IBERIAN DAILY 14 DECEMBER (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: AENA, ENCE, INDITEX, LAR ESPAÑA, OHL, TELEFÓNICA.MARKETS YESTERDAY AND TODAY
Doubts still surrounding the market
European stock markets deflated after the EU Public Health Agency warned that the Omicron variant is spreading more quickly than it is being detected and after the University of Oxford stressed the lower protection from vaccines against this variant (with neutralising antibodies being reduced more than 30x more than the Delta variant). In this regard, the UK has warned that 40% of cases detected in London are the Omicron variant. With all this in mind, the Euro STOXX was hit by sell-offs, with Autos and Telecoms the best performers (two of the worst-performing sectors over the past few days), whereas Travel & Leisure and Energy ended with the biggest drops. On the macro side, in the Euro zone, natural gas prices returned to all-time highs after German Foreign Minister stated that the Nord Steam 2 gas pipeline does not comply with EU regulation. In the United Kingdom, an agreement has been reached to postpone the negotiations on the Irish border issue until 2022. In the US the market consensus expects the Fed to announce a quicker reduction to asset purchases and an earlier start to interest rate hikes (fed fund futures currently place the first increase in June’22). In Japan, October’s final industrial output improved slightly vs. the preliminary data. In Turkey, the lira hit new a new low against the dollar due to expectations of a new interest rate cut (at 15%), with inflation standing at 21%, and fears of sovereign debt rating downgrades.
What we expect for today
We expect the European stock markets to see a bearish opening, amid increased nervousness ahead of the midweek Central Bank meetings. Currently, S&P futures are up +0.15% (the S&P 500 ended unchanged yesterday vs. its level at the European closing bell). Volatility in the US increased (VIX 20.30. Asian markets are falling (China’s CSI 300 -0.8% and Japan’s Nikkei -0.73%).
Today in the UK we will learn October’s ILO unemployment rate, in the euro zone October’s industrial output, in the US November’s production prices and in Brazil BoB meeting minutes. In debt auctions: Spain (€ 2 Bn in 3M and 9M t-bills) and Italy (€ 3.5 Bn in bonds due 2024).
COMPANY NEWS
TELEFÓNICA. Preliminary award of the League rights. BUY.
Yesterday, LaLiga communicated it had preliminary awarded LaLiga audio-visual rights to TEF and DAZN for € 520 M for Spain and Andorra for 5 seasons (from 2022/2023 to 2026/2027). TEF will broadcast a total of 5 matches per day in addition to three full days whereas DAZN will broadcast 5 matches per day. We welcome this news. The annual price of TEF’s lot has been negotiated -7% lower (the difference between both versions, La Liga and TEF, would be due to the fact that, in this auction, the price includes production costs) and DAZN can already be accessed on TEF’s platform (the negotiation for the integration of contents would be pending). Lastly, to see the final impact on TEF’s statements, in addition to this possible agreement with DAZN, we should also consider whether there are other players interested in offering football (currently TEF is reselling the rights to Orange until April 2023).
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.
Ence Energia Y Celulosa is engaged in the manufacture and commercialization of wood pulp and derivatives. Co. divides its activities into the following two business lines: Forest Division: Co. manages timberlands in South America and the Iberian Peninsula. Co. is involved in trading of wood, and supplies solid wood products including: plywood, sawn timber, parquet flooring and glued-edge paneling. Co. is involved in forest and environmental consulting. Pulp Division and Energy Production: Co. is engaged in the production of Eucalyptus globulus-based TCF and ECF paper pulp. Co. is also involved in the generation of electricity through biomass power producing plants.
Lar Espana Real Estate SOCIMI SA is a Spain-based company primarily engaged in the operation of retail Real Estate Investment Trusts (REITs). The Company specializes in acquiring, managing and renting real estate assets within the Spanish market. Its business activities are divided into three segments: Shopping Centers, Offices, as well as Logistics. The Shopping Centers area is responsible for operation of a number of shopping malls, namely Txingudi, Las Huertas, Albacenter, Anec Blau, Hiper Albacenter, and Nuevo Alisal, among others. The Offices segment invests in office properties, such as Arturo Soria, Cardenal Marcelo Spinola, Egeo and Eloy Gonzalo. The Logistics division focuses on managing logistics warehouses, including Alovera I and Alovera II. The Company also owns a plot for residential properties development. It is a parent of a number of entities, such as Lar Espana Inversion Logistica SA, Gran Via Centrum Holdings SAU, Global Noctua and Puerta Maritima Ondara.
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.
Telefonica is engaged in the provision of public or private telecommunications services, including ancillary or complementary telecommunications services or related services. Co.'s fixed business includes: traditional fixed telecommunication services, Internet and broadband multimedia services, data and business-aplications services, and wholesale services for telecommunication operators. Co. also provides a range of mobile and related services and products to consumer and business customers, including mobile voice services, value added services, mobile data and Internet services, wholesale services, corporate services, roaming, fixed wireless, and, trunking and paging.
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