EUR 100.00 For Business Accounts Only

IBERIAN DAILY 28 JULY + 2Q'21 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, AENA, CAIXABANK, CELLNEX, ENDESA, FERROVIAL, INDRA, LIBERBANK, NATURGY, ROVI, SANTANDER, UNICAJA.

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 2Q’20 results to be released over the coming days in Spain.

MARKETS YESTERDAY AND TODAY

Global Market Selloff
Global equity markets saw new drops. Thus, all sectors in the Euro STOXX ended in negative territory, with Chemicals and Consumer Goods being the best performers whereas Retail and Energy were the worst performers. On the macroeconomic level, the IMF’s new forecasts (vs. April’21) improved the prospects for developed countries, thus Europe would grow by 4.6% YoY (+0.2pp) in 2021 and 4.3% (+0.5 p.p.) in 2022 whereas the US would grow by 7.0% (+0.6 p.p.) and 4.9% (+1.4 p.p.). However, for Spain it cut its forecast for 2021 to 6.2% (-0.2pp) although improving its estimate for 2022 to 5.8% (+1.1pp). In the euro zone, June’s M3 slowed down more than expected although the previous data was raised. In Mexico, IGAE activity index climbed, hitting new highs. In the US, June’s durable goods orders came in worse than expected while June’s consumer confidence came in better. In US business results General Electric, Alphabet (Google), Visa, Microsoft, Starbucks, Apple and 3M beat expectations.
What we expect for today
The stabilisation of the Chinese stock markets point to a flat opening in Europe awaiting the Fed. Currently, S&P futures are down -0.3% (the S&P 500 ended +0.3% higher vs. its price at the closing bell in Europe). Volatility in the US rose (VIX 19.36). Asian markets are sliding (China’s CSI -0.1% and Japan’s Nikkei -1.7%).
Today in the US we will see the Fed’s meeting for June and June’s preliminary wholesale inventories. In debt auctions: Germany (€ 2.5 Bn in bonds due 2036). In US business results, Pfizer, Mc Donald’s, Boeing, Facebook, PayPal and Ford Motor, among others, will release their earnings.


COMPANY NEWS
ACS. Better 1H’21 results in EBITDA and operating cash generation. BUY
At the closing bell the company released better results in EBITDA (+5% vs. BS(e) and +8% vs. consensus) and in operating cash generation (€ +191 M vs. 1H’20) thanks to improved working capital, where many of the figures were already known after Hochtief’s release (50.4% ACS; 80% EBITDA’21e excl. Industrial Services). NFD came in at € 2.98 Bn (vs. € 2.68 Bn in Dec’20 adjusted for Industrial Services), down by around € -0.7 Bn in 2Q’21. The backlog grew +3.3% (adjusted for FX) to € ~64 Bn. We expect the results to be well received, especially after the stock’s -26% underperformance vs. the IBEX so far this year, burdened by the uncertainty surrounding how the funds stemming from the sale of Cobra to Vinci (€~5 Bn; 79% of market cap) will be used. There will be a conference call at 11:00 (CET).

FERROVIAL. 2Q’21 results in line. Toll roads speeds up as expected. The stock has outperformed the Ibex by 4%, we do not expect an impact. BUY.
The 2Q’21 results came in as expected in EBITDA (€ 132 M vs. €~132 M BS(e) and consensus), marked by the good performance of traffic on Toll roads (€ 94 M of EBITDA vs. € 91 M BS(e) and € 85 M consensus) as expected, and the better performance of Construction (€ 71 M of EBITDA vs. € 45 M BS(e) and € 50 M consensus) thanks in part to one-offs (€~+15 M). On the negative side, we highlight a weaker performance in cash ex infra than expected (-3% to € 1.85 Bn vs. € 2 Bn BS(e)), although the company maintains a robust liquidity position (€ 6.51 Bn; 2.3x NFD).

INDRA. Results above expectations. The Company raised its 2021 guidance. BUY.
EBIT totalled € 61.4 M (vs. € -97 M in 2Q’20), >20% above our expectations and those of the consensus, with a 7.1% margin (vs. 6.2% BS(e)), leaving the 1H’21 EBIT at € 100 M (6.2% margin) thanks to the better performance of both Minsait and T&D. The company raised its 2021 guidance, now forecasting >€ 220 M of EBIT (vs. € 200 M previously and vs. € 213 M BS(e) and € 204 M consensus). We expect a positive impact from these results that underscore the business recovery (better results, exceeding pre Covid-19 levels) that could lead us and the market consensus to raise our estimates. The share price is -29% below pre- Covid levels.

LBK/UNI: 2Q’21 Results. Both BUY.
The companies have released joint 2Q’21 results, with weak NII, solid fee revenues performance and costs and CoR in line with expectations. On the Net Profit level, UNI was in line with expectations (€ 28 M), whereas LBK generated € -91 M of losses after provisioning around € -143 M from the departure (starting on 1 August) of the ~730 furloughed employees (vs. around € -150 M BS(e)) and due to the change in accounting criteria from the one-off fee revenues from Caser in 2Q’20 (€ -38 M, unexpected). These last few items will be accounted as revenues over the next 10 years. No additional information has been given on the adjustments from the initial merger integration, to be executed on Friday.
Positive results and in line with expectations in the relevant headings. We stress the reactivation of the commercial activity and the lack of relevant deterioration in LBK’s credit quality. However, the key will lie in the merger comments at the conference call (9:00 CET), and thus we expect a neutral reaction to the figures released.

ROVI. 2Q’21 results above the consensus estimate. Guidance’21 raised. SELL.
The 2Q’21 results came in above the consensus estimate on the operating level (€ 39.2 M of EBITDA vs. € 39.2 M BS(e) and € 32.9 M consensus) thanks to higher sales (+77% vs. +48% consensus) and margins in line (24.6% vs. 24.7% consensus). Good performance in net cash, which improved by €~55 M to € 56 M (vs. €~32 M BS(e)). The company raised its revenue guidance’21 to between +35% and +40% growth (vs. the high end of a range of between +20% and +30% previously; vs. +34% BS(e) and +31% consensus). We expect a positive share price reaction, despite the stock’s recent performance (+26% since its 1Q¡21 results; +29% vs. IBEX). We will revise our estimates, but with an expected impact lower than +3% on valuation, which leaves our T.P. without upside.
SANTANDER. 2Q’21 Results above expectations in all activity margins and. BUY.
2Q’21 Results came in above expectations in all business lines, with NII and fee revenues growing +7% and +15% vs. 2Q’20, respectively, and vs. +4% and +11% expected, mainly fuelled by the UK, the US, Brazil and Chile. Costs grew +3% vs. 2Q’20, in line with the greater commercial dynamism, especially in LatAm. CoR came in € 2 Bn of “structural” Operating Net Profit on a quarterly basis (+20% vs. consensus and +10% BS(e)), opening the door to an EPS upgrade. CET1 reached 12.11% (11.70% FL) and vs. 12.30% BS(e) and 12.26% in 1Q’21. The -24bps of regulatory effects and a 50% pay-out reserve have been accounted in the end. We expect a good market reaction. Conference Call 10:00 (CET).