IBERIAN DAILY 26 AUGUST (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: ACS.Third week of gains for stock markets, with the Ibex exceeding the 11,200-point level
Stock markets saw weekly gains >+1.00% after the good macroeconomic data and J. Powell’s speech suggesting that the Fed will initiate a gradual rate cut cycle in September to fuel the US job market. The Ibex was one of the best-performing indices, climbing +3.0%. In the STOXX 600, Retail, Real Estate and Autos led gains, whereas Energy and Technology were the only sectors ending in negative territory. On the macro side, in the US July’s new home sales rose much more than expected. In China, the PBoC kept the 1Y loan rate unchanged at 2.3%.
What we expect for today
Stock markets would open with slight gains, mainly oil groups thanks to the rise in Brent crude prices. Currently, S&P futures are down -0.08% (the S&P 500 ended up +0.38% vs. the European closing bell). Volatility on the S&P 500 (VIX) fell to 15.95. Asian markets are sliding (CSI -0.36% and Nikkei -0.96%).
Today in Germany we will learn August’s IFO and in the US July’s durable goods orders.
COMPANY NEWS
ACS, OVERWEIGHT
Last Friday the company announced that Texas Transport Commission (US) had decided to suspend the negotiation of a new agreement and to continue with the early termination process of the concession contract of the SH-288 highway (43.2% ACS and ~56.8% Abertis) for US$ 1.73 Bn (€ ~1.55 Bn), where US$ 524 M would correspond to ACS (through its subsidiary Iridium Infraestructuras). The contract termination, after provisions and other results, including that of Abertis (~50% ACS) would not have a significant impact on ACS’s expected consolidated net profit for 2024. Negative news, as our central-case scenario was a downward renegotiation of the asset conditions, curbing to some extent future toll rate rises. If we were to assume a US$ 1.73 Bn bailout for 100% of the EV (i.e. around US$ 1.21 Bn for 100% of equity), the deal would have a -5.4% impact on our T.P. (including ACS’s direct and indirect stake in the SH-288 that totals around 72%).
ACS Actividades de Construccion y Servicios is a holding company. Through its subsidiaries, Co.'s activities are divided into the following areas: Construction, engaged in the construction of civil works, and residential and non-residential building construction; industrial services, engaged in the development of applied engineering services, installations and the maintenance of industrial infrastructures in the energy, communications and control systems sectors; services, groups together environmental services, the outsourcing of building maintenance services, logistics and transport services; and concessions, mainly engaged in transport infrastructure concessions.
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