IBERIAN DAILY 03 JULY (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: AENA, BANKING AND ENERGY SECTOR, CELLNEX, ENAGAS, OHLA, NATURGY.Positive 1H’23 for stock markets
Most stock exchanges reacted with gains to the more hawkish message from Central Banks. The Ibex ended the 1H’23 up +16.6%, above the Euro STOXX (+12.5%) or Germany’s DAX (+16.0%), but below Japan’s Nikkei (+27%) and the US tech index Nasdaq (+30%). Thus, in the Euro STOXX, all sectors saw gains last week, led by Banks and Autos vs. the worse relative performance (although positive) of Basic Resources and Media. On the macro side, in the euro zone, June’s general inflation dropped more than expected to 5.5% YoY and the core data climbed to 5.4% YoY. May’s unemployment rate remained at 6.5%, as expected. In Germany, June’s unemployment rose more than expected. In the US May’s personal outlays fell more than expected and May’s University of Michigan final consumer sentiment index was raised. In Japan, the 2Q’23 Tankan indices came in above expectations in manufacturing and services. In China, the Caixin manufacturing PMI fell less than expected, but the sector remains in an expansive phase.
What we expect for today
European stock markets would open with gains due to the expectation of a soft landing and the trends of falling inflation, in a session in which US markets will only trade for half a day due to the Fourth of July holiday. Currently, S&P futures are unchanged (the S&P 500 ended +0.22% higher vs. the European closing bell). Volatility in the US rose (VIX 13.59). Asian stock markets are climbing (China’s CSI 300 +1.25%, Japan’s Nikkei +1.69%).
Today in the euro zone, Spain and Brazil we will learn the final manufacturing PMI, in the US June’s manufacturing ISM and May’s construction spending. As for auctions, Germany will issue € 6 Bn in 3M & 9M T-bills.
COMPANY NEWS
ENAGAS, BUY
ENAG has sent a communiqué to the Spanish market watchdog regarding the international arbitration in ICSID against the Peruvian Govt. for the dispute over the investment made in GSP (Gasoducto Sur Peruano) and the collateral provided. Thus, according to the estimates of its legal advisors, ENAG would expect a final resolution for the lawsuit at some point in 2023, most likely starting in September. News without impact. Although the final resolution has been delayed (initially expected in 1H’23), ENAG is confident the ruling will go in its favour, and it expects to recover 50% of the investment made by 2024 (€~230 M / 4.7% market cap); in our estimates we do not include this, and thus a ruling against the company would have no negative impact on cash flow or the T.P. That said, a ruling against the company in the GSP lawsuit would call into question the repatriation of TGP’s dividends from Peru (€ 316 M through Dec’22), whose lawsuit is expected at the end of 2024, and thus the current capital structure and sustainability of the dividend.
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.
Cellnex Telecom SA is a Spain-based company engaged in the wireless telecommunications (telecom) business. Its activities are divided into three segments: Broadcasting infrastructure, Telecom site rental, as well as Network services and other. The Broadcasting infrastructure division comprises distribution and transmission of television (TV) and frequency modulation (FM) radio signals, operation and maintenance (O&M) of radio broadcasting network, as well as over-the-top (OTT) radio services, among others. The Telecom site rental division provides access to wireless infrastructure, primarily through infrastructure hosting and telecom equipment co-location, mainly for mobile network operators and other wireless and broadband telecom network operators. The Network services and other division offers connectivity services for a variety of telecom operators and radio communication, among others. The Company also develops 5th generation mobile networks (5G) through Alticom BV.
Enagas is a gas transportation company based in Spain. Co. is engaged in the technical distribution and storage of gas through pipelines as well as the provision of regasification services. Co. and subsidiaries are engaged in the ownership, administration, storage, pipeline transportation, distribution flow, and sale of natural gas. As a transport company, Co. also provides gas and manages the gas infrastructures.
Obrascon Huarte Lain is an international concession and construction groups based in Spain. Co. maintains significant operations in 30 countries across all five continents. Co. is engaged in hospital and railway construction, transport infrastructure concessions, oil and gas, energy, solids handling and fire protection systems and international contracts. Co.'s operations are organized along four divisions: OHL Concesiones, OHL Construccion, OHL Industrial y OHL Desarrollos. Co. is also engaged in real state project developments of mixed use managed by the international hotel chains.
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