EUR 100.00 For Business Accounts Only

IBERIAN DAILY 29 NOVEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: AEDAS HOMES, ELECTRICITY SECTOR, FCC, FERROVIAL, RENEWABLES SECTOR.

The IBEX breaks above 10,000 points
Slight drops on European stock markets, which were highly conditioned by the hawkish comments from ECB members, although recovering after some dovish comments from the Fed. In the STOXX 600, the best-performing sectors were Utilities and Banks, whereas Consumer Goods and Real Estate suffered the biggest losses on the day. On the macro side, in the euro zone October’s M3 index contracted slightly more than expected, and corporate lending fell even further on the YoY level. From the ECB, J. Nagel reiterated that rates could be raised again if the outlook on inflation worsens, warning on the market’s haste to expect -100bps cuts for next year, beginning in April’24. In the US, Conference Board consumer confidence rose more than expected in November (though with a sharp cut to the previous data). Meanwhile, the Richmond Fed and Dallas Fed services indices fell into negative territory in November, whereas the Texas Fed services index improved slightly (although still in negative territory). Lastly, housing prices (according to FHFA) rose more than expected in September. From the Fed. A Goolsbee warned about the greater drop in inflation in the past 71 years whereas C. Waller admitted that rates could be cut if inflation continues to moderate, but on the contrary, C. Bowman left the door open to further rate rises. As for the OPEC+ meeting on 30/11, there is still a great difference in positions, and it could be delayed again or “only” extend the current cuts.
What we expect for today
European stock markets would open flat with some bullish bias. Currently, S&P futures are up +0.15% (the S&P 500 ended down -0.25% vs. the European closing bell). Volatility in the US rose (VIX 12.69). Asian stock markets are falling (China’s CSI 300 -0.85%, Japan’s Nikkei -0.26%).
Today in Spain we will learn November’s inflation and October’s retail sales.


COMPANY NEWS

RENEWABLES SECTOR. Turning point in sight? We maintain BUY in ANA\ANE\ENER\GGR\IBE\SLR.
Renewable energy companies have showed a strong underperformance vs. the IBEX in 2023 (-47% for the S&P Global Clean Energy Index vs. IBEX) in view of the doubts regarding value generation and the ability to grow, which translates into a significant derating and share prices that sometimes price in excessively pessimistic scenarios. However, the prospects of rate cuts as the main driver, along with a stabilisation of installation costs and expectations of pool prices remaining high in the long term, could mean a boost for the sector on the stock market. With this in mind, in the case of Acciona, Acciona Energía and Ecoener we have cut our expected capacity growth (-18% in Acciona Energía through 2032 and -8% in Ecoener through 2026), translating into cuts of around -15% on the three target prices, but still with significant upside (+41%, +24% and +69%, respectively), and thus we maintain our BUY recommendations. In Solaria the improved CAPEX/MW, a higher EBITDA margin and to some degree a lower risk on the pipeline allow us to raise the T.P. +20%, maintaining our BUY recommendation. Lastly, Iberdrola remains our top pick among domestic integrated utilities thanks to its diversification, financial robustness and potential, and we maintain our BUY recommendation.

FERROVIAL. Sale of its stake in Heathrow. BUY.
At yesterday’s closing bell the company announced it had reached an agreement to sell its 25% stake in Airport Holdings’s parent company for £ 2.37 Bn (€ ~2.75 Bn; ~42% NFD; ~1.26x RAB BS(e)). The book value of the stake is zero. The agreement has been reached with two different buyers: Ardian and The Public Investment Fund, which would acquire around 15% and 10%, respectively. The deal is subject to meeting the right of first offer (ROFO) and the full tag-along right, which can be exercised by the rest of Heathrow’s shareholders. The full completion of the deal is also subject to meeting other regulatory conditions. Positive news. We believe that the transaction makes strategic sense, as it would allow FER to invest in new infrastructure projects with a more appealing return than Heathrow, especially after the decision made by the Civil Aviation Authority (CAA) in March’23 of lowering tariffs in 2024 by -19.4% to £ 25.43/Passenger and keeping them stable until 2026. On another note, the sale price is above our € 1.60 Bn valuation (~1.07x EV/RAB BS(e)), and thus the transaction would have a +4.9% impact on T.P. In terms of results, the capital gains from the deal (in the absence of the confirmation on the impact from potential associated taxed) could multiply by 4x our EBT expectations’24 BS(e) for FER.

AEDAS HOMES, BUY
The 1H’23 results came in below our expectations in revenues, due to a lower deliveries figure, although they are not very representative of what we expect for the full year. Sales: € 230 M (+7.2% vs. +9.0% BS(e)); EBITDA: € 18 M (-15.2% vs. +9.5% BS(e)). Deliveries were +22% higher than last year (units), but with a lower average price (-11%) due to the geographical and product mix.
EBITDA was low, at € 18 M, equivalent to 11% of what we expect for the full year, as there is little fixed cost dilution with such a low level of deliveries.
As for presales, they rose +15% to 1,214 units (+7% in euros) thanks to the BtR sales.
The number of deliveries in the first half of 2023 only accounts for 22% of the full-year expectations but this is due to the delivery calendar this year, rather concentrated in the second half of the year. This is usual in the home development business and we play down the relevance of this factor. The company actually reiterated its delivery targets for 2023.