IBERIAN DAILY 11 SEPTEMBER (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: AEDAS HOMES, INDITEX, SANTANDER, TALGO.Volatility continues
It was a session of decreasing performance on European markets which, lacking a clear driver, fell into the red by the end of the day. In the STOXX 600, most sectors ended with losses, led by Autos and Energy (Brent fell -4.5%), compared to defensive sectors like Real Estate and Utilities, which were the best performers. On the macro side, in Spain July’s industrial output fell unexpectedly. In the UK, quarterly wage growth slowed in July as expected to a two-year low, with the ILO unemployment rate also falling to 4.1% and job creation much higher than expected. In the US, August’s SME confidence fell unexpectedly and remains below the 50-year average. Meanwhile, weekly Redbook sales sped up to 6.5% YoY. Most TV viewers and the press consider that K. Harris beat D. Trump at yesterday’s debate whereas the singer Taylor Swift publicly supported the former. In Brazil, August’s inflation moderated more than expected.
What we expect for today
Stock markets would open with slight drops that will turn into gains throughout the session. Currently, S&P futures are down -0.48% (the S&P 500 ended up +0.85% vs. the European closing bell). Asian markets are falling (China’s CSI -0.45% and Japan’s Nikkei -2.00%).
Today in the US we will learn July’s inflation, in the UK GDP and July’s industrial output and in Mexico July’s industrial output.
COMPANY NEWS
AEDAS HOMES. Castlelake could divest from the developer. OVERWEIGHT.
According to the press, Castlelake (70% AEDAS) is looking for investors to buy its stake in AEDAS. The process is still at an early stage, and all options are on the table. We would not be surprised by a divestment by Castlelake, as it has been invested in the project for 10 years, a longer period than normal for venture capital funds, and given that the share price has performed very well over the past two years (+100% including dividends, +48% vs. IBEX, +8% since the 2017 IPO). As Castlelake holds 70% of AEDAS, the sale would mean a TOB. The stock is trading at 12x P/E’24 with a dividend yield above 8% and a -24% discount to NAV. Our T.P. is € 25.84/sh. (+4% upside).
INDITEX. Solid performance in 2Q’24 and positive indications from the trading update. OVERWEIGHT
2Q’24 LfL sales were in line (+9.9% vs. around +9% BS(e) and around +10% consensus) with a negative -3.3% FX effect. The gross margin improved +19bps to 56.5% (vs. +10bps BS(e) and around -6bps consensus) and operating costs remain under control (+7.2% vs. 2Q’23 and below sales growth). All this allows EBIT to reach € 1.91 Bn (+13.3% vs. +8.2% BS(e) and +10.7% consensus). The 3Q’24 sales indications (01 Aug/8 Sep period) are positive, with +11% growth, and the 2024 target of stable gross margin was maintained (+/-50bps), with the company slightly raising the negative FX impact to -3% (vs. the previous -2%), which should help keep the stock’s positive momentum (+17% in absolute terms in 2024 and +4% vs. IBEX 35).
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.
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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