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IBERIAN DAILY 30 APRIL + 1Q’21 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, BBVA, CAF, ENCE, FERROVIAL, GRUPO C. OCCIDENTE, SACYR.

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

IBEX up again, and the S&P 500 hits a new high
It was a session that started off better than it ended, where most European indices ended with losses except the IBEX, which rose above 8,800 points. Thus, most sectors in the Euro STOXX closed in negative numbers, with Banks (which spent all week leading the gains) and Telecoms showing the best performance vs. Autos and Travel & Leisure, which fell the most. On the macro side, in Spain the 1Q’21 unemployment rate reached 16% vs. 16.5% expected (due to a drop in active population), with April’s inflation rising more than expected to 2.2% YoY (in Germany it reached 2.0% YoY). In the euro zone, the economic sentiment index rose more than expected in April, reflecting solid recovery despite the restrictions put in place during the month. In the US, the 1q’21 GDP grew almost in line with forecasts (6.4% QoQ vs. 4.3% the previous quarter and 6.7% expected), with a strong push from private consumption. In China, April’s PMIs fell, except the Caixin manufacturing index. In US business results, Amazon, Twitter, Caterpillar, McDonald’s and Ford (disappointing guidance) all beat expectations.
What we expect for today
Europe will once again open flat, where most drivers will continue to be results, whereas the Q1 GDP figures would beat expectations (as in France). Currently, S&P futures are down -0.4% (the S&P 500 ended up +0.57% vs. its price at the closing bell in Europe). Volatility in the US rose (VIX 17.61). Asian markets are falling (China’s CSI 300 -1% and Japan’s Nikkei -0.9%).
Today in the euro zone we will learn the 1Q’21 GDP (along with Germany, Spain and Mexico) and April’s inflation, in Brazil February’s unemployment rate and in the US March’s personal outlays. In US business results, Aon, Colgate, Exxon and Phillips, among others, will release their earnings.


COMPANY NEWS

CAF. 1Q’21 Results quite in line with expectations. We raise our estimates and T.P. by +14% (+18% upside). BUY.
At yesterday’s closing bell the company released 1Q’21 Results without surprises, reiterating its 2021 guidance (sales growth, BtB >1 and pre- Covid-19 margins). On another note, the company outlined that Thales’s signalling business currently up for sale (according to the press valued > € 1.5 Bn; around 75% of CAF’s EV) would have a strategic fit for CAF although it did not confirm its study, and in any case it would be still at a very early stage. The possible deal would make sense although without financial data, the size could generate some uncertainties in the short-term, although the share price has underperformed the IBEX by -9% YtD. With all this in mind, we raise our long-term EBITDA estimate (2021-23) by +1.1% on average (although 2021 remains unchanged) and order intake in perpetuity by +5% (in line with the adjusted average from the past 10 years), meaning +14% in T.P. up to € 46.73/sh.

GRUPO C. OCCIDENTE. Very good 1Q’20 Results. We raise our T.P. up to € 40.00/sh. (+15% vs. Previous T.P.; +15% upside).
The 1Q’21 Results have an immediate reading: GCO would be “Covid-19 normalised” as early as in 2022e. Although the surprising historical low level of gross CR in Credit Insurance in the 1Q’21 (around 64% in gross terms) could not be extrapolated to the YE, all indications suggest that in 2022e it will reach its structural level of ~80% in gross terms and vs. 85% we previously expected. On the contrary, in the Traditional Business, the gradual business recovery leads us to forecast a CR’21-22 BS(e) of 89.7% and 90.5%, respectively (vs. 89.3% and 89.7% previously). This explains our T.P. increase, with the share price trading at 1x P/BV, at a -30% discount vs. historical levels we reiterate our positive stance on the stock.

BBVA, BUY
The company has obtained € 1.21 Bn of Net Profit (vs. €-1.79 Bn in 1Q’20), +24% vs. our estimate and +33% vs. the consensus, thanks to higher trading revenues (€ 581 M; +80% vs. consensus) and lower provisions (-59% vs. 1Q’20; CoR of 117bps vs. 155bps in 2020 and ~150bps expected). NII fell by -14.2% vs. 1Q’20, ~-2% below, although this is offset with a slightly better performance in fee revenues (+0.8% vs. 1Q’20 and vs. -0.8% BS(e) and -7% consensus). Costs were reduced by -7% vs. 1Q’20, beating our estimates (+4.5%), but below the consensus’ (-8%). Thus, Operating Income decreased -13.6% vs. last year (and vs. ~-20% expected).
In capital, CET1 reached 11.88% (+15bps vs. 4Q’20 and vs. +5bps expected) due to the better organic generation.
Adjusted for trading revenues, the underlying performance was slightly better than expected, with weak revenues in Spain and a slowdown in Mexico, offset by the better performance in Turkey and the US. We expect a neutral/positive reaction by the share price.