IBERIAN DAILY 28 JUNE (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: AENA, CAF, CAIXABANK, CELLNEX, ENCE, MEDIASET ESPAÑA, SIEMENS GAMESA.The Ibex resists at 8,200 points
The European stock markets fell as the session progressed and sovereign bond yields widened ahead of the CB meeting in Sintra. The G7 continued its three-day meeting to discuss new sanctions against Moscow and will probably agree on a cap on Russian oil exports. Thus, within the Euro STOXX, Basic Resources and Household Goods were the best relative performers, vs. the drops in Construction and Utilities. On the macro side, in the US, May’s pending home sales and durable goods orders climbed above expectations. In China, the Covid-19 situation further improved with the reopening of schools in Beijing and after two consecutive days without new cases being recorded in Shanghai. The onshore credit market is seeing liquidity tensions in a quarter of heavy debt maturities after Sunac China (the fourth largest builder in the country) warned that it might not be able to face payments. The Govt. of the PBoC, Yi, mentioned that the market will continue to be underpinned through an accommodative policy, but he stated that rates are too low.
What we expect for today
European stock markets would open with slight drops awaiting news on the international meetings. Energy will be underpinned by the rising crude oil prices, whereas Technology could be dragged down by profit taking in the sector in China following the rally from the past few days. Currently, S&P futures are down -0.1% (the S&P 500 ended unchanged vs. the European closing bell). Volatility in the US decreased (VIX 26.95). Asian markets are rising (China’s CSI 300 +0.25% and Japan’s Nikkei +0.04%).
The G7 summit ends today, NATO begins its meeting in Madrid and the CB holds its second-day meeting in Sintra. Also we will learn in the US May’s wholesale inventories and June’s Richmond Fed. In debt auctions: Germany (€ 4 Bn in bonds due 2027).
COMPANY NEWS
CELLNEX, BUY
According to the press, CLNX negotiated a syndicated loan of € 6 Bn with several banks to present, together with Brookfield, a joint offer for DTE’s towers (40,600 as of the end of 2021, 90% in Germany) to avoid a capital increase. According to the news story, the price considered could be around € 19.5 Bn EV (7.6% of DTE’s EV and 15.2% of its NFD).
We recall that Deutsche Telekom would have initiated the sale of its Tower business. Among the interested candidates, apart from CLNX itself would be Vantage Towers, American Tower, KKR and GIP, among others. According to the story, Deutsche Telekom’s aim could be to close the deal before the summer.
News of limited impact for CLNX, as it had already pointed out that it would not carry out a capital increase to finance this transaction.
As for the valuation of € 19.5 Bn hinted at by the press, it means an EV/EBITDA ratio’22 of 21.7x and would be a perfect fit, as it would allow the company to enter the German market and continue consolidating the European tower market. According to our estimates, CLNX has €~9 Bn to make purchases without a capital increase (currently we estimate 7x NFD/EBITDA’22e). At this level of valuation, if it acquired a 51%, the possible transaction would mean some € 9.7 Bn (~20% of CLNX’ EV), meaning that with the aforementioned loan, depending on depending on how the bid is structured and the possible divestitures by CLNX could mean a capital increase (the asset being acquired contributes €~900 M).
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.
Caixabank is an investment company based in Spain. Co. is involved in investment portfolio management activities across two areas: Services and Financial Business and Insurance. In the services area, Co. provides investment solutions for companies involved in the infrastructure, energy, services and entertainment sectors. In the financial business and insurance area, Co. is engaged in the investments for international banks, insurance and specialist financial services. Co. focuses most of its banking investments in India, China, the U.S., and Central and Eastern Europe with a particular interest in retail banking. Co. is also involved in the disinvestments activities.
Cellnex Telecom SA is a Spain-based company engaged in the wireless telecommunications (telecom) business. Its activities are divided into three segments: Broadcasting infrastructure, Telecom site rental, as well as Network services and other. The Broadcasting infrastructure division comprises distribution and transmission of television (TV) and frequency modulation (FM) radio signals, operation and maintenance (O&M) of radio broadcasting network, as well as over-the-top (OTT) radio services, among others. The Telecom site rental division provides access to wireless infrastructure, primarily through infrastructure hosting and telecom equipment co-location, mainly for mobile network operators and other wireless and broadband telecom network operators. The Network services and other division offers connectivity services for a variety of telecom operators and radio communication, among others. The Company also develops 5th generation mobile networks (5G) through Alticom BV.
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.
Gestevision Telecinco is a television network company based in Spain. Co. heads a group of dependent companies, which form the Telecinco Group. Through its subsidiaries, Co. is engaged in the management and commercial exploitation of a television network. Co.'s television network acquires, produces, and distributes audiovisual content. Co. also sells the network advertising airtime, carried out by its subsidiary. In addition, Co. is involved in the sale of other advertising products; production of news programs; the production and sale of audiovisual property rights; and teleshopping.
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