EUR 100.00 For Business Accounts Only

IBERIAN DAILY 26 MARCH (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: AEDAS, BANKING SECTOR, SACYR, SANTANDER.


MARKETS YESTERDAY AND TODAY

Uneasy calm on stock markets
It was a back-and-forth session for the European stock markets, which ended unchanged or with very slight losses. Fears of new restrictions in response to a 4th wave of infections remain, even though AstraZeneca dispelled doubts somewhat after revising down the efficacy rate if its vaccine from 79% to 76% and EU-UK tensions over vaccines eased somewhat. Within the Euro STOXX, Autos and Pharma were the best relative performers vs. Real Estate and Energy, which saw the biggest losses. On the macro side, in the US, the 3rd reading of the 4Q’20 GDP beat expectations (4.3% vs. 4.1% expected) and the number of weekly jobless claims fell more than expected and than the previous data. The Fed outlined that restrictions on share buyback and dividend payment for most US banks will ease after the 30th of June. In China, there are mounting fears in the technology sector due to sanctions from the US and the government plans to take control of users data.
What we expect for today
We expect a bullish session thanks to the vaccination improvement worldwide. On another note, the blockage in the Suez canal (due to a wedged ship) could last longer than expected with a relatively significant impact on global trade, which has fuelled oil prices to US$ 63.00.
Currently, S&P futures are up +0.5% (the S&P 500 ended +0.37% higher vs. its price at the closing bell in Europe). Volatility in the US fell (VIX 19.81). Asian markets are climbing (CSI 300 +2.5%, Japan +1.6%).
Today in the Euro zone, the European Council will meet again. Also we will learn in Germany March’s IFO data, in the UK, February’s retail sales and in the US February’s retail inventories, and February’s personal income and outlays data. As for auctions, Italy will issue € 6 Bn in 6M T-bills.


COMPANY NEWS

SANTANDER, BUY
SAN has just issued an official market communiqué announcing its intention of acquiring 100% of the minority stakes in the Mexico division (a unit contributing 15% of group Net Profit’20). The total is 8.3% for € 550 M (~1.2x P/BV BS(e)), and the impact is -8bps on CET (12.34% as of Dec’20). The price means a 24.3% premium over SAN Mexico’s closing price yesterday and a ROIC of 14%, with the impact expected to be 0.8% on EPS’23 in 2023. The deal will be neutral on TNAV and is expected to be finalised between 2Q’21 and 3Q’21. There will be a conference call today at 10:00 (CET).
Additionally, SAN has announced that thanks to the solid business performance in 1Q’21, it expects to reach a RoTE’21 of 10%> the CoE guidance of between 8-9% and vs. 9% indicated to date.
Separately, the bank has announced that it will pay € 0.0275/sh. (15% payout; in line with expectations) in cash as a dividend’20 starting on 4 May. Ex-date 3 May. DPS’20 yield 1% (in line with expectations).
Positive news that we expect to be warmly received today. The deal fits within SAN’s strategy of concentrating its capital on businesses with double-digit returns and with an improvement to RoTE. This deal and the business performance as of 1Q’21 could mean that Net Profit’21 could come in above the € 6 Bn mentioned to date.