IBERIAN DAILY 05 AUGUST (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: AENA, IBERDROLA, OHLA.A week of corrections
Heavy sell-offs in developed markets in a week marked by the results calendar (with some disappointments in large caps) and poor employment data in the US. In the STOXX 600, the hardest-hit sectors were Banks and Technology, whereas Real Estate and Utilities (aided by falling yields) rose the most. On the macro side, in Spain July’s unemployment fell much less than expected, suggesting a cooling of the Spanish job market. In the US, July’s job market data was poor, with non-farm job creation falling more than expected, the unemployment rate rising unexpectedly and salary gains increasing more slowly than expected. Furthermore, factory orders fell more than expected in June. In Brazil, June’s industrial output rose more than expected. In China, July’s Caixin services PMI rose more than expected. In US business results, PPL beat expectations, Linde and Exxon Mobil were in line, and Chevron released earnings below expectations.
What we expect for today
Stock markets would open with sharp drops (more than -2%). Currently, S&P futures are down -1.8% (the S&P 500 ended up +0.6% vs. the European closing bell). Asian stock markets are falling sharply (China’s CSI 300 -0.7%, Japan’s Nikkei -12% in view of the yen’s revaluation).
Today in Spain we will learn June’s industrial output, in the euro zone July’s final services PMI and August’s SENTIX index and in the US July’s non-manufacturing ISM. In US business results, Tyson Foods and Diamondback Energy, among others, will release their earnings.
COMPANY NEWS
AENA, OVERWEIGHT
A British court has seized AENA’s use of the Luton airport due to the Spanish Government’s pending payment stemming from the rulings on compensation to investors in renewable energies, which were in favour of the latter. Among them was NextEra Energy, with a pending € 291 M collections, which requested this seizure from the court, along with some lands in which one of AENA’s subsidiaries appears on the deeds. Note that in July Enaire suffered a similar seizure in Belgium, and the Govt. still has to return some € 1.2 Bn.
In this case Aena has been affected as it is a company in which Enaire has a 51% stake. Aena has stated that because it is not involved in the legal process regarding the renewable energy investors, it has not been given a hearing and the pertinent information to determine the scope and consequences of the measures, and in any event it will defend its interests, those of its subsidiaries and its shareholders.
Negative news, although for the time being difficult to quantify, as among other things, the decision would not yet be final, and the Govt. could appeal.
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.
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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