EUR 100.00 For Business Accounts Only

IBERIAN DAILY 01 DECEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ALMIRALL, BANKING SECTOR, CELLNEX, CHANGES IBEX, ELECTRICITY SECTOR, FERROVIAL, IAG, IBERDROLA.

The IBEX ends its best month in 3 years
It was a session of slight gains in Europe, backed by positive inflation data in the euro zone and despite the fact that sovereign debt yields rose after the drops over the past few days. As for the OPEC+ meeting, the organisation unexpectedly announced a “voluntary” additional cut of -900,000 b/d for 2024, which will be shared by Russia, UAE, Kuwait and Iraq, whereas Saudi Arabia will delay the current -1 M b/d reduction. We highlight that Angola rejected the idea of reducing its production by -200,000 b/d, showing the division within the group. In March there will be another meeting to review these adjustments. In the STOXX 600, most sectors closed with gains, led by Energy (initial rise in Brent) and Insurance, whereas Travel & Leisure and Technology fell the most. On the macro side, in the euro zone, general inflation fell to 2.4%, with core inflation slowing to 3.6%, in both cases below expectations. October’s unemployment rate was stable, as expected, at 6.5%. In the US, weekly jobless claims rose slightly, as expected. Real personal outlays rose more than expected in October and suggests private consumption still dynamic in 4Q’23. From the Fed, Williams and Daly gave a hawkish message, leaving the door open to new rate hikes if inflation does not slow. In Japan October’s unemployment rate fell to 2.5%, beating expectations. In China, the Caixin manufacturing PMI for November returned to expansive territory, beating expectations and opening a gap with the Chinese Federation of Manufacturers PMI (50.7 vs. 49.4, respectively).
What we expect for today
European stock markets would open with gains, underpinned by the solid inflation data and the surprise in the Caixin PMI in China this morning. Separately, we expect poor performance from the energy sector following the OPEC+ meeting and after the initial gains. Currently, S&P futures are down -0.05% (the S&P 500 ended up +0.62% vs. the European closing bell). Volatility in the US rose (VIX 12.92). Asian stock markets are falling (China’s CSI 300 -0.37%, Japan’s Nikkei -0.17%).
Today in Spain we will learn November’s manufacturing PMI, in the US November’s manufacturing ISM and in Brazil October’s industrial output.


COMPANY NEWS

CHANGES IBEX 35. The Technical Advisory Committee will meet on 11 December. We expect no changes.
At the closing bell on the 11th of December, the IBEX Technical Advisory Committee will meet for its second control meeting of the year (the other one being in June). We expect no changes.

IAG. Hard landing priced in. We raise our T.P. up to € 2.50/sh. (+4% vs, previous T.P.; +41% upside). BUY.
Despite the good share price performance in 2023 (+28% vs. +3% LHA or -5% AF), IAG’s medium-term performance is far from positive (>-60% vs. pre Covid-19). The market would be pricing in a potential operating deterioration that would be consistent with significant price weakness (-4% vs. 2023 BS(e)) and a +10% increase in fuel costs vs. the base-case scenario. We believe that these hypotheses are cautious and not realistic bearing in mind the current environment and dynamics (record-high prices, undercapacity, supply chain, etc.). We revise our estimates due mainly to the better price environment than expected, being more optimistic in the short-term and more cautious in the long-term (CAGR EBIT ’22/26e +33% vs, 34.5% prev.). IAG is currently trading at ~5x EV/EBITDA’24 vs. ~6x historically and 7x peers.