE, ENDESA, TOURISM SECTOR, VOCENTO.


MARKETS YESTERDAY AND TODAY

Black Monday
The European stock markets ended the session with hefty losses, dragged down by the lack of a Brexit deal and fears of a more virulent Covid-19 strain that has led other countries to close their borders to the UK. Thus, within the Euro STOXX, Banks and Insurance led losses, vs. Household and Consumer Goods, which were the best relative performers. On the macro side, in the Euro zone, Consumer confidence recovered more than expected in December, although it did not mitigate the day’s losses, and the EMA approved the marketing authorisation for Pfizer-BioNTech’s Covid-19 vaccine. In the US, November’s Chicago Fed recovered less than expected. As expected, the Senate approved the fiscal stimulus package worth US$ 900 Bn.
What we expect for today
The European stock markets would open flat after hitting support levels yesterday, backed by possible news on a Brexit deal, but with fears on the new Covid-19 strain. Currently, S&P futures are down -0.5% (the S&P 500 closed up +0.7% vs. its price at the closing bell in Europe). Volatility in the US rose slightly (VIX 25.16). Asian markets are also pricing in the rise in the number of infections (CSI 300 -1.4%, Japan -1%).
Today we will learn in the UK and in the US and final 3Q GDP data, and in the US, the Richmond manufacturing index and the second-hand home sales data (both for November).



COMPANY NEWS

ENDESA. BUY.
The company has just announced that it has signed an agreement with the unions to execute a voluntary redundancy plan over the 2021-24 period that could affect up to 1,200 employees (~12% of staff). To this end, the company will set aside € 390 M (1.7% market cap) in 4Q’20 that will not affect the dividend.
News of little impact, as the plan will be implemented in the long-term, but with a positive slant, as, for 2024, we estimate an impact of around +3% on EBITDA and of around +1.2% on valuation after the costs of the restructuring have been met.

TOURISM SECTOR
Yesterday the stocks linked to the Spanish tourism sector fell sharply (AENA -3.1%; Amadeus -4%, IAG -8.8%, Meliá -2.1%, NHH -7%) due to the uncertainties surrounding the new Covid-19 mutation, the closure of borders and the new restrictions on air travel. The situation casts much doubt at the beginning of the vaccination campaign in Europe and has led to new restrictions on travel from/to the UK, although new limitations cannot be ruled out.
Negative news. In our view, the uncertainty might continue in the short-term, and the fact that the efficacy of the vaccines is not called into question is key. In any event, the problem does not lie in the drop in activity as of today (still at its lows), but in the new doubts arising and which could delay the sector’s recovery. From the current trading levels, we only see upside potential in AENA and IAG.