IBERIAN DAILY 29 OCTOBER + 3Q’21 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: ACS, AENA, BBVA, CAIXABANK, FERROVIAL, GRUPO C. OCCIDENTE, METROVACESA, VISCOFAN.MARKETS YESTERDAY AND TODAY
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 3Q’21 results to be released over the coming days in Spain.
No changes from the ECB, and the IBEX breaks above 9,000 points
In a session in which the ECB did not state anything new regarding monetary policy (leaving the most important decisions for the December meeting) and the US GDP grew less than expected, European stock markets showed a mixed performance in which the IBEX and CAC shone vs. the worse performance from the DAX. In the Euro STOXX, Food and Technology were the best performers vs. the drops in Household Goods and Telecoms. On the macro side, in the euro zone October’s economic sentiment index rose more than expected. In Spain, October’s inflation sped up more than expected to 5.5% YoY, a high since 1992, whereas the unemployment rate for 3Q’21 fell less than expected to 14.6%. In Germany, the number of unemployed in October fell more than expected, while inflation rose more than the consensus expected. In France, the 3Q’21 GDP grew above expectations. In the US, the 3Q’21 GDP slowed more than expected to 2.0% QoQ. On another note, China and India ruled out moving forward the zero-emission efforts to 2050 ahead of the COP26 summit with already complicated targets if the efforts do not increase (investments) in climate. In US business results, Caterpillar, Merck, Moody’s and Mastercard beat expectations, Amazon and Xcel Energy came in below, Apple in line but it cut its guidance due to supply problems.
What we expect for today
European stock market would open with drops of as much as -0.5%, dragged down by the impact of the shortage of supplies and labour in companies such as Apple and Amazon, among other factors. On the positive side, in the tourism sector there are no countries in the red list in the UK. Currently, S&P futures are down -0.4% (the S&P 500 ended up +0.24% vs. its price at the closing bell in Europe). Volatility in the US dropped (VIX 16.53). Asian markets are climbing (China’s CSI 300 +0.4% and Japan’s Nikkei +0.1%).
Today in the euro zone, Germany and Spain we will learn the 3Q’21 GDP, in the euro zone October’s inflation and in Spain September’s retail sales. In US business results, Phillips, Exxon Mobil and Aon, among others, will release their earnings.
COMPANY NEWS
FERROVIAL. Better 3Q’21 Results on the operating level with positive prospects in Highways. BUY.
3Q’21 Results came in above expectations in EBITDA (€ 188 M vs. € 165 M BS(e) and € 159 M consensus) thanks to the better performance of Construction (€ 75 M EBITDA vs. € 61 M expected). The performance of Highways was in line with expectations (EBITDA € 105 M vs. € 104 M expected), where we continue to see margin for improvement in traffic and tariffs. Positive performance also in cash ex infra, which leads us to foresee a positive reception although limited following its good performance (+9% vs. IBEX 3 months). Even though the share price is -5% below pre-Covid levels, we maintain our positive stance thanks to the quality of its infra assets (85% T.P.) and the predictable value enhancement with new greenfield projects. We will upgrade our T.P., which we place UR, maintaining our BUY recommendation.
BBVA, SELL
The company has obtained record Net Profit of € 1.4 Bn (+23% vs. 3Q’20), +18% above our estimate and +28% above the consensus, thanks to the better performance in Core revenues and lower CoR. NII rose +5.6% vs. 3Q’20 (+5% vs. expected), underpinned by Mexico and Turkey. Fee revenues grew +18% (in line with BS(e) and beating the consensus), with total revenues rising +4.4%, which more than offset the pressure on costs (+7% vs. around +3% expected) due to inflation in Turkey and Mexico. With this, Operating Income rose +4.8% (vs. 0.8% BS(e) and -1.7% consensus). Very strong performance in CoR, which remained at 92bps (vs. ~100bps expected and the guidance’21 of ~10bps), with an improvement in lending quality in Mexico (270bps) and Turkey (88bps), where we see a slight reduction in the NPL ratio.
By countries, the best performance came in Mexico (€ 673 M of Net Profit, +7% vs. BS(e) and +15% vs. consensus) and Turkey (€ 207 M of Net Profit, +65% vs. expected). In Spain Net Profit reached € 478 M, around +10% above forecasts, with weak NII (-2.5% vs. 2Q’21), offset by the maintained fee revenues performance (+15% vs. 3Q’20) and lower CoR (32bps vs. 40bps expected).
In capital, CET1 (14.48%) improved +31bps (vs. +10bps expected) and the company also announced it has received authorisation to begin its share buyback programme for a total of € 3.5 Bn and/or a maximum of 10% of shares. At the current share price, the limit means a buyback of 620.6 million shares (9.3% of shares) and ~125 trading days. The programme will begin after the ID (18/11), and the first tranche of € 1.5 Bn will have a 5-month period.
Very strong performance in Mexico and Turkey, and strong growth in revenues in all areas. We expect a positive reaction on the share price.
CAIXABANK, BUY
3Q'21 Results worse than expected in all activity margins due to weaker NII (€ 1,589 Million), which fell -2.8% vs. 2Q'21 and vs. -1.8% consensus due to a higher pressure on interest rates and downward volumes that exacerbate the usual seasonality. Fees (€ 964 Million) continue to advance adequately, fully in line with our estimates although slightly worse than consensus. This means a -1.9% drop vs Q2'21 due to seasonality but a c. + 3.5% vs 3Q'20 Pro-Forma. Finally, it is worth mentioning that its insurance income has performed vey well. Concerning cost although they have evolved worse than expected with a growth of + 0.5% vs 2Q'21 and vs -0.9% expected, it should be mentioned that they move totally in line with the guidance at the end of year of + 1% vs 2020. Very good performance of the CoR that surprises with a reference of 2 Bn, which could be increased by +40%), especially in a scenario of air traffic recovery. There will be a conference call at 13:00 (CET). They will be whether the company provides any visibility into airline bookings for the Christmas season.
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.
Aena SME SA, formerly Aena SA, is a Spain-based company primarily engaged in the airports operation. Its activities are divided into four segments: Airports, which comprises Aeronautical subdivision, responsible for the management of airports, jetways, security, handling, cargo and fuel services, among others, as well as Commercial subdivision, including duty-free and specialty stores, restaurant services, car rental, as well as banking services and advertising; Services outside the terminal, which manages real estate assets, such as parking lots, warehouses and lands; International, which comprises operations of Company's subsidiary, Aena Desarrollo Internacional SA, that invests in other airport owners principally in Mexico, Colombia and the United Kingdom; and Others, encompassing corporate activities. It manages tourism, hub and regional airports, as well as heliports and general aviation areas. Furthermore, its destination range comprises Europe, the Americas, Asia and Africa.
Banco Bilbao Vizcaya Argentaria is an international financial group, engaged primarily on providing banking services and consumer finance to private individuals and businesses in Spain and Portugal; providing real estate activity in Spain; providing services to international companies and investment banking, capital markets and treasury management services to clients; and providing the banking, insurance and pension businesses in Mexico and the U.S., as well as in South America.
Caixabank is an investment company based in Spain. Co. is involved in investment portfolio management activities across two areas: Services and Financial Business and Insurance. In the services area, Co. provides investment solutions for companies involved in the infrastructure, energy, services and entertainment sectors. In the financial business and insurance area, Co. is engaged in the investments for international banks, insurance and specialist financial services. Co. focuses most of its banking investments in India, China, the U.S., and Central and Eastern Europe with a particular interest in retail banking. Co. is also involved in the disinvestments activities.
Ferrovial is a transportation company based in Spain. Co. is engaged in operations in the transportation sector. Co. specializes in the design, construction, management, administration and maintenance of transport infrastructures. Co.'s services range also includes the maintenance of parking lots, and land-, sea- and air-based transport networks. Co. is also engaged in the promotion and operation of short-stay parking lots, parking regulation and management services and promotion and sale of residents' parking.
Grupo Catalana Occidente is an insurance group based in Spain. Co. is engaged in insurance and reinsurance activities, including commercial, life, disability, and automobile insurance. Co. is also engaged in the sale of annuities and pension funds. Co.'s operations are organized along two businesses: Traditional business (insurance) and Credit Insurance business. Co.'s main markets are located in Spain, Germany, United Kingdom, France and the Netherlands. Co. maintains a presence in more than 40 countries.
Metrovacesa SA, formerly Metrovacesa Suelo y Promocion SA, is a Spain-based real estate developer. The Company specializes in construction and sale of sustainable housing, both single-family and multi-family residential properties. Its activities also include promotion, urbanization and parceling of real estate in general, as well as real estate management for own benefit or on behalf of third parties. Its asset portfolio includes more than 6 million square meters of building land across Spain, as well as already developed properties in cities, such as Malaga, Almeria, Cordoba, Barcelona and Madrid, among others.
Viscofan is the parent company of the Viscofan Group. Co. is divided into two major operational subgroups. The companies comprising the Naturin GmbH subgroup are engaged in the manufacture and distribution of artificial casings (small and big diameter collagen and plastics) for the meat industry. Through its wholly-owned subsidiary IAN, S.A., Co. also manufactures and distributes canned vegetables (asparagus, olives and tomato).
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