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IBERIAN DAILY 23 APRIL + 1Q’21 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, FERROVIAL, SANTANDER, TÉCNICAS REUNIDAS, 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’21 results to be released over the coming days in Spain.

MARKETS YESTERDAY AND TODAY

Strong market recovery
Although without market surprises, the ECB’s commitment to stimulus fuelled gains in European stock markets, especially in the peripheral segment that recovered significantly (Ibex 35 +1.5%). Thus, almost all sectors in the Euro STOXX saw gains, with Utilities and Technology posting the highest rises while Insurance and Consumer Goods reported the biggest drops (slight). On the macroeconomic level, at the ECB meeting, the monetary policy was kept unchanged and C. Lagarde outlined that the tapering is not being discussed even though the economy is showing signs of recovery. In the US, mixed data, weekly jobless claims dropped unexpectedly while home sales slowed down again more than expected in March. On another note, Biden announced at the US climate summit that greenhouse effect emissions will be cut in half by 2030. Separately, the Govt plans to almost double the tax on earnings, bringing it to 39.6% vs. 20% currently to finance social expenditure. In US business results, AT&T, Dr Horton, Snap and Mattel came in better than expected, along with Intel (which released disappointing margins and business data), American Airlines in line.
What we expect for today
The European stock markets would open with slight drops amid fears of a new wave of tax increases in developed countries. Currently, S&P futures are up +0.2% (the S&P 500 ended down -0.9% vs. its price at the closing bell in Europe). Volatility in the US rose (VIX 18.71). Asian markets are trading with mixed results (China’s CSI 300 +0.5% and Japan’s Nikkei -0.7%).
Today in the Euro zone we will learn April’s PMIs, in the US construction permits and March’s housing starts, and in Brazil February’s unemployment rate. In US business results, Seagate and American Express, among others, will release their earnings. As for ratings, S&P will revise Greece (BB-, stable) and Italy (BBB, stable).


COMPANY NEWS

VISCOFAN, SELL
The 1Q’21 results came in as expected on the operating level (+10.8% in EBITDA vs. +12.7% BS(e) and +10.4% consensus), with sales slightly better than expected (+2.8% vs. +3.4% BS(e) and +1.9% consensus) and margins very much in line (+180bps vs. 1Q’20 to 25.2% vs. 25.3% expected). Net Profit increased by +10.4% (vs. +7.1% consensus), whereas NFD was reduced by -52% to € 18.5 M (~0.1x NFD/EBITDA) vs. € 24 M BS(e) due to lower Capex (we expect acceleration over the coming months).
The 1Q’21 results leave VIS in a very good position to meet its guidance’21 (which remains unchanged), especially considering that the negative impact from FX (-7% in sales 1Q’21) should be toned down in the 2H’21. We expect a positive share price reaction despite the stock’s recent good performance (+7% since 4Q’20 results; +3% vs. IBEX).

SANTANDER, BUY
According to the press, ALD Automotive (whose largest shareholder is GLE, with a 80% stake) and SAN could be interested in acquiring Lease Plan, a company specialising in vehicle renting and valued at € 8.3 Bn. Lease Plan would have obtained € 252 M of Net Profit’20, which would mean paying a P/E ratio of ~33x. This represents ~17% of SAN’s market cap.
None of the two companies has confirmed this news.
For SAN, the transaction would be a strategic fit. We recall that the company is focused on doing business with double-digit growth in ROE to fuel its SCF division (~20% of consolidated Net Profit). Its goal is to become the main digital consumer financing bank through its Digital Consumer Bank. That said, the amount mentioned is very high in our opinion and would mean some -150bps on CET1’20 (12.34%), and thus the deal could not be fully financed in cash.