IBERIAN DAILY 26 FEBRUARY (ANÃLISIS BANCO SABADELL)
NEWS SUMMARY: AEDAS, AENA, DOMINION, LIBERBANK, NH HOTELES, RED ELÉCTRICA.MARKETS YESTERDAY AND TODAY
The US does not avoid the coronavirus
It was the fourth consecutive session in the red for Europe, where the uncertainty surrounding the rapid contagion of the coronavirus led to losses of -2.0%, with the US also ending with heavy losses. In the Euro STOXX, all sectors ended once more in negative territory, led by Banks and Insurance, while Consumer Goods and Media saw the lowest losses. On the macroeconomic level, in Europe, F. Villeroy from the ECB suggested that the coronavirus will have a negative but temporary impact on growth and that the monetary policy might not be the best answer to a health alert. In the US, consumer confidence rose less than expected (the previous data was significantly cut) although it remains at high levels. From the Fed, R. Kaplan does not support new rate cuts while R. Clarida expects inflation to exceed the target. In US Results Home Depot and Macy´s came in better than expected.
What we expect for today
The strong overselling from the past days does not justify the rally for the time being although we foresee a slightly more stable opening. Currently, S&P futures are up +0.35% (the S&P 500 closed down -1.36% vs. its price at the closing bell in Europe). Volatility in the US rose (VIX 27.85%). The Asian markets that are open are falling (Japan -0.79% and Hong Kong -0.81%).
Today in the US we will learn new home sales. In US Results, Booking Holdings, Lowe´s Cos and Marriot International, among others, will release their earnings. Today Italy’s and Greece’s Treasuries will issue 3M T-bills (€ 6.5 Bn and € 650 M, respectively), while Germany’s will issue 5Y bonds (€ 4 Bn).
COMPANY NEWS
AEDAS, BUY
Announced Results 2019 (for the moment we do not have the complete breakdown) that shows revenues of € 311 M (vs € 318 M consensus vs € 316 M BSe) with EBITDA of € 56 M (vs € 57 M consensus vs € 54 M BSe). Measured in deliveries, the company stays -20% below its forecast (850 units vs 1,055 units provided by the company in its business plan vs. 850 units consensus) due to delays related to the new mortgage regulations, among other things. As you can see, the consensus already anticipated the smaller volume of deliveries, so it should not be a surprise. It will move the dividend one year forward and will pay € 1.00/sh. (5.2% yield) against 2020 results in two payments (one in Nov 2020 and another in 2021). Moreover, it will triple its share buyback programme from € 50 M (it has purchased 62%) to € 150 M (16% market cap), setting itself a 2.5-year period, until September 2022, to complete it. The results were in line with our estimates in EBITDA although slightly below those of the consensus. As for the lower delivery figure vs. the company’s estimate (925 units vs. 1,055 Aedas) due to delays linked to the new mortgage regulations, in our view it is negative but should already be priced in by the market. Moreover, we understand that the houses have already been built and will be deliver during the first two months of 2020.
AENA, SELL
The FY2019 results came in as expected in EBITDA (+4.1% vs. +4.5% BS(e) and +4.0% consensus), where margins was slightly harmed (61.4% vs. 61.5% in FY2018) given the increased operating and staff costs (effects that were already known). However, this is partially offset with a positive performance in commercial revenues (27% sales), which continue to grow by healthy rates (+8.1%) given the increase in RMG. Moreover, the company has raised its guidance’20 for traffic growth to +1.9% (vs. +1.1% previously and +2.8% BS(e)), although this figure would not price in the potential impact from the coronavirus on air traffic. With these numbers, AENA forecasts revenue growth of +4% in 2020 (vs. +2.3% consensus), with improvement of +1% in EBITDA (vs. +1.2% consensus). In short, the results did not add much new, emphasising the high visibility into the company’s business (main focus on the share price), where the only doubt lies in the messages that the company may convey in the Conference Call (13:00 CET) as regards the possible impact from the coronavirus (which would not be included in their figures).
GLOBAL DOMINION. Robust 4Q’19 Results and in line, we expect a positive reaction after the correction. BUY.
EBITDA grew +26% (vs. +24% consensus and +27% BS(e)), fuelled by better sales (+16.4% vs. +13.4% consensus) which showed +11.5% organic growth (+8.5% on the year), far above its +7% guidance (+5% included in its 2019-22 plan). Net Profit grew +33%, leaving DOM well-positioned to meet its target of doubling its Net Profit in 2022 (€ 64 M). Good news in cash, which ended at € 113 M (vs. € 115 M BS(e)), with a € 23 M recovery in working capital in the 2H’19. Although the results meet expectations they are favourable and bearing in mind the performance from the past 3 months (-5.8% vs. IBEX), we foresee a positive reaction.
NH HOTELES: Results above expectations. The 2020 guidance was not unveiled. Conf call at 12:00 (CET). BUY.
Results came in above expectations on the operating level thanks to revenues (Revpar speeded up to +5.4% in the 4Q’19 vs. +3% expected and +3% seen in the 3Q’19) from Europe. EBITDA ex IFRS came in above expectations at € 294 M vs. NH’s € 285 M target (in line with the consensus and BS(e)). The company did not unveil its 2020 guidance or outlook. NH already prices in an uncertain environment due to Covid-19 (-11% in 2 sessions; -8% vs. IBEX), and thus even though the results add confidence, the absence of guidance reduces visibility.
Aedas Homes is engaged in the housing development business in Spain. The company has a portfolio of approximately 1.5 million square meters of land that it develops for residential purpose. Co. develops multifamily homes for the housing market in Madrid, Catalonia, Levante and Majorca, Costa del Sol and Seville.
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.
Cellnex Telecom SA is a Spain-based company engaged in the wireless telecommunications (telecom) business. Its activities are divided into three segments: Broadcasting infrastructure, Telecom site rental, as well as Network services and other. The Broadcasting infrastructure division comprises distribution and transmission of television (TV) and frequency modulation (FM) radio signals, operation and maintenance (O&M) of radio broadcasting network, as well as over-the-top (OTT) radio services, among others. The Telecom site rental division provides access to wireless infrastructure, primarily through infrastructure hosting and telecom equipment co-location, mainly for mobile network operators and other wireless and broadband telecom network operators. The Network services and other division offers connectivity services for a variety of telecom operators and radio communication, among others. The Company also develops 5th generation mobile networks (5G) through Alticom BV.
Ence Energia Y Celulosa is engaged in the manufacture and commercialization of wood pulp and derivatives. Co. divides its activities into the following two business lines: Forest Division: Co. manages timberlands in South America and the Iberian Peninsula. Co. is involved in trading of wood, and supplies solid wood products including: plywood, sawn timber, parquet flooring and glued-edge paneling. Co. is involved in forest and environmental consulting. Pulp Division and Energy Production: Co. is engaged in the production of Eucalyptus globulus-based TCF and ECF paper pulp. Co. is also involved in the generation of electricity through biomass power producing plants.
Euskaltel SA is a Spain-based company engaged in the provision of integrated telecommunication services. The Company's activities are divided into three segments: Residential, Business, as well as Wholesale and Other. The Residential segment provides fixed and mobile telecommunication services, broadband and wireless Internet, as well as digital television (TV) as a single service and in packages. The Business division primarily offers fixed and mobile telephony, as well as Internet access for enterprises. The Wholesale and Other area serves wholesale customers and is responsible for the delivery of communication services, such as infrastructure leasing, information technology (IT) outsourcing, as well as sell of installation material and electronics. The Company operates in the Basque Country, Spain.
Global Dominion Access SA is a Spain-based company primarily engaged in the construction and engineering sector. The Company's activities are divided into two segments: Multi-technological Services, which offers design, implementation and maintenance of fixed and mobile telecommunications networks, manages sales and distribution processes for telecommunications carriers, as well as renders of inspection, maintenance, repair and renovation services for industrial and energy firms, and Solutions and EPCs, which executes turnkey Engineering-Procurement-Construction (EPC) projects, provides construction, repair and renovation of industrial heating installations, as well as develops processes and other technological and business solutions in numerous sectors. Its services are provided in three areas: Technology and Telecommunications (T&T), Industry and Renewable energies. It operates worldwide in Europe, the Americas, Asia and Africa. The Company is a subsidiary of CIE Automotive SA.
Iberdrola is a holding company. Through its subsidiaries, Co. operates in four segments: network business, which includes all the energy transmission and distribution activities, and other regulated activity originated in Spain, the U.K., the U.S. and Brazil; deregulated business, which includes electricity generation and sales businesses as well as gas trading and storage businesses carried on by Co. in Spain, Portugal, the U.K. and North America; renewable business, with activities related to renewable energies in Spain, the U.K., the U.S. and the rest of the world; and other businesses, including the engineering and construction businesses and the non-power businesses.
Iberpapel Gestion is engaged in the manufacture, wholesale distribution, sale and export of pulp and printing and writing paper. In addition, Co. maintains forestry activities, including the cultivation of timberlands.
Laboratorios Farmaceuticos Rovi is engaged in the sale of its own pharmaceutical products and the distribution of other products for which it holds licenses granted by other laboratories for specific periods, in accordance with the terms and conditions contained in the agreements entered into with said laboratories.
Gestevision Telecinco is a television network company based in Spain. Co. heads a group of dependent companies, which form the Telecinco Group. Through its subsidiaries, Co. is engaged in the management and commercial exploitation of a television network. Co.'s television network acquires, produces, and distributes audiovisual content. Co. also sells the network advertising airtime, carried out by its subsidiary. In addition, Co. is involved in the sale of other advertising products; production of news programs; the production and sale of audiovisual property rights; and teleshopping.
Melia Hotels International is the parent company of a group engaged in the acquisition, management and operation of hotels. Co. operates its hotel network in Germany, Argentina, Brazil, Bulgaria, Cabo Verde, Chile, China, Costa Rica, Croatia, Cuba, Egypt, Spain, United States, France, Greece, Netherlands, Indonesia, Italy, Luxembourg, Malaysia, Mexico, Panama, Peru, Portugal, Puerto Rico, United Kingdom, Dominican Republic, Singapore, Switzerland, Tunisia, Uruguay, Venezuela and Vietnam under the followings brandnames: Paradisus Resorts®, Melia Hotels & Resorts®, TRYP Hoteles® and Sol Hotels & Resorts®.
NH Hotel is engaged in the operation and management of hotels throughout Spain, the Benelux countries, Germany, and South America.
Red Electrica is engaged in the transmission of electrical energy, the operation of the system and the management of the transmission network in the Spanish electricity system. In addition, through its subsidiaries, Co. is engaged in the acquisition, holding and management of foreign securities, co-ordination of international exchanges, provision of telecommunications services for third parties, provision of consultancy, engineering and construction services outside the Spanish electricity system, securing of funds, carrying out of financial transactions and provision of financial services.
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