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IBERIAN DAILY 17 JUNE (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: AEDAS HOMES, AMADEUS, IBERDROLA, NEINOR HOMES.

The market recovers
European stock markets rallied, driven by the possibility of a de-escalation of the situation in the Middle East. In this regard, Iran would be trying to stop the hostilities through the US in exchange for resuming talks on the nuclear agreement. In the STOXX 600, the best-performing sectors were Travel & Leisure and Banks, whereas defensive sectors like Pharma and Food suffered the biggest drops. On the macro side, in the US, the Empire manufacturing index worsened unexpectedly in June. On the trade front, Trump trusts that the G7 meetings will include advances in trade agreements before the 09 July deadline, and it has been leaked that the EU would be willing to accept 10% US tariffs on all exports in order to avoid other tariffs on automobiles, medicines and electronics. In Japan, the BoJ, as expected, kept the reference rate at 0.5% but announced a slowing of the pace of asset purchases starting in April’26 (200 Bn yen vs. 400 Bn currently). In geopolitics, Trump has left the G7 after the tensions in the Middle East and has ordered the evacuation of Tehran.
What we expect for today
European stock markets would open with drops >-0.5%, with defensive and oil companies acting as safe-haven again in view of the geopolitical risk. Currently, S&P futures are down -0.4% (the S&P 500 ended flat vs. the European closing bell). Asian markets are mixed (China’s CSI 300 -0.2% and Japan’s Nikkei +0.5%).
Today in Germany we will learn June’s ZEW index and in the US May’s import prices, retail sales, industrial output and June’s NAHB construction sector confidence index.


COMPANY NEWS

AEDAS/NEINOR HOMES. We raise our T.P. and upgrade our recommendation for Neinor after TOB on AEDAS announced.
HOME has reached an agreement with Castlelake to acquire its 79% stake in AEDAS at a cash price of € 24.48/sh. (€ 21.33 post-dividend of € 3.15/sh., a -30% discount to NAV and -9% vs. closing price). To finance the deal, which means a TOB on 100% of AEDAS, HOME will assume debt (€ 750 M at 7.25%) and carry out a capital increase (underwritten by its main shareholders) of € 225 M (22% over the closing price). We believe the deal is very positive for HOME, as the company is buying at a heavy discount over both NAV and our valuation (undisturbed) of AEDAS. Thus, in the case of HOME we upgrade our recommendation to OVERWEIGHT and our T.P. +15% to € 16.84/sh. Following the deal, the NAV/sh. could grow around +26% and LTV would rise to around 40% (but only 21% with recourse). Given that there is an irrevocable agreement with Castlelake, we expect the TOB to be successful and that no competing bids will be made.
In the case of AEDAS, and given that the price offered is -9% below the closing price, we reiterate our UNDERWEIGHT recommendation and lower our T.P. (which was already penalised by the strong probability of a lowball price) to the level of the price offered (thus, it goes from € 25.77/sh. to € 24.48/sh. before the dividend payment).

AMADEUS. Placement of 1.3% of capital. OVERWEIGHT
According to Bloomberg, Goldman Sachs would be selling around 5.7 M shares (1.3% of the capital) at € 70.61/sh. (-2.2% vs. yesterday’s close). The books would be covered and will be closed today at 8:30 (CET). After the deal we do not know who will hold the stake. We do not foresee any impact, as the discount is not relevant, in our view.