EUR 100.00 For Business Accounts Only

IBERIAN DAILY 30 MAY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: AENA, CELLNEX, FERROVIAL, IBERDROLA, TÉCNICAS REUNIDAS.

Solid rally over the week
The European stock markets consolidated on Friday the gains made over the week, backed, among other factors, by the good sales figures from Chinese technology companies (especially Alibaba) and other US retailers. With this in mind, almost all sectors within the Euro STOXX posted gains, with Retail and Basic Resources leading the way, whereas Media ended with slight losses and Utilities was the worst relative performer. On the macro side, in Spain, Abril’s retail sales rose by 1.5% on a monthly basis, which suggests that private consumption is withstanding the high inflation. In the Euro zone, from the ECB, there were hawkish comments from peripheral countries, with Hernández de Cos (Spain) warning about high and persistent inflation. In the US, April’s US real spending climbed in line with expectations and hints at robust private consumption in 2Q’22. In China, the Shanghai Govt. will extend the tax cut, electric vehicle subsidies and will speed up infrastructure construction in order to boost recovery, while it will cancel certain “unreasonable restrictions” and will relax testing starting on 01 June, which is added to some reopening of Beijing. On the geopolitical side, Europe has still not reached an agreement to veto Russian crude oil imports, with negotiations ongoing.
What we expect for today
European markets would open with gains of around +0.5%, with recovery continuing in the consumer goods sector (luxury) due to the news of reopenings in China, but this could be marred by negative surprises in German inflation data. Currently, S&P futures are up +0.5% (the S&P 500 ended +0.7% higher vs. the European closing bell). Volatility in the US fell (VIX 25.72). Asian markets are climbing (China’s CSI 300 +0.7% and Japan’s Nikkei +2.3%).
Today we will learn in Spain and Germany May’s preliminary inflation, and in the Euro zone May’s preliminary economic confidence index. In debt auctions: France (€ 5.4 Bn in 3M, 6M and 12M T-bills) and Germany (€ 6 Bn in 3M and 9M T-bills).

COMPANY NEWS

AENA. We upgrade our recommendation to BUY (from SELL) with a € 163.50/sh. T.P. (unchanged).
We believe that the company will see a positive momentum in the upcoming months with a significant recovery in traffic data (April’19 levels were recovered by 90% in April’22 vs. ~77% consensus in 2022), and thus in results in view of the boom of pent-up demand that could exceed traffic expectations for 2022 (187 M passengers DORA II, € 213 M BS(e) and 215 M consensus). However, since the release of its 1Q’22 results, the share price has seen a negative performance (-4% in absolute terms, -10% vs. Ibex and -5% vs. sector), underperforming the Ibex by as much by -1.5% in 2022 and yielding +14.5% upside vs. our T.P. (€ 163.50/sh.). With this in mind, we upgrade our recommendation to BUY (from SELL).

CHANGES SPANISH MODEL PORTFOLIO
We exclude Acciona (-1.6%) from our model portfolio after climbing +38% in the last quarter where the upside has decreased significantly. We also lower the weight of Iberdrola and Repsol (-2% and -1%, respectively), as seen in the Energy sector, these companies have seen an extraordinary performance in the past three months. On another note, we cut the weight of other well-performing stocks slightly: ACS (-0.5%) and Santander (-2%), where we maintain our positive stance but preferring domestic banks (Caixabank, Bankinter). In the case of Ferrovial and FCC we lower their weight due to the absence of short-term drivers (-1.5% and -2.3%, respectively). Thus, we add Inditex to the model portfolio (7.1% weight), which has slid -10% since we removed the company from our portfolio in March (-15% vs. market), hit by consumption doubts. The company will release its results on 08/06 that will show its business resilience vs. its peers, trading at a discount in P/E of -30% vs. historical average (25x historical average vs. 20/21x currently and in the past year) with a ~4% dividend yield. We also add Aena to our model portfolio (with a 3.8% weight), as we expect a positive momentum in the share price thanks to the recovery of traffic and results, underpinned by the boom of demand that could exceed consensus expectations (187 M passengers DORA II, € 213 M BS(e) and 215 M consensus). Lastly, we add Inditex to our 5-stock portfolio, replacing Ferrovial (we prefer other stocks linked to tourism, such as IAG or Aena).