EUR 100.00 For Business Accounts Only

IBERIAN DAILY 12 AUGUST (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ALMIRALL, CAIXABANK, CELLNEX, MAPFRE.

Caution remains due to risk of US recession in a highly volatile week
After the week started out with sharp drops (in view of fears of a recession stemming from the US employment data the week before and the rate hike in Japan), the stock markets began to recover. However, towards the end of the week doubts returned, and on Friday, after rising slightly through mid-session, European stock markets lost almost all the ground gained during the afternoon, ending flat. Lacking macro references and business results, the fears of a recession in the US set the pace in a typical summer session with very little trading volume. In Europe the best-performing sectors during the week was Technology, with Autos and Utilities being the worst performers. On the macro side, in Germany July’s final inflation confirmed the preliminary data of 2.6%. In the US, M. Bowman (Fed) reiterated that there are still risks in inflation, and it may be too early to begin to lower rates (futures continue to price in -100bps of cuts in 2024). In Mexico, June’s industrial output contracted more than expected. In Brazil, July’s inflation rose slightly (in line with expectations). In US business results, Evergy was in line.
What we expect for today
Stock markets would open gains of around +0.5%. Currently, S&P futures are up +0.5% (the S&P 500 ended up +0.4% vs. the European closing bell). Volatility on the S&P500 (VIX) continued to fall to 20, closer to the average from the past few months. Asian markets are flat (Japan’s Nikkei closed and China’s CSI 300 flat).
Today in US business results, only Home Depot will release its results.

COMPANY NEWS

CELLNEX, OVERWEIGHT
On Friday the company announced the sale to a consortium (Vauban Infra. and EDF) of 100% of the Austrian business for an EV of € 803 M, including a deferred unconditional payment of € 272 M in Dec’28. The price is in line with market valuations and means an EV/EBITDA’23 (post-leases) of ~35x BS(e) (vs. 19x CLNX). The Austria portfolio accounts for ~2% of sales and ~3.8% of NFD (2.5% excl. the deferred payment).
In the communique, CLNX confirmed that once it has obtained the regulatory authorisations and executed the sale, it will “reevaluate its capital allocation priorities”, which we recall are focused on two pillars: reducing leverage and improving shareholder remuneration.
We recall that CLNX already mentioned in its 2Q’24 results that the sale of the Austrian business could be imminent, and in fact it made a € 265 M provision for the subsidiary. The company also confirmed that once the sales of the Irish (approval expected in late 2024 or early 2025) and Austrian businesses, and after ensuring that its IG rating will be maintained, it will notify the market of the increase to shareholder remuneration (and the manner of increasing it, stating that given the current share price, a share buyback would make sense).
Despite the fact that the news was expected and that the stock was already pricing it in (+3.8% since 31/07 vs. -3.8% IBEX), the reception was warm, and CLNX ended Friday with a +2.7% rise (+2% vs. IBEX) due to the bigger commitment the company has shown in moving forward the shareholder remuneration increase, and due to the high multiples paid in the deals, showing the company is undervalued.