IBERIAN DAILY 31 JANUARY + 4Q’23 RESULTS. PREVIEWS (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: ACS, MERLIN PROPERTIES, SANTANDER.At the end of today’s report, and during the entire results season, we will include a presentation with previews for the 4Q’23 results to be released over the coming days in Spain.
IBEX back above 10,000 points
Ahead of today’s Fed meeting, the session was a positive one in Europe, underpinned by the surprising business results and 4Q’23 GDP growth. In the STOXX 600, the best-performing sectors were Retail and Banks, whereas Basic Materials and Telecoms ended the worst performers. On the macro side, in the euro zone the 4Q’23 GDP avoided a recession (0.0% QoQ and +0.1% YoY) thanks to the higher growth than expected in Spain (+0.6% and 2.0%, respectively) and Italy (+0.2% and +0.5%), thus minimising the low growth in Germany (-0.3% and -0.2%) and the stagnation in France (0.0% and +0.7%). Economic confidence in the euro zone rose more than expected. In Spain, both general and core inflation for January rose more than expected to 3.4% and 3.6% YoY, respectively, confirming the reduction to the drop since December’s data. In the US, January’s Conference Board consumer confidence rose in line with expectations to a two-year high. Separately, the robust labour market data (the JOLT report shows job offers in December rose above 9 million) continues to cool forecasts of interest rate cuts (falling to 41.7% in March’24). The IMF published its new forecasts, placing global growth at +3.1% in 2024 (+0.2% vs. previous) and +3.2% in 2025 thanks to the resistance of the cycle in the US, where 2.1% is expected in 2024 (+0.6% vs. previous) and 1.7% in 2025 (-0.1%). For the euro zone it lowered its growth forecast by -0.3% to +0.9% in 2024 and +1.7% in 2025 and for Spain by -0.2% to +1.5% in 2024 and +2.1% in 2025. In Japan, retail sales contracted unexpectedly and industrial output for December rose less than expected. In China, January’s manufacturing PMI recovered less than expected and remains below 50, whereas the services PMI improved slightly more than expected. In US business results, Pfizer and General Motors beat expectations, Sysco was in line. After the closing bell, Microsoft beat expectations in revenues, whereas Alphabet released disappointing earnings.
What we expect for today
European stock markets would open flat and with a bearish slant, awaiting newsflow from the earnings calendar and the Fed. Currently, S&P futures are down -0.41% (the S&P 500 ended +0.10% higher vs. the European closing bell). Asian stock markets are mixed (China’s CSI 300 -0.79%, Japan’s Nikkei +0.61%).
Today in the US the Fed will meet and we will learn January’s ADP employment survey, in Spain December’s retail sales and in Germany unemployment change and inflation for January. In US business results, Mastercard, Boeing and Nasdaq, among others, will release their earnings.
COMPANY NEWS
SANTANDER. Results very much in line. Ambitious target’24 for ROTE and lacklustre for capital. BUY.
Results were very much in line with expectations on the operating level but higher in Net Profit (+11%) as a result of the tax rate. Spain came in below in Net Profit (-19%) due to lower volumes and Brazil (-19%) to higher costs and one-off credit provisions. On the positive side, Chile (+79) and Portugal (+7%) stand out. ROTE, CET1 and NPL in line (15.1%, 12.3% and 3.14%, respectively). 2024 Guidance: mid single-digit revenue growth (vs. +3.2% cons.), 43% cost/income ratio (vs. 44.1%), 120bps of COR (vs. 121), 16% ROTE (vs. 13.2%) and 12% CET1 (vs. 12.5%). We expect a positive market reaction thanks to the optimism about ROTE/implicit Net Profit’24. We believe that the lacklustre CET1 target is explained by the higher Basel IV capital requirements.
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.
Banco Santander is a holding company, providing a range of financial products. Co.'s products and services include: retail banking business that covers all customer banking businesses; wholesale banking business; as well as asset management and insurance business. Co.'s principal operations are in Spain, the U.K., Portugal, Germany, Italy and Latin America. As of Dec 31 2014, Co.'s total assets amounted to Euro1,266,296,000,000 and total customer deposits amounted to Euro647,627,000,000.
Merlin Properties SOCIMI SA is a Spain-based company engaged in the operation of a real estate investment trust (REIT). The Company focuses on the acquisition, management and rental of commercial properties located in the Iberian Peninsula, primarily in Spain. The Company's activities are divided into the following segments: Office buildings, operating a portfolio of office space; High-street retail, engaged in leasing retail stores; Shopping centers, engaged in managing department stores; Logistics, operating logistics warehouses and distribution centers, and Others. The Company's other activities include property management services rendered to third parties.
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