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IBERIAN DAILY 27 APRIL + 1Q’22 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: AENA, ELECTRICITY SECTOR, ENCE, FERROVIAL, RED ELÉCTRICA, UNICAJA.

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 1Q’22 results to be released over the coming days in Spain.

Fears drag down markets
Despite the bullish opening, European indices erased gains gradually in view of the increased geopolitical tensions (threats from Russia and North Korea) and awaiting the release of large US technology groups (such as Alphabet), which were disappointing. In the Euro STOXX, Energy and Insurance were the best-performing sectors whereas Technology and Automobiles saw the biggest drops. On another note, Travel & Leisure was dragged down after Russia decided to stop natural gas deliveries to Poland and threatened Bulgaria. On the macro level, in the US March’s preliminary durable goods orders rose slightly less than expected although capital goods recovered to a greater extent. However, April’s Conference Board consumer confidence moderated unexpectedly, suggesting private consumption in line with the 2.4% Q/Qa expected by the consensus in the 2Q’22. Lastly, March’s new home sales slowed down more than expected. In China, Xi Jinping promised the construction of infrastructures in some regions, bolstering transport centres, airports and energy conservation projects. Furthermore, there is a strong internal debate in the PBoC regarding the effectiveness of stimuli in offsetting lockdowns. Business profits rose +8.5% in March. In US Results Dr Horton, 3M, General Electric, Visa, General Motors, Warner Bros and PACCAR beat expectations, PepsiCo, Texas Instruments and Microsoft were in line and Invesco and Alphabet (Google) released disappointing figures.
What we expect for today
European stock markets would again open with losses, hurt by the tech sector and the cutoff of gas supply to Poland. Currently, S&P futures are up +0.5% (yesterday the S&P 500 ended -0.74% higher vs. the European closing bell). Volatility in the US increased (VIX 33.52). Asian markets are mixed (China’s CSI 300 +2%, and Japan’s Nikkei -1.2%).
Today in Mexico we will learn March’s trade balance and in the US pending home sales and wholesale inventories (both for March). In US Results, Garmin, Boeing, T-Mobile, Kraft Heinz, PayPal and Ford, among others, will release their results. Debt auctions: Germany (€ 2 Bn in bonds due 2038).

COMPANY NEWS

UNICAJA. 1Q’22 results in line with expectations, with better performance in costs. BUY
The company has obtained € 61 M of Net Profit (-7% vs. 1Q’21), in line with expectations, meeting expectations in revenues (-8% vs. 1Q’21) and with better performance in costs (-8% vs. around -5% expected), underpinned by personnel costs (integration synergies). In Revenues, NII was flat vs. 4Q’21 (-15% vs. 1Q’21) and fee revenues rose +15% vs. 1Q’21, both figures in line. CoR (35bps) was in line with the consensus (and vs. 40bps BS(e)), with no increase in NPLs and coverage remaining at 68%. CET1 stood at 12.6%, in line with a +10bps improvement on the quarter. We expect a neutral to positive reaction (UNI has risen +1% in 2022, far behind the rest of the domestic banks).

AENA. 1Q’22 results below the consensus estimate in EBITDA. New T.P. of € 163.50/sh. (+20% vs. previously, +10% potential). SELL.
The 1Q’22 results came in above expectations in sales (+93.6% vs. +69.3% BS(e) and +77.3% consensus), driven by the very good performance of the commercial division (+22% vs. consensus) and International (+55% vs. consensus) backed by the improvement in passenger traffic (+280% vs. 1Q’21). However, the results failed to meet expectations in EBITDA (€ 73 M 1Q’22 vs. €-121.5 M in 1Q’21 vs. € 187.0 M BS(e) and € 117.5 M consensus), affected by rising energy costs (€+47 M vs. 1Q’21). AENA’s current liquidity position is €>2 Bn (€+900 M from the Euro Commercial Paper programme – ECP). In short, the results showed a significant increase in activity, albeit stained by the increase in energy costs, and thus, we expect a negative share price reaction after the stock’s recent performance (+9% vs. Ibex). We have raised our traffic estimates (+36% in the 2022/24 period, bringing forward by four years the recovery to pre Covid-19 levels, which we now expect for 2024 vs. 2028), leading to a CAGR’21-24 of +23% in sales (vs. +16% previously) and of +62% in EBITDA (vs. +40% previously).

RED ELÉCTRICA, SELL
The company’s 1Q’22 results came in as expected, with € 395 M of EBITDA as of 1Q’22 (+1.8% vs. 1Q’21, vs. +0.5% BS(e)) and € 182 M of Net Profit (+0.6% vs. 1Q’22, +0.6% BS(e) and +11% consensus). The worse performance of the Spanish regulated TSO business (once again affected by maintenance costs in certain critical facilities) was offset by the rest of divisions (Reintel, Hispasat, International). In any case, this level of EBITDA would be in line to achieve the guidance’22e (provided by the company in 4Q’21) of levels in line with 2021 (€~1.5 Bn, in line with the consensus and BS(e)).
We do not expect an impact from these results. REE share price remains flat YtD (-0.15% vs. -3% IBEX) and we reiterate our SELL recommendation in view of the declining path in revenue generation, the low short-term visibility and the low upside potential (-10.76%). No Conference Call will be held.