IBERIAN DAILY 28 APRIL + 1Q’21 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: AENA, ENCE, FERROVIAL, INDRA, MERLIN PROPERTIES, NATURGY, SANTANDER, VOCENTO.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’21 results to be released over the coming days in Spain.
MARKETS YESTERDAY AND TODAY
The Ibex continues to rise as Europe remains in the red
It was yet another session of slight losses in the European stock markets, except for the Ibex, which ended up +0.6% thanks to the rally of the banking sector. This was despite the announcement of stimulus plans in France (€ 40 Bn) and Germany (€ 30 Bn) to reform the economy of the Euro zone, requesting a faster delivery of the aid package, and awaiting the Fed and OPEC meetings that will be held today. In the US we are entering the most important period of the results season with the results releases from the large technology companies (they account for 40% of market cap). Thus, most sectors within the Euro STOXX ended in the red, with Banks and Travel & Leisure being the best relative performers (as was the case yesterday) vs. Basic Resources and Pharma, which saw the bigger drops. On the macro side, in the US, April’s consumer confidence climbed above expectations, whereas April’s Richmond Fed manufacturing index disappointed, remaining unchanged vs. March. In Japan, March’s retail sales grew more than expected. In Spain, the recovery plan that will be sent to the EU was approved where the more challenging reforms will be delayed through 2022. Additionally, the country expects to be open to tourism starting in June. In US business results, Texas Instrument, Starbucks, Microsoft, Visa and Google (increasing share buyback) beat expectations.
What we expect for today
European stock markets would open with slight gains thanks to the good results of banks that underpin the sector. Currently, S&P futures are up +0.15% (the S&P 500 ended unchanged vs. its price at the closing bell in Europe). Volatility in the US fell (VIX 17.56). Asian markets are trading with mixed results (China’s CSI 300 -0.05% and Japan’s Nikkei +0.4%).
Today the OPEC and the US Fed will hold its meeting. Also we will learn in Germany May’s consumer confidence and in Brazil, April’s consumer confidence. In US business results, Apple, Facebook, and Ebay, among others, will release their earnings. In debt auctions: Netherlands (€ 2.5 Bn in bonds due 2026), Germany (€ 2.5 Bn in 0% bonds due 2036), Italy (€ 6.5 Bn in 6M T-bills) and Greece (€ 625 M in 3M T-bills).
COMPANY NEWS
INDRA. Good Results and better than expected in all headings. BUY.
Sales grew +2.2% (vs. -2% expected BS(e) and consensus) and the order backlog reached a new record level of € 5.322 Bn (1.74x sales). The 1Q’21 EBIT totalled € 39 M (+103.7% reported vs. +43.2% BS(e) and +56.3% consensus) with a 6.9% margin (vs. 4.2% in the 1Q’20), reaching 2019 levels in absolute terms thanks to sales growth and cost efficiency. We expect a positive impact with greater probabilities of higher guidance in the future. The share price has climbed +12% YTD (+4% vs. IBEX), although it is still far from pre- Covid-19 levels (-26%) and its long-term prospects are positive (backlog at record high levels and confirmed by good results) with robust cash generation (€ 120 M in 2021 mean >8% yield).
SANTANDER. 1Q’21 results slightly better in Core Revenues and driven by trading revenues, and substantially lower CoR. BUY
The 1Q’21 results were slightly better than expected from NII (-6.3% vs. 1Q’20 and around -7% expected) and fee revenues (-10.7% vs. 1Q’20 and vs. -13.7% expected). The high trading revenues levels on the quarter (2x estimates) contribute to the better Total Revenues performance (-3.6% vs. 1Q’20 and vs. -7.5% expected), driving PPP despite the slightly worse cost performance. Very positive reading in CoR in all the main divisions to 108bps (128bps in 4Q’20 and vs. 115bps BS(e)). With all this in mind, underlying Net Profit reached € 2.14 Bn, +41% vs. consensus and ~6x 1Q’20 Net Profit (with 117bps CoR). As we expected, €~550 M of restructuring costs were put on the books. CET1 came in at 12.3% vs. 12.2% BS(e) and vs. 11.89% FL (12.34% and 11.89% in 4Q’20), reserving 40% of the payout and regulatory adjustments of -13bps (-40bps for the full year). The door is open to estimates being raised. The underlying Net Profit figure from the consensus is € 5.7 Bn (€ 6.2 Bn BS(e)), and all signs point to a reference closer to € 7 Bn (+22%). There will be a conference call at 10:00 (CET). We expect a warm reception, despite the +5% rise yesterday.
ENCE. 1Q’21 Results above our expectations although with nuances. BUY.
The company released 1Q’21 Results at yesterday’s closing bell above expectations in sales (+6% vs BS(e) and +1% vs. consensus), beating our EBITDA estimate but below that of the consensus (+18% vs. BS(e) andy -6% vs. consensus). The difference is explained by higher sales volume, along with positive one-offs, and despite the worse-than-expected cashcost (€ 386/t vs. 378 BS(e)). We expect a moderately negative reaction, especially after outperforming the IBEX by +12% YTD. With this in mind, the positive pulp price prospects lead us to raise our estimates (+37% CAGR’20-23e in EBITDA vs. +29% previously), meaning +8% in T.P. up to € 4.65/sh. (+14% upside).
VOCENTO, BUY
VOC has announced the sale of the 45% stake held through Veralia (70% VOC) and its 11.7% position in Zebra Series S.L. to Newen SAS. The sale has been carried out for € 10.6 M (according to our estimates at ~7x EV/EBITDA’20 and ~20x EV/EBITDA’19 and vs. 6.3x VOC), generating € 1 M of capital losses (vs. € 3.9 M of Net Profit’21e).
Positive news, where we expect a significant impact on valuation (+5.1%) as we did not include this asset in our SoTP valuation. This is a non-core business that was consolidated by the equity method (with a € 1 M contribution in 2020 and € 0.3 M in 2019 and without cash contribution). Debt will be cut by around -10%.
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.
Banco Santander is a holding company, providing a range of financial products. Co.'s products and services include: retail banking business that covers all customer banking businesses; wholesale banking business; as well as asset management and insurance business. Co.'s principal operations are in Spain, the U.K., Portugal, Germany, Italy and Latin America. As of Dec 31 2014, Co.'s total assets amounted to Euro1,266,296,000,000 and total customer deposits amounted to Euro647,627,000,000.
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.
Ferrovial is a transportation company based in Spain. Co. is engaged in operations in the transportation sector. Co. specializes in the design, construction, management, administration and maintenance of transport infrastructures. Co.'s services range also includes the maintenance of parking lots, and land-, sea- and air-based transport networks. Co. is also engaged in the promotion and operation of short-stay parking lots, parking regulation and management services and promotion and sale of residents' parking.
Indra Sistemas is engaged in the design, development, manufacture, assembly, repair, and installation of computer software and applications. Through its subsidiaries, Co. is engaged in consulting, graphic design and multimedia, web design and marketing, internet development and electronic trade, systems integration and hosting geared business to business and business to consumer, as well as in internet financing and electronic marketing. Co. serves defense and security, transport and traffic, energy and industry, telecom and media, finance and insurance, and public administration and healthcare markets. Co. operates primarily in Europe, the United States, Canada, and Latin America.
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.
Vocento is engaged in the editing, distribution and sale of unit or periodic publications of general, cultural, sport, artistic or any other nature type of information, as well as the printing and sale of printing warehouses and any other activities related to the editorial industry and graphic arts. Co. is also engaged in the establishment, utilization and sale of radio stations, television stations and other types of installations for the emission, production and promotion of audiovisual media, as well as the production, edition and distribution of discs, tapes, magnet phonic tapes, programs, films and all other types of communication media.
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