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IBERIAN DAILY 26 APRIL + 1Q’22 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, CELLNEX, ENAGÁS, GRIFOLS, IBERDROLA, NEINOR HOMES, SANTANDER.

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

Profit taking in equity markets
European and Asian equity markets saw corrections, as the Omicron outbreak in China continued to aggravate fears derived from the faster tightening of the monetary policy by the Fed. In the Euro STOXX, Utilities and Telecoms were among the few sectors ending in positive territory, whereas Basic Resources and Energy saw the biggest drops due to the situation of Covid-19 in China. On the geopolitical front in Ukraine, the US Secretary of Defence, L. Austin, promised further military funding. The EU would be studying the possibility of limiting Russian crude oil imports as an alternative to a ban. Separately, Russia announced the expulsion of 40 German diplomats. On the macro level, in Germany, April’s IFO rose unexpectedly thanks to the improvement of the expectations component. From the ECB, P. Hernández stressed that the monetary policy will continue to normalise although the end of purchases will depend on the data to be released. In the US, March’s Chicago Fed index moderated in line with expectations, whereas the Dallas Fed index fell much more than expected. As for Ukraine, the US Secretary of Defence, L. Austin, promised new military financing whereas Russia announced the expulsion of 40 German diplomats. In Mexico, the economic activity index (IGAE) stagnated in February. In China, the PBoC voted to increase support for the economy, especially with financing targeted for small businesses, and committed to maintaining a healthy and stable monetary and financial environment. In US Results Coca-Cola, Whirlpool and Universal Health Services came in better while Blizzard released disappointing figures.
What we expect for today
The European stock markets would rally following the recovery of the US stock markets, spurred by the promise of further stimuli in China and the slight tightening in sovereign bond yields. In Spain, we all eyes will be on the meeting between Teresa Ribera with the EC to set a cap on gas prices in the electricity reform underway. Currently, S&P futures are up +0.13% (yesterday the S&P 500 ended +2.03% higher vs. the European closing bell). Volatility in the US dropped (VIX 27.02). Asian markets are rising (China’s CSI 300 +0.9%, and Japan’s Nikkei +0.5%).
Today in the US we will learn March’s preliminary durable goods orders, April’s Conference Board consumer confidence, April’s Richmond index and March’s housing starts. In US Results, PepsiCo, Invesco, PACCAR, 3M, General Electric, DR Horton, Warner Bros, Visa, Microsoft, Alphabet (Google) and General Motors, among others, will release their results. Debt auctions: Italy (€ 3.25 Bn in bonds due 2023 and I/L bonds due 2026).

COMPANY NEWS

ENAGÁS. 1Q’22 Results in line with expectations. We change our recommendation to SELL and cut our T.P. to € 20.13/sh.
The 1Q’22 results were in line with our expectations and slightly below those of the consensus for Net Profit (€ 69.3 M vs. € 71 M BS(e) and € 74 M consensus) and EBITDA (€ 185.8 M vs. € 185 BS(e) and € 190 M consensus), with an expected drop in EBITDA (-14% vs. 1Q’21). We take this opportunity to cut our annual EBITDA estimates for the 2022-26 period by -10% on average after excluding the contribution from GNL Quintero and Morelos to the results from investees headline and, to a lesser extent, the increase in costs linked to the rise in inflation to a CAGR’21-25e of -5.6% in EBITDA (vs. -4.4% consensus), bringing our T.P. to € 20.13/sh. (-8.4% vs. previously and -1.9% upside). As a result, and following the stock’s rally in the past 12 months (+23.9% in absolute terms, +21.4% vs. IBEX), we see no upside potential.

SANTANDER. 1Q’22 results in line in NII, above in the rest of the figures. BUY
The 1Q’22 results were fully in line in NII (+11.3% vs. 1Q’21), but with better commercial trends that have boosted fee revenues. This along with the higher trading revenues explain the growth in Total Revenues, +8% vs. 1Q’21. Costs were in line, but up +8% vs. 1Q’21. The best reading comes in CoR, which came in at around 75bps (with no deterioration in loan quality). Thus, Net Profit stood at € +2.5 Bn (+58% vs. 1Q’21 and vs. ~40% expected), supporting a +6% increase in Operating Net Profit’22. Robust generation of FL CET1, which rose to 12.05%. RoTE rose in all regions (except North America, which remained flat), and progress was made in TNAV. We expect a warm reception. Conference call at 10:00 (CET). BUY.