EUR 100.00 For Business Accounts Only

IBERIAN DAILY 31 OCTOBER + 3Q’23 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: AENA, ALMIRALL, ARCELOR MITTAL, BANKINTER, BBVA, ECOENER, ENDESA, TELEFÓNICA, 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 3Q’23 results to be released over the coming days in Spain.

The week kicks off with a rally
The week of Central Bank meetings (Fed on Wednesday) began with gains, which started off strong and then faded, with the IBEX standing out with its rise above 9,000 points. In the STOXX 600, most sectors closed with gains, led by Pharma and Travel & Leisure, with Technology and Energy the biggest losers. On the macro side, in the euro zone, October’s economic confidence index slowed less than expected. In Spain, October’s inflation repeated the 3.5% YoY figure from October, with the core figure falling to 5.2% YoY from the previous 5.8%. In Germany, the 3Q’23 GDP fell less than expected (-0.3% YoY vs. -0.7% expected and previous -0.2%), whereas October’s inflation slowed more than expected to 3.8% YoY. In Japan, the BoJ was more flexible regarding the limit of 1.0% for the 10Y bond reference, but it kept its monetary policy unchanged despite raising its forecasts. Meanwhile, September’s retail sales fell more than expected and industrial output fell more than expected. In China, both the manufacturing PMI (below 50) and the non-manufacturing index fell unexpectedly in October. In US business results, McDonald’s and Western Digital beat expectations, ON Semiconductor was in line and Revvity released worse earnings than expected.
What we expect for today
European stock markets would open with slight drops. Currently, S&P futures are down -0.44% (the S&P 500 ended +0.58% higher vs. the European closing bell). Volatility in the US fell (VIX 19.75). Asian stock markets are mixed (China’s CSI 300 -0.44%, Japan’s Nikkei +0.53%).
Today in the euro zone we will learn the 3Q’23 GDP and October’s inflation, in the US the Conference Board consumer confidence and in Mexico the 3Q’23 GDP. Debt auctions: Italy (€ 8.75 Bn in bonds due 2029, 2034, 2027 and 2028). In US business results, Caterpillar, Pfizer, Sysco and Global Payments, among others, will release their earnings.


COMPANY NEWS

UNICAJA. Accelerated bookbuild of 2.95% of Aivilo Spain. BUY
Aivilo Spain, owned by Mexican businessman Ernesto Tinajero, announced an accelerated bookbuild of its 2.95% stake in UNI with a -2% discount, which along with yesterday’s drop after the results release have led the stock to fall -5% since Friday’s closing bell. We welcome the fact the discount was small, as the stock ended yesterday’s session with a sharp drop. Note that the last placement in the stock came from OceanWood following the 2Q’23 results on 02/08. On that occasion 7% of the capital was placed at € 1/sh. (+3% vs. yesterday’s closing price) with a -5.7% discount. Rest of shareholders: Fundación Bancaria Unicaja (30.23%), Fundación Cajastur (6.56%), Norges Bank (5.04%), Tomás Olivo (5.18%), Santa Lucía (5%) and Indumenta Pueri (5%).

ENDESA. 9M’23 results in line. Annual guidance maintained. BUY
The 9M’23 results were in line with expectations. Adjusted EBITDA for 9M’23 came in at € 3.35 Bn (-3.4% vs. 9M’22 and vs. -4.3% BS(e) and -3.1% consensus) due to one-off effects. and the ordinary 9M’23 Net Profit stood at € 1.06 Bn (-28% vs. 9M’22 vs. -29% BS(e) and -28% consensus). In Gx&Cx, the strong liberalised electricity margin offset the gas business. The annual guidance was maintained (EBITDA of €~4.4-4.7 Bn / Net Profit’23e of € 1.4-1.5 Bn). Strong improvement in cash generation (due to working capital). We do not expect any impact. Conference call at 10:00 (CET).

3Q’23 Results highlights and rest of previews
Of the stocks releasing their earnings over the coming days, on the positive side we highlight: (i) LOG (08/11), where expect a solid set of results, with sharp growth in economic sales (+36%) and EBIT (+15%, similar to the company’s guidance) due mainly to an effect from the scope of consolidation, following the incorporation of El Mosca and Carbó. This year there has also been a significant positive impact from the capital gains stemming from inventory revaluation (€~28 M) and from the higher financial revenues after the interest rate hike.

BBVA, BUY
The bank has reported € 2.03 Bn of Net Profit (+13.3% vs. 3Q’22 and 17% implicit RoTE), around +2% vs. consensus (+10% vs. BS(e)), with a positive performance in core Operating Income that improves by +15% vs. 3Q’22, exceeding consensus expectations by +10%. The increase in CoR and higher tax rate taint the Net Profit figure. Revenues grow +16% with a better performance of NII and fee revenues in almost all markets, improving by around +22%. This is partially offset by higher costs (+18%) mainly in Turkey. In credit quality, the CoR rises >~12bps in the 3Q’23 (vs. ~110bps BS(e) and 104bps in 1H’23) due to LatAm and Mexico. By countries, Spain and Mexico fared better whereas Turkey incurred losses in the 3Q’23 and LatAm weakens. The CET1 ratio came in at 12.73% (vs. 12.65% BS(e)), with negative net organic generation (-12bps) due to APR inflation.
We expect a neutral/negative market reaction as the strength in revenue growth is tainted by the inflation of costs, the increase in CoR and, in our view, the pressure in capital generation.