IBERIAN DAILY 03 FEBRUARY + 4Q'20 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: AEDAS, BANKING SECTOR, GLOBAL DOMINION, IBERDROLA, SANTANDER, SIEMENS GAMESA, TALGO.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 4Q’20 results to be released over the coming days in Spain.
MARKETS YESTERDAY AND TODAY
A new session of gains
It was another session of gains for the European stock markets, underpinned by increased availability of vaccines in 2Q’21 and the good results season on both sides of the Atlantic. Thus, the Euro STOXX posted gains of more than +1.5%, led by Banks and Industrials, whereas Telecoms saw losses and Energy ended virtually flat. On the macro side, in the Euro zone, the 4Q’21 GDP contracted somewhat less than expected (-5.1% YoY vs. -4.3% previously). In Italy, M. Draghi will be asked by the Italian President to form a new government. In China, the Caixin Services PMI fell more than expected in January to 52 and in Japan it fell unexpectedly to 46.1. In US business results, Exxon Mobile, Alphabet (Google) and Amazon came in better, whereas Pfizer and Sysco disappointed.
What we expect for today
The European indices would open with gains of around +0.5%. Currently, S&P futures are up +0.43% (the S&P 500 closed down -0.38% vs. its price at the closing bell in Europe). Volatility in the US dropped (VIX 25.56). Asian markets are climbing (CSI 300 +0.3%, Japan +0.9%).
Today we will learn in the Euro zone, the final Services PMI and the inflation data, both for January, in the US, the ADP private employment survey and the ISM manufacturing index, both for January. In US business results, Biogen, QUALCOMM, eBay and PayPal, among others, will release their earnings. In debt auctions, Greece (€ 625 M in 3M T-bills).
COMPANY NEWS
4Q’20 Results highlights and rest of previews.
Among the companies releasing their earnings next week, on the positive side, we stress Arcelor Mittal, where we expect strong 4Q’20 results (+53% vs. 3Q’20 BS(e) in EBITDA) that, along with a bright outlook, lead us to believe the market will have a very positive reaction. Furthermore, in addition to the good news on the operating level, there is also a potential announcement that the company will resume paying a dividend.
SANTANDER. Better 4Q’20 Results in all business lines. T.P. Upgrade. BUY.
4Q’20 Results came in better than expected in all business lines with € 1.423 Bn of Net Profit, around +13.5% vs. consensus thanks to € 8.19 Bn of NII (+3.4% vs. consensus), allowing the bank to offset the slightly worse performance of costs of € 5.24 Bn (+1.5% vs. consensus). Among the relevant division, Spain was the only one below expectations (due to CoR). The UK, Brazil, US, Chile and SFC fared better than expected in terms of PPP and CoR, which came in at 128bps (slightly below the guidance and vs. 130bps BS(e)). Good performance of CET1 that came in at 12.34% (+36bps vs. 3Q’20) and 11.89% FL and above the guidance (around 12%). ~ € -1 Bn of restructuring expenses were accounted for One Europe (for a total of € 1.5-1.7 Bn). The bank announced the intention of paying a € 0.0275/sh. DPS’20 (in line with expectations; 1.1% yield) and kept its payout target at around 40%-50% when the regulator allows it. We expect a positive market reaction. Conference call at 10:00 (CET). We raise our estimates by ~+20% and our T.P. to € 3.30/sh. (~+30% vs. previous T.P.; ~+30% upside).
SIEMENS GAMESA, SELL.
According to a communiqué released at yesterday’s session by Iberdrola, SGRE would have been selected by the former as preferred supplier for the manufacturing and installation of 3,100 MW offshore (200 wind turbines of SG-14 model) for the three offshore wind farms of the East Anglia Hub Project (UK). These wind farms are subject to be awarded in the tender that could be carried out at the end 2021, and thus the construction would start in 2023 and operations in 2026.
Positive news, as the 3,100 MW account for around 20% of the company’s offshore wind turbines backlog + pipeline at the end of 1Q’21. We assume that until the signing of the contracts these wind turbines would be part of the pipeline.
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.
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.
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.
Talgo is engaged in designing, manufacturing, repairing and maintaining the railway rolling stock, as well as the manufacturing, assembling, repairing and maintaining the engines, machinery and parts of the railway systems. Co. has an industrial presence in seven countries: Spain, Germany, Kazakhstan, Uzbekistan, Russia, Saudi Arabia and U.S.A. Co. has an active fleet in Europe, Asia and North America that comprises of 94 high-speed trains and more than 1,400 Talgo tilting passenger cars. Also, Co. purchases, redesigns, constructs, leases and sells all types of real estate.
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