IBERIAN DAILY 19 AUGUST (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: AENA, MERLIN PROPERTIES.Stock markets lack direction in a session with few macro references
The European stock markets moved between slight losses and moderate gains in a session with little trading volume and few macro references. Thus, within the Euro STOXX, Energy led gains, driven by the rise in crude oil prices, whereas Retail saw the biggest losses. On the macro side, in the Euro zone, inflation increased again in July (core inflation remained flat), as expected. In the US, the Philadelphia Fed index returned to positive territory in August, but July’s second-hand home sales came in somewhat worse than expected, increasing concerns about the health of the real estate sector in the country. In China, following the latest cuts to GDP forecasts by the consensus, expectations are rising for new stimulus packages after local governments were authorised to increase debt issuances. Early this morning in Japan, July’s inflation rose in line with expectations. In US business results, Estée Lauder came in far above expectations.
What we expect for today
The European stock markets would open with slight gains. Currently, S&P futures are up +0.23% (the S&P 500 ended flat vs. the European closing bell). Volatility in the US fell (VIX 19.6). Asian markets are trading with mixed results (China’s CSI 300 -0.23% and Japan’s Nikkei 0%).
Today we will learn in the United Kingdom July’s retail sales, in Germany July’s production prices index, and in Mexico June’s retail sales. No relevant business results are released today in the US.
COMPANY NEWS
AENA, BUY.
Yesterday, the company was awarded a concession for 11 airports in Brazil (Congonhas, Campo Grande, Uberlândia, Santarém, Marabá, Montes Claros, Carajás, Altamira, Uberaba, Corumbá and Ponta Porã, with Congonhas being the main airport) for a 30-year duration at a price of € 780 M (4% of AENA’s market cap; 2.5% EV), of which € 468 M correspond to the award price and € 312 M for mandatory commitments. Moreover, there is an obligation to pay a variable fee (4-year grace period) consisting of a share of gross revenues (ranging from 3.23% to 16.15% per year). Lastly, AENA will invest €~958 M (BRL 5 Bn), of which 73% is expected to take place during the first phase of the concession (until 2028).
Positive news of limited impact due to the size of the assets. While we believe that there are synergies with the airports AENA already owns in Brazil (Grupo Nordeste), at financial level, and awaiting to know further details on the asset, we estimate the impact from the acquisition at
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.
Merlin Properties SOCIMI SA is a Spain-based company engaged in the operation of a real estate investment trust (REIT). The Company focuses on the acquisition, management and rental of commercial properties located in the Iberian Peninsula, primarily in Spain. The Company's activities are divided into the following segments: Office buildings, operating a portfolio of office space; High-street retail, engaged in leasing retail stores; Shopping centers, engaged in managing department stores; Logistics, operating logistics warehouses and distribution centers, and Others. The Company's other activities include property management services rendered to third parties.
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