EUR 100.00 For Business Accounts Only

IBERIAN DAILY 07 JULY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: AMADEUS, ELECTRICITY SECTOR.

US hits new highs
It was a positive week for stock markets at both sides of the Atlantic, marked by the continued depreciation of the dollar vs. the euro, the good job data released in the US and the approval of D. Trump’s budget law. In the STOXX 600, the best-performing sectors last week were Consumer Goods and Travel&Leisure, whereas Real Estate and Media suffered the biggest losses. On the macro side, in Germany, May’s factory orders dropped more than expected. In Spain, May’s industrial output climbed more than expected. In the OPEC+ meeting yesterday, the organisation decided to ramp up crude production starting in August to 548,000 b/d (vs. 411,000 in May, June and July and 138,000 in April), thus returning most of the 2.2 M b/d of cuts that had been imposed since 2022. On the trade front, Donald Trump threatened to place an extra 10% tariff on BRICS countries and any other countries that follow their “anti-American” policies, while Scott Bessent announced extensions for countries currently negotiating with the US. Separately, China imposed reciprocal restrictions on medical equipment acquisitions for countries headquartered in the EU.
What we expect for today
European stock markets would open with a slightly positive slant but with the energy sector dragged down by the drop in Brent crude. Currently, S&P futures are down -0.44% (the S&P 500 was closed last Friday for holiday). Asian markets are sliding (China’s CSI 300 -0.52% and Japan’s Nikkei -0.60%).
Today in the euro zone we will learn July’s Sentix index and May’s retail sales, in Germany May’s industrial output.




COMPANY NEWS

ELECTRICITY SECTOR. The CNMC sets the remuneration rate for transmission system at 6.46%
The CNMC (Spanish Competition Authorities) has made public the draft of the financial remuneration rate for the new framework’26-31 of electricity transportation and transmission system at 6.46% vs. 5.58% previously, in line with that initially expected but far from that requested by the sector (~7/7.5%). Negative news particularly for those companies with higher exposure to the domestic regulated business (Redeia, 81% EBITDA’25e) and to the financial remuneration rate (Endesa, 36% EBITDA’25e). However, we will have to wait for the final financial remuneration after the allegation period and for the rest of the methodology in the electricity transportation and distribution system, all of this should be ready by the end of the year and could eventually represent some improvement in the total remuneration to around 6.8%-7% (in line with our estimates and some utilities except Endesa, ~7.5%). With this financial remuneration rate, with all things remaining equal, Endesa would see the main impact on valuation (-12% T.P.) and Redeia to a lesser extent (-5% T.P.).