IBERIAN DAILY 20 NOVEMBER (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: ALMIRALL, CELLNEX, ENDESA, FERROVIAL, IBERDROLA, TALGO, UNICAJA.A recovery week
European stock markets benefited from the debt curve tightening, hitting key medium-term resistance levels, with the Ibex35 returning to the 9,700-point level. However, the good data released in the US real estate sector last Friday halted the tightening. Thus, in the STOXX 600 Basic Resources and Real Estate were the best performers last week, whereas Household ended with losses and Food saw the lowest gains. On the macro side, in the euro zone, October’s final inflation confirmed the 2.9% YoY data and the core inflation at 4.2%. From the ECB, the more hawkish members such as R. Holzmann or J. Nagel ruled out cutting rates before the 2H’24. In the US, October’s housing starts and construction licences rose unexpectedly. In China, the PBOC kept the 1&5Y interest rates unchanged at 3.45% and 4.2%, respectively.
What we expect for today
European stock markets would open with some bearish bias although with Energy and Basic Resources benefiting from the hike in raw material prices. Currently, S&P futures are down -0.17% (the S&P 500 ended +0.12% higher vs. the European closing bell). Volatility in the US fell (VIX 13.80). Asian stock markets are mixed (China’s CSI 300 +0.22%, Japan’s Nikkei -0.60%).
Today no relevant data will be released. In US business results, Keysight and Agilent, among others, will release their earnings.
COMPANY NEWS
ENDESA, BUY
The International Arbitration Court of the International Chamber of Commerce has notified Endesa Generación the arbitral award for the price revision of a long-term liquated natural gas procurement contract. As a result, ELE will have to pay US$ 570 M (€ 530 M /2.5% market cap) to the opposing party for a retroactive adjustment, registering an accounting impact on results before taxes for the same amount. A Board meeting is expected to be held on the 22nd of November where the modification of the 2023-26 dividend policy will be proposed (already expected), and if approved, it will determine that the impact from the arbitral award will have no consequences on the dividend amount for 2023. Negative news that will make it difficult for the company to meet its 2023 guidance (€ 1.4-1.5 Bn Net Profit). In any case, the dividend policy for 2023 should not be affected according to the statements made by the company. Note that on the 23rd of November ELE will revise its 2024-26 Strategic plan where the new guidance and the medium-term dividend policy will be unveiled. We foresee € 1.00/sh. as DPS’23 (that should remain unchanged) and 2.5x NFD/EBITDA, which should not entail a hurdle to maintain high dividends from 2024 (we foresee € 1.20/sh. in the long-term).
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.
Cellnex Telecom SA is a Spain-based company engaged in the wireless telecommunications (telecom) business. Its activities are divided into three segments: Broadcasting infrastructure, Telecom site rental, as well as Network services and other. The Broadcasting infrastructure division comprises distribution and transmission of television (TV) and frequency modulation (FM) radio signals, operation and maintenance (O&M) of radio broadcasting network, as well as over-the-top (OTT) radio services, among others. The Telecom site rental division provides access to wireless infrastructure, primarily through infrastructure hosting and telecom equipment co-location, mainly for mobile network operators and other wireless and broadband telecom network operators. The Network services and other division offers connectivity services for a variety of telecom operators and radio communication, among others. The Company also develops 5th generation mobile networks (5G) through Alticom BV.
Endesa is engaged in the production, transmission, distribution, and supply of electricity, through hydroelectric, fossil fuel, and nuclear generation. Co. is also engaged in the mining of coal for use in its fossil-fuel electric plants; mining research; land restoration, and environmental monitoring and control.
Ferrovial is a transportation company based in Spain. Co. is engaged in operations in the transportation sector. Co. specializes in the design, construction, management, administration and maintenance of transport infrastructures. Co.'s services range also includes the maintenance of parking lots, and land-, sea- and air-based transport networks. Co. is also engaged in the promotion and operation of short-stay parking lots, parking regulation and management services and promotion and sale of residents' parking.
Iberdrola is a holding company. Through its subsidiaries, Co. operates in four segments: network business, which includes all the energy transmission and distribution activities, and other regulated activity originated in Spain, the U.K., the U.S. and Brazil; deregulated business, which includes electricity generation and sales businesses as well as gas trading and storage businesses carried on by Co. in Spain, Portugal, the U.K. and North America; renewable business, with activities related to renewable energies in Spain, the U.K., the U.S. and the rest of the world; and other businesses, including the engineering and construction businesses and the non-power businesses.
Talgo is engaged in designing, manufacturing, repairing and maintaining the railway rolling stock, as well as the manufacturing, assembling, repairing and maintaining the engines, machinery and parts of the railway systems. Co. has an industrial presence in seven countries: Spain, Germany, Kazakhstan, Uzbekistan, Russia, Saudi Arabia and U.S.A. Co. has an active fleet in Europe, Asia and North America that comprises of 94 high-speed trains and more than 1,400 Talgo tilting passenger cars. Also, Co. purchases, redesigns, constructs, leases and sells all types of real estate.
Unicaja Banco SA is a Spain-based financial institution (the Bank) engaged in the banking sector. The Bank offers services to individual and business customers. Its products and services range includes current and savings accounts, debit and credit cards, consumer and commercial loans, real estate credit, securities brokerage, funds management, leasing, factoring, pension plans, life and non-life insurance, international trade financing, money transfer, as well as treasury, among others. The Bank operates a number of branches in Spain and Morocco. The Bank is controlled by Fundacion Bancaria Unicaja.
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