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IBERIAN DAILY 09 MAY + 1Q’23 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACCIONA ENERGIA, ALMIRALL, AMADEUS, ENDESA, GRIFOLS, IBERDROLA, NH HOTELES.

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.

European stocks start the week with gains
The European stock markets posted slight gains on Monday despite rate hikes across the debt curve. Within the Euro STOXX, cyclical sectors such as Basic Resources and Banks were the best performers, whereas Insurance and Pharma saw the biggest drops. On the macro side, in the Euro zone, May’s SENTIX index contracted unexpectedly, falling deeper in negative territory. In Germany, March’s industrial output contracted more than expected. In the US, the Fed’s financial stability report warned that the recent banking crisis will weigh on credit conditions going forward, whereas the latest bank survey reflected additional tightening in credit conditions and a deterioration in demand. In China, exports slowed less than expected in April, but imports contracted more than expected. In Japan, household spending contracted unexpectedly in March. In US business results, Tyson Foods disappointed, PayPal came in better.
What we expect for today
European stock markets would open with gains of +0.2% that would ease throughout the session. Currently, S&P futures are down -0.05% (the S&P 500 ended unchanged vs. the European closing bell). Volatility in the US dropped (VIX 16.55). Asian stock markets are climbing (China’s CSI 300 +0.59%, Japan’s Nikkei +0.99%).
Today we will learn in Mexico April’s inflation data. In US business results, Duke Energy, Fox and Electronic Arts, among others, will release their earnings. In debt auctions: Germany (€ 5 Bn in bonds due 2028).


COMPANY NEWS

AMADEUS. Better 1Q’23 Results in Sales and EBITDA with good debt performance. BUY.
1Q’23 Results came in better than expected in Sales, falling -6.7% vs. 1Q’19 (-8.9% BS(e) and -8.6% consensus) due to IT Solutions (32% sales). EBITDA also beat expectations (€ 510 M vs. € 493 M BS(e), and vs. € 491 M consensus), underpinned by a higher margin of 38.9% (vs. 38.5% BS(e)), with rises by +660bps vs. 1Q’22. We also stress the good debt performance, coming in at 1.1x NFD/EBITDA, already at the bottom end of the target range (1/1.5x company). With this in mind, robust results with a good margin performance that should lead to a positive market reaction today after climbing +15% vs. IBEX YtD. We maintain our positive stance and will upgrade our T.P. >€ 70.00/sh. (>+12% upside).

ENDESA. Good 1Q’23 results beating expectations, but guidance’23 reiterated. We expect a positive share price reaction. BUY.
The company has released 1Q’23 results beating our expectations and those of the consensus. Adjusted EBITDA came in at € 1.46 Bn vs. € 1.39 Bn BS(e) and € 1.4 Bn consensus. The improvement in 1Q’23 EBITDA (+60% vs. 1Q’22) was driven by the good performance of the Conventional Gx and Renewables businesses, as well as the normalisation of the commercialisation margin (liberalised electricity margin of € 675 M and gas margin of € 131 M). Despite this good set of results, the company reiterates its 2023 guidance (between €~4.4 Bn and € 4.7 Bn of EBITDA and between € 1.4 Bn and € 1.5 Bn of Net Profit) and DPS’22 of € 1.585/sh. (~8% yield). Conference call at 10:00 (CET).

IBE could acquire RWE, which we see as unlikely. BUY.
According to the press, (Ok Diario), IBE would be analysing the acquisition of Germany’s electricity group RWE through a combination of cash and share exchange (€ 31 Bn market cap vs. IBE’s € 76 Bn, € 33 Bn EV vs. IBE’s € 134 Bn). According to this news, a spokesman from IBE denied the company was considering this acquisition. The reason behind the deal would be that Germany needs to develop renewable energies following the shutdown of its nuclear power plants to reduce its dependence on Russia. RWE does not have a core shareholding group (Qatar holds around 7%). We believe that this deal would not make much strategic sense, generating very few synergies (even bearing in mind that RWE is trading at a significant discount: 5.4x EV/EBITDA’23 vs. IBE’s 9.9x), and thus we would rule out this option.

NH HOTELES, SELL
Yesterday, Minor International (MINT), NHH’s largest shareholder with a 94% stake, announced its intention to purchase additional NHH shares, over a 30-day period, at a price not exceeding € 4.50/sh. (the maximum/minimum share limit has not been disclosed), meaning a +24% premium vs. the current trading levels. Once the purchase period is over, MINT has no intention of acquiring any more shares on the market. NHH’s stock is still suspended from trading pending clarification on the part of the company of certain doubts with regard to this announcement (possible delisting TOB? Maximum/minimum share limit? Etc.), but we understand that once the CNMV lifts the suspension, the stock should trade at the maximum price offered by MINT (€ 4.50/sh.), and thus, at this trading level, we change our recommendation to SELL, as this trading level exceeds our T.P. of € 4.20/sh. by +7%.