Report
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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’23 results to be released over the coming days in Spain.
The banking crisis in the US and Central Banks set the pace of stock markets
Stock exchanges continued to pay close attention, one more week, to the performance of the US banking sector and to the messages on the imminent end of the rate rise cycle by the Fed and the ECB. Notwithstanding, the main European stock markets ended last week with slight drops, with the exception of the DAX, FTSE MIB and SMI, which ended in the black. In the Euro STOXX, Basic Resources, Pharma and Technology were the best-performing sectors whereas Media and Retail led corrections last week. On the macro side, in the US, April’s non-farm job creation came in above expectations whereas the unemployment rate dropped unexpectedly to lows and wage gains climbed more than expected. In the euro zone, March’s retail sales slowed down more than expected and in Germany industrial orders fell sharply. In Spain, unions and employers (CEOE) agreed on wage increases of 4% in 2023 and 3.0% for 2024-25, with the possibility of an additional 1pp increase if inflation remains above the agreed level. In Japan, the BoJ minutes showed the debate among its members on the risks of accelerating inflation. In US Results, Warner Bros and Allian came in worse than expected, Cigna Group better.
What we expect for today
European stock markets would open with slight gains of +0.2%. Currently, S&P futures are down -0.10% (the S&P 500 ended +0.37% higher vs. the European closing bell). Volatility in the US dropped (VIX 17.19). Asian stock markets are mixed (China’s CSI 300 +1.16%, Japan’s Nikkei -0.62%).
Today in the Euro zone we will learn May’s SENTIX index In US business results, Viatris, Devon Energy, Pay Pal and Tyson Food Inc., among others, will release their earnings. As for auctions, Germany will issue € 6 Bn in 3 & 9M T-bills.
COMPANY NEWS
ALMIRALL. 1Q’23 Results above expectations. NFD increased and guidance’23 maintained. BUY.
The has company released 1Q’23 results above expectations on the operating level (€ 52 M of EBITDA vs. € 47 M BS(e) and consensus) on better performance in sales (+6% vs. +4% BS(e) and +3% consensus) and margins (22.3% vs. ~21% consensus). Net Profit was in line (€ 8 M vs. € 7 M BS(e)) due to the valuation of an equity swap (with no impact on cash) and weaker than expected in NFD (+29% to € 217 M; ~1.1x NFD/EBITDA; vs. € 191 M BS(e)) due to higher capex and working capital. The company reiterates its guidance’23 (low-mid single-digit growth in sales and between € 165 M and € 180 M of EBITDA vs. € 176 M BS(e) and € 174 M consensus), for which we believe it is well positioned. We do not expect a significant impact after the stock’s -2% drop YTD (-13% vs. IBEX).
CAF. 1Q’23 results showing an EBIT margin below expectations but a positive outlook. BUY
The company released at Friday’s closing bell 1Q’23 results beating expectations in sales (+9% vs. BS(e) and +10% vs. the consensus) and very much in line with our estimate in EBIT (+5% vs. consensus), with the consolidated EBIT margin coming in slightly below expectations at 4.6% (4.9% BS(e) and 4.8% consensus; 4.8% in 1Q’22 and 4.2% in 4Q’22), albeit with prospects of recovery throughout the year. Solaris’s strong growth stands out (+35% vs. 1Q’22) thanks to the delivery of buses pending electronic components. Order intake came in at €~1.22 Bn (incl. € 450 M worth of contracts pending signing; € 1.14 Bn in 1Q’22). The company did not provide a breakdown of debt or cash generation. CAF reiterates its targets for 2023 (with sales at the high end of the range) and 2026. We highlight the fact that margins remain poor, although this was expected to some extent and is largely offset with the positive outlook provided by the company for the remainder of the year, both in sales and in margins. While this set of results should not have a significant impact on the share price, although in any case with some positive bias thanks to the favourable message from the recovery of deliveries in Solaris. Over Friday’s session, the stock outperformed the IBEX by +1.5%. The stock has fallen by -5% YTD (vs. IBEX).
REAL ESTATE SECTOR
The Spanish president, Pedro Sánchez, would have announced last weekend his intention of approving an aid plan for people under the age of 35 years to make easier the purchase of homes. The aid plan would include a collateral granted by the Spanish Credit Institute for “up to 20% of the mortgage amount” (it is not clear the LTV reference to be used for the calculation of this 20% limit or whether it refers to 20% on the total property value). In order to be eligible to this collateral there would be an income limit: up to € 37,800 per person or the double if the buyers are two people. In the case of families with children there would be no age limit. The plan could be approved at the Cabinet meeting to be held tomorrow. In the absence of the details of this measure, if it is approved in the end, we believe that this news would be positive for the Spanish real estate sector although with an impact difficult to assess. The aid plan would make easier the purchase of homes for many potential buyers that even though having the recurring revenues to cover the mortgage interests and payment lack sufficient savings for the initial payment (around 30% of the home value when taxes are included for an 80% LTV). In another countries where similar measures have been adopted (such as Help to Buy in the UK), the impact on sales of new homes has been clearly positive. Given the limit to family income to be eligible for this aid plan, and if not adjusted depending on the geographic areas, the measure would benefit those home development groups with a portfolio of lower unit value (cheaper homes). In our coverage universe, the value of HOME’s and MVC’s portfolios is lower than AEDAS’s (with a higher buyer profile).
IBERIAN DAILY 08 MAY + 1Q’23 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: ALMIRALL, CAF, FLUIDRA, HOME DEVELOPMENT SECTOR.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’23 results to be released over the coming days in Spain.
The banking crisis in the US and Central Banks set the pace of stock markets
Stock exchanges continued to pay close attention, one more week, to the performance of the US banking sector and to the messages on the imminent end of the rate rise cycle by the Fed and the ECB. Notwithstanding, the main European stock markets ended last week with slight drops, with the exception of the DAX, FTSE MIB and SMI, which ended in the black. In the Euro STOXX, Basic Resources, Pharma and Technology were the best-performing sectors whereas Media and Retail led corrections last week. On the macro side, in the US, April’s non-farm job creation came in above expectations whereas the unemployment rate dropped unexpectedly to lows and wage gains climbed more than expected. In the euro zone, March’s retail sales slowed down more than expected and in Germany industrial orders fell sharply. In Spain, unions and employers (CEOE) agreed on wage increases of 4% in 2023 and 3.0% for 2024-25, with the possibility of an additional 1pp increase if inflation remains above the agreed level. In Japan, the BoJ minutes showed the debate among its members on the risks of accelerating inflation. In US Results, Warner Bros and Allian came in worse than expected, Cigna Group better.
What we expect for today
European stock markets would open with slight gains of +0.2%. Currently, S&P futures are down -0.10% (the S&P 500 ended +0.37% higher vs. the European closing bell). Volatility in the US dropped (VIX 17.19). Asian stock markets are mixed (China’s CSI 300 +1.16%, Japan’s Nikkei -0.62%).
Today in the Euro zone we will learn May’s SENTIX index In US business results, Viatris, Devon Energy, Pay Pal and Tyson Food Inc., among others, will release their earnings. As for auctions, Germany will issue € 6 Bn in 3 & 9M T-bills.
COMPANY NEWS
ALMIRALL. 1Q’23 Results above expectations. NFD increased and guidance’23 maintained. BUY.
The has company released 1Q’23 results above expectations on the operating level (€ 52 M of EBITDA vs. € 47 M BS(e) and consensus) on better performance in sales (+6% vs. +4% BS(e) and +3% consensus) and margins (22.3% vs. ~21% consensus). Net Profit was in line (€ 8 M vs. € 7 M BS(e)) due to the valuation of an equity swap (with no impact on cash) and weaker than expected in NFD (+29% to € 217 M; ~1.1x NFD/EBITDA; vs. € 191 M BS(e)) due to higher capex and working capital. The company reiterates its guidance’23 (low-mid single-digit growth in sales and between € 165 M and € 180 M of EBITDA vs. € 176 M BS(e) and € 174 M consensus), for which we believe it is well positioned. We do not expect a significant impact after the stock’s -2% drop YTD (-13% vs. IBEX).
CAF. 1Q’23 results showing an EBIT margin below expectations but a positive outlook. BUY
The company released at Friday’s closing bell 1Q’23 results beating expectations in sales (+9% vs. BS(e) and +10% vs. the consensus) and very much in line with our estimate in EBIT (+5% vs. consensus), with the consolidated EBIT margin coming in slightly below expectations at 4.6% (4.9% BS(e) and 4.8% consensus; 4.8% in 1Q’22 and 4.2% in 4Q’22), albeit with prospects of recovery throughout the year. Solaris’s strong growth stands out (+35% vs. 1Q’22) thanks to the delivery of buses pending electronic components. Order intake came in at €~1.22 Bn (incl. € 450 M worth of contracts pending signing; € 1.14 Bn in 1Q’22). The company did not provide a breakdown of debt or cash generation. CAF reiterates its targets for 2023 (with sales at the high end of the range) and 2026. We highlight the fact that margins remain poor, although this was expected to some extent and is largely offset with the positive outlook provided by the company for the remainder of the year, both in sales and in margins. While this set of results should not have a significant impact on the share price, although in any case with some positive bias thanks to the favourable message from the recovery of deliveries in Solaris. Over Friday’s session, the stock outperformed the IBEX by +1.5%. The stock has fallen by -5% YTD (vs. IBEX).
REAL ESTATE SECTOR
The Spanish president, Pedro Sánchez, would have announced last weekend his intention of approving an aid plan for people under the age of 35 years to make easier the purchase of homes. The aid plan would include a collateral granted by the Spanish Credit Institute for “up to 20% of the mortgage amount” (it is not clear the LTV reference to be used for the calculation of this 20% limit or whether it refers to 20% on the total property value). In order to be eligible to this collateral there would be an income limit: up to € 37,800 per person or the double if the buyers are two people. In the case of families with children there would be no age limit. The plan could be approved at the Cabinet meeting to be held tomorrow. In the absence of the details of this measure, if it is approved in the end, we believe that this news would be positive for the Spanish real estate sector although with an impact difficult to assess. The aid plan would make easier the purchase of homes for many potential buyers that even though having the recurring revenues to cover the mortgage interests and payment lack sufficient savings for the initial payment (around 30% of the home value when taxes are included for an 80% LTV). In another countries where similar measures have been adopted (such as Help to Buy in the UK), the impact on sales of new homes has been clearly positive. Given the limit to family income to be eligible for this aid plan, and if not adjusted depending on the geographic areas, the measure would benefit those home development groups with a portfolio of lower unit value (cheaper homes). In our coverage universe, the value of HOME’s and MVC’s portfolios is lower than AEDAS’s (with a higher buyer profile).
Underlyings
Almirall SA
Almirall is engaged in the acquisition, manufacture, storage, sale and mediation in the sale of pharmaceutical specialties and products and all manner of raw materials used to prepare pharmaceutical specialties and products. Also, Co. acquires, manufactures, storages, sales and mediates in the sale of cosmetics, chemical, biotechnological and diagnostic products for human, veterinary, agrochemical and food-industry use, as well as all manner of utensils, complements and accessories for the chemical, pharmaceutical and clinical industries. In addition, Co. is engaged in the acquisition, sale, lease, subdivision and development of land lots, land and properties of all kinds.
Construcciones Y Auxiliar De Ferrocarriles, S.A.
Fluidra S.A.
Fluidra is engaged in the manufacture and commercialization of accessories and specific products for swimming pools, irrigation, and water treatment and purification systems.
Provider
Sabadell
Research Department
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