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IBERIAN DAILY 25 JANUARY + 4Q’20 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: AENA, BBVA, CAF, GRIFOLS, ENDESA, REPSOL, SIEMENS GAMESA.

At the end of today’s report, and during the entire results season, we will include a presentation with positive and negative results highlights and previews for the 4Q’20 results to be released over the coming days in Spain.

MARKETS YESTERDAY AND TODAY

Stock markets consolidate, backing away from highs
The European stock markets posted losses, dragged down by fears of new restrictions due to the UK’s Covid-19 strain and following mixed PMI data in the Euro zone. Within the Euro STOXX, most sectors ended in the red, with Banks and Travel&Leisure being the worst relative performers, vs. the slight gains posted by Industrials and Real Estate. On the macro side, in the Euro zone, January’s PMIs increased, but less than expected, whereas in the United Kingdom, they fell more than expected, especially the Services PMI, which hints at a recession in the country. In Portugal, President De Sousa was reelected with 60% of votes to govern for another 5 years. In the US, January’s PMIs and December’s second-hand home sales climbed unexpectedly. In US business results, Huntington and Kansas City, among others, came in below expectations.
What we expect for today
The European stock markets would open with gains of +0.5%, with a better performance by growth stocks. The risk of new lockdowns due to the spread of Covid-19 cases (there is mention of an aggressive lockdown in France) will also weigh on performance. Currently, S&P futures are up +0.40% (the S&P 500 closed practically -0.2% lower vs. its price at the closing bell in Europe). Volatility in the US rose (VIX 21.91%). Asian markets are rising (CSI 300 +1.1%, Japan +0.4%).
Today in Germany we will learn January’s IFO data, and in the US the Chicago Fed national index for December. In US business results, Kimberly-Clark, among others, will release its earnings. In debt auctions: Germany (€ 4 Bn in 12M T-bills) and France (€ 5.4 Bn in 3M, 6M & 12M T-bills).


COMPANY NEWS

AENA. The pandemic will lead to a slow recovery. We change our recommendation to SELL.
The Covid-19 situation leads us to lower our expectations and assume that traffic is unlikely to return to 2019 levels before the second half of the decade (in 2020 it fell by -73% vs. 2019), which will drag down the Aeronautical business (48% EBITDA) and, to a lesser extent, the Commercial business (43% EBITDA), and we now expect a CAGR’19-24e of -8.6% in EBITDA (vs. -3% previously). Bearing this in mind, we cut our T.P. to € 136.50/sh. (-8.4% previously) and change our recommendation to SELL in view of the lack of a positive newsflow and a low upside potential (+4%) following the stock’s sharp rally since March 2020 lows (+6,4% vs. IBEX and +8% vs. the sector). Thus, although we do not see a risk on the liquidity level and the company’s assets are high quality, we believe that the lack of dividend payments in the short-term (vs. 3.4% yield BS(e) previously) would reduce the stock’s appeal.

SIEMENS GAMESA, SELL
The company has released preliminary (non-audited) 1Q’21 results showing sales -7% below our estimates (-5% vs. consensus) and € 121 M of adjusted EBIT (vs. € 39 M BS(e) and € 48 M consensus), which means a 5.3% margin (guidance’21 of between 3% and 5%), although it points out that this EBIT figure would be affected by positive one-offs that are not quantified. On the order intake level, the company forecasts € 2.3 Bn (vs. € 4.6 Bn in 1Q’20), with no offshore projects awarded as expected (orders are expected to come in the next few quarters). Separately, we would like to highlight that the company confirms the guidance’21 of between € 10.2 M and € 11.2 M of sales (vs. € 10.77 Bn BS(e) and € 10.63 Bn consensus) and an adjusted EBIT margin ranging from 3% and 5% (vs. 4% BS(e) and 3.9% consensus).
We do not think these preliminary results should have much of an impact on the market, as although EBIT is clearly above expectations, it would be positively affected by one-offs (we know neither the nature nor the amount), and separately sales came in below expectations. Nevertheless, we welcome the fact the guidance was maintained. The company will release full results on the 29th of January before the opening bell (conference call at 9:00 CET).