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IBERIAN DAILY 10 NOVEMBER + 3Q’23 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: AMADEUS, CAF, COLONIAL, MERLIN.

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 3Q’23 results to be released over the coming days in Spain.

Bullish stock markets amid expectations of peaking interest rates
European stock markets saw strong gains, fuelled by expectations that interest rates would have peaked but J. Powell’s speech and the weak auction of the US 30Ydebt dragged down the US market. In the STOXX 600, Chemicals and Industrials (driven by Adyen, which climbed by as much as +40% at yesterday’s session after raising its targets) led gains vs. the drops of Travel&Leisure (near -2%, dragged down by Flutter, which slid around -10% after the disappointing results). On the macro side, in the US J. Powell stressed the higher for longer message, leaving the door open to new rate rises. In the euro zone, the Eurogroup and mainly Germany-France would be about to reach an agreement on the new tax rules that would come into force in 2024. In Mexico, inflation moderated in line with expectations and the Central Bank, as expected, kept the benchmark rate unchanged at 11.25%.
What we expect for today
European stock markets would open with drops >-0.5%. Currently, S&P futures are up +0.10% (the S&P 500 ended -0.91% lower vs. the European closing bell). Volatility in the US rose (VIX 15.29). Asian stock markets are sliding (China’s CSI 300 -0.70%, Japan’s Nikkei -0.25%).
Today in the US we will learn the University of Michigan index for November, in the UK October’s inflation and the 3Q’23 GDP, in Brazil October’s inflation and in Mexico September’s industrial production. No business results will be released today in the US.


COMPANY NEWS

COLONIAL, BUY
Total rents show +7% growth (+8% LfL) thanks mainly to indexation and improvements to occupancy rates. The company has slightly raised the recurring EPS’23 guidance (which was conservative) from € 0.30/sh. to € 0.31/sh. (vs. € 0.30/sh. BS(e)). We do not expect this revision to have a relevant market impact.
We believe the results are good and should not hurt the share price, which has fallen -2% since the year began (-21% vs. IBEX and -2% vs. EPRA sector), although we also warned that for more than a year there has been a clear “disconnect” between the company’s operating performance and what the market is pricing in. Thus, the share price could continue to move to the beat of macroeconomic factors (GDP, inflation, and especially interest rates).