Report
Research Department
EUR 100.00 For Business Accounts Only

IBERIAN DAILY 01 JULY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: AENA, COLONIAL, FERROVIAL, GLOBAL DOMINION, SIEMENS GAMESA.

MARKETS YESTERDAY AND TODAY

Europe needs more
The bullish US opening following the good confidence data contributed to some recovery in European indices that still ended flat in negative territory. In the Euro STOXX, Technology and Insurance were the best-performing sectors while Travel&Leisure and Energy saw the biggest drops. On the macroeconomic side, in Spain, the final 1Q’20 GDP data confirmed the -5.2% q/q slowdown, with a 6.6% decline in private consumption. On another note, the BoS claimed a medium-term fiscal plan with adjustment measures to tackle debt. Raising reduced VAT rates and special taxes, revising the corporate tax and reforming the Social Security to ensure the sustainability of the pension system are among the measures requested. In the euro zone, June’s inflation speeded up slightly more than expected while the core data was in line, however, despite the recovery of the activity in the 2H’20, inflation will remain below 1%. In the UK, the final revision of the 1Q’20 GDP showed a one tenth deterioration given the decline in private consumption. In the US, June’s consumer confidence provided a surprise, recovering above expectations. Data suggest private consumption will slow down less than -39.9% q/qa expected by the consensus. In Brazil, May’s unemployment rate climbed although less than expected.
What we expect for today
European stock markets would open flat awaiting some references (in the US job data and ISM). Currently, S&P futures are down -0.24% (the S&P 500 closed up +0.74% vs. its price at the closing bell in Europe). Volatility in the US dropped (VIX 30.45%). Asian markets are mixed (Japan -0.34% and Hong Kong +0.52%).
Today in Germany we will learn June’s unemployment, in the euro zone, June’s final manufacturing PMI, in the US June’s ADP job creation, May’s construction spending, June’s manufacturing ISM and the minutes from the meeting held on the 10th of June. As for auctions, Portugal will issue 15Y syndicated debt and Greece € 625 M in 6M-bills.


COMPANY NEWS

AENA, BUY
At yesterday’s closing bell the company announced it has cancelled the DPS’19 (€ 7.58/sh.; 6.4% yield) due to the low visibility on the business recovering (no further details were given on bookings or air traffic).
Negative news, as the dividend is one of the key elements in these assets (although in general all its peers have reduced their shareholder remuneration due to Covid-19). Separately, we welcome the company adopting an extremely cautious attitude regarding preserving liquidity, although we think at the current levels (more than € 3 Bn) it could face at least part of the dividend payment (we expected it to be lowered to € 3.79/sh. and with a 3.2% yield) without compromising its financial situation.
Note that as of YE2019 the company’s debt levels was reasonable (2.3x ND/EBITDA), and with its current liquidity we think AENA could keep its operations unchanged and still face financial commitments through 2022 (€ 1.55 Bn), even against a backdrop of sharp drops in air traffic (similar to those at the onset of the Covid-19 crisis with air traffic falling >95%, which has already improved). The stock has rallied +24% since lows, and it has outperformed the rest of the sector linked to tourism since the onset of the Covid-19 crisis, although it is true that since early-June highs it has fallen -18%, and thus we do not expect the news to have much of an impact.
Underlyings
Aena SME SA

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.

Ferrovial S.A.

Ferrovial is a transportation company based in Spain. Co. is engaged in operations in the transportation sector. Co. specializes in the design, construction, management, administration and maintenance of transport infrastructures. Co.'s services range also includes the maintenance of parking lots, and land-, sea- and air-based transport networks. Co. is also engaged in the promotion and operation of short-stay parking lots, parking regulation and management services and promotion and sale of residents' parking.

Global Dominion Access SA

Global Dominion Access SA is a Spain-based company primarily engaged in the construction and engineering sector. The Company's activities are divided into two segments: Multi-technological Services, which offers design, implementation and maintenance of fixed and mobile telecommunications networks, manages sales and distribution processes for telecommunications carriers, as well as renders of inspection, maintenance, repair and renovation services for industrial and energy firms, and Solutions and EPCs, which executes turnkey Engineering-Procurement-Construction (EPC) projects, provides construction, repair and renovation of industrial heating installations, as well as develops processes and other technological and business solutions in numerous sectors. Its services are provided in three areas: Technology and Telecommunications (T&T), Industry and Renewable energies. It operates worldwide in Europe, the Americas, Asia and Africa. The Company is a subsidiary of CIE Automotive SA.

Inmobiliaria Colonial (COL SM)

SIEMENS GAMESA (SGRE SM)

Provider
Sabadell
Sabadell

Analysts
Research Department

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