EUR 100.00 For Business Accounts Only

IBERIAN DAILY 17 JUNE (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: AMADEUS, FERROVIAL, GRIFOLS, MELIÁ HOTELS, SOLARIA.


Political risk drags down markets
European stock markets suffered the possible consequences from European tariffs on Chinese electric vehicles and the political uncertainty following the results of the European parliamentary elections, plus the call for a snap election in France, leading the CAC to fall more than -5% and where the risk premium rose to 77bps (a high since 2017). Most sectors (18/20) in the STOXX 600 ended the week in the red, with only Household Goods and Pharma escaping losses, whereas Banks and Autos fell the most. On the macro side, from the ECB, C. Lagarde was confident the deflation process is on track and that the target will be met in 2H’25, also stating she does not expect measures to stem French sovereign debt sales. In France, the minister of economy, B. Le Maire, warned of the risk of a financial crisis if the far right wins the early election. In the US, U. Michigan consumer confidence for June was disappointing, falling unexpectedly, while 1Y and 5Y inflation expectations remained unchanged above 3.0%. In China, industrial output and investments for May slowed their growth more than expected, while retail sales sped up their annual growth more than expected. On another note, housing prices fell more steeply, -3.9% YoY vs. the previous -3.1%.
What we expect for today
Stock markets would open with gains > +0.5% after the strong overselling seen last week. Currently, S&P futures are down -0.05% (the S&P 500 ended +0.26% higher vs. the European closing bell). Asian stock markets are falling (China’s CSI 300 -0.25%, Japan’s Nikkei -2.16%).
Today in the euro zone we will learn the 1Q’24 labour costs and in the US June’s Empire manufacturing index.

COMPANY NEWS

AMADEUS, OVERWEIGHT
The company has just released the presentation of its Investors Day that will be held tomorrow (18/06) in London. Highlights: (i) Revenue growth. Over the 2023/26 period, the company expects a +9%/+12.5% CAGR’23/26 (+8.2% BS(e) and +9.4% consensus). By divisions: i) Air Distribution: +6%/+9% CAGR’23/26 (vs. +4.6% BS(e); ii) Air IT Solutions: 10%/14% CAGR’23/26 vs. 10.5% BS(e); iii) Hospitality & Other: 15%/18% CAGR’23/26 (vs. +13.2% BS(e)); (ii) The group expects the EBITDA margin to remain stable (vs. +230bps BS(e) and +200bps consensus), with EBIT expansion; (iii) Capex: 11%/13% of revenues with a decreasing trend (vs. 11% BS(e)). (iv) FCF: Over the period AMS expects accumulated FCF of around € 3.9-4.2 Bn (vs. € 4.07 Bn BS(e)). (v) Shareholder remuneration policy: The company reiterated the target of a 40%/50% payout, complemented by extraordinary shareholder remuneration (unspecified). With the initial reading, and awaiting details from tomorrow’s presentation, we welcome the company’s outlook on revenue growth, which for the group is clearly above our estimates, even in the low end of the range. On the negative side, the lack of expansion in the margin, hit by the cloud migration process, contrasts with the expansion we expected. With all this in mind, given that the main uncertainty lies in revenue growth due to the impact from disintermediation, we would expect this news to be well received.

FERROVIAL, OVERWEIGHT
On Friday the company announced that, with the aim of complying with the tag-along right, Ardian and PIF have made a new offer to acquire a 37.62% stake in the parent company of Heathrow Airport Holdings (vs. the previous 25%) for £ 3.26 Bn (€~3.88 Bn; vs. the previous € 2.37 Bn). This offer has been accepted by FER and other shareholders that will sell their shares prorated, and thus FER will keep a 5.25% stake in the company (that is, it will sell ~19.75% of Heathrow, ~80% of its stake). This offer is subject to meeting the rights of first offer and full tag-along rights, which could be exercised by the other shareholders in Heathrow, as well as other regulatory conditions. Although the scope of the sale has been reduced and the new price is -8.5% lower than the initial offer, the impact on our T.P. is very small (-0.8% BS(e)), and we believe this scenario is better for FER than if it were to hold on to its entire stake in the asset. Thus, the cash FER will receive (€~2.04 Bn; ~31% of NFD) will allow the company to easily meet its investment commitments over the coming months (we highlight the acquisition of IRB Trust for € 740 M and the contributions from NTO in 2024 totaling €~500 M BS(e)) and would leave leeway to eventually improve the dividend (€ 0.75/sh.; ~2.0% yield). Separately, we think this new offer is more likely to be successful than the previous one, given that the tag-along right for the rest of the shareholders is less attractive now that the price has been lowered.