IBERIAN DAILY 31 MAY (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: AEDAS, AENA, IBERDROLA, INDITEX, NATURGY, ROVI.Europe loses momentum
The European stock markets fell over the session amid doubts on the US debt ceiling and the drop in crude oil prices. Thus, the Euro STOXX ended in the red, with Utilities, Technology (fuelled by NVIDIA) and Retail being the only sectors that posted gains and Food and Energy seeing the biggest drops. On the macro side, in Spain, retail sales slowed less than expected in April, whereas May’s preliminary inflation slowed somewhat more than expected, both general inflation (3.2% YoY vs. 4.1% YoY previously) and core inflation (6.1% vs. 6.6% previously). In the Euro zone, April’s M3 supply slowed somewhat more than expected, whereas May’s economic climate index fell unexpectedly. In US business results, May’s Conference Board consumer confidence fell less than expected. Separately, L Mester (Cleveland Fed) spoke in favour of further rate hikes in June. In Japan, April’s industrial output fell unexpectedly, and retail sales decreased above expectations. In China, May’s manufacturing and services PMIs contracted more than expected to 48.8 and 54.5, respectively, the first showing a faltering external demand.
What we expect for today
The European stock markets would open with losses of -0.4% driven by cyclical stocks after the poor macro data in Asia. Currently, S&P futures are down -0.32% (the S&P 500 ended -0.15% lower yesterday vs. the European closing bell). Asian stock markets are falling (China’s CSI 300 -1.20%, Japan’s Nikkei -1.60%).
Today we will learn in Germany May’s both unemployment and preliminary inflation data, and in Spain March’s current account balance. In the US, both Houses will hold the vote on the debt ceiling. In debt auctions: Germany (€ 3 Bn in bonds due 2029).
COMPANY NEWS
AEDAS. FY2022/23 Results in line although with worse quality than expected. BUY.
Even though the company had already announced the main KPIs of the fiscal year (units delivered, pre-sales, revenues, adjusted EBITDA, etc.), the quality of the “adjusted” EBITDA reported comes as a surprise, being worse than expected due to the inclusion of a € 8 M mark to model (we were expecting a lower amount for this heading). Gross margin over sales (27% vs. 28% BS(e)) also came in below our expectations due to higher construction costs. The company has confirmed the payment of a final DPS worth € 1.15/sh. (+0%, 8% yield, already made public). With this in mind, we do not foresee a significant market impact from these results.
AENA. BUY.
According to the press, the Board of Directors yesterday approved a new tender for the lots 1 and 4 (the duty free stores in Madrid and Barcelona airports) that did not receive any response in the previous tender given the absence of bids. The conditions from the previous tender remain unchanged with the exception of two; The clause limiting the reasonable share at 80% is eliminated, with no share limitation now. In the case of bids for Madrid airport, the obligation of including a bid for northern Spain airports is eliminated, as they were already awarded in the previous tender to Lagardère.
Positive and expected news. We believe that the elimination of the quota limitation paves the way for Dufry, the current winning bidder, to submit a bid and maintain the statu quo. We recall that the award of the remaining airport lots resulted in an increase in MAGs of +17%.
INDITEX. 1Q’23 results preview and new T.P. of € 34.50/sh. We maintain our BUY recommendation
We expect positive LfL sales performance (results to be released on 07/06) of around +12.5% in a quarter of declining performance (strong start to Q1, number of stores, price increases and solid demand). Despite the higher costs (around -30bps on the gross margin) and a less favourable sales mix, EBIT will grow around +5% vs. 1Q’22 adjusted for the Russia/Ukraine provisions, around +27% on the reported level, bringing the margin to 17.5%. We also expect a positive (although more moderate) trading update (01 May- around 05 June), and we do not expect any changes to the 2023 targets. We raise our sales estimates to a CAGR’22-25e of around +5% and more than +6% in EBIT (vs. the previous +5%) and place our T.P. at € 34.50/sh. (+5% vs. previous and +10% upside).
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.
Aena SME SA, formerly Aena SA, is a Spain-based company primarily engaged in the airports operation. Its activities are divided into four segments: Airports, which comprises Aeronautical subdivision, responsible for the management of airports, jetways, security, handling, cargo and fuel services, among others, as well as Commercial subdivision, including duty-free and specialty stores, restaurant services, car rental, as well as banking services and advertising; Services outside the terminal, which manages real estate assets, such as parking lots, warehouses and lands; International, which comprises operations of Company's subsidiary, Aena Desarrollo Internacional SA, that invests in other airport owners principally in Mexico, Colombia and the United Kingdom; and Others, encompassing corporate activities. It manages tourism, hub and regional airports, as well as heliports and general aviation areas. Furthermore, its destination range comprises Europe, the Americas, Asia and Africa.
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.
Laboratorios Farmaceuticos Rovi is engaged in the sale of its own pharmaceutical products and the distribution of other products for which it holds licenses granted by other laboratories for specific periods, in accordance with the terms and conditions contained in the agreements entered into with said laboratories.
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