IBERIAN DAILY 29 FEBRUARY + 4Q’23 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: AMADEUS, MERLIN, SOLARIA, TALGO, VIDRALA.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 4Q’23 results to be released over the coming days in Spain.
Results hurt the IBEX
It was a session of moderate drops in most European indices (except the German DAX), with the IBEX leading the drops after the release of several companies’ results. In the STOXX 600, most sectors closed with losses, led by Household Goods and Real Estate, whereas Autos, Industrials and Financials rose the most. On the macro side, in the euro zone February’s economic confidence index fell more than expected due to services, retail and construction. In the US, the second reading of the 4Q’23 GDP was cut by -0.1% to 3.2% QoQ, despite the more dynamic private consumption. On another note, Congress reached an agreement to avoid a possible shutdown on Saturday, setting a new deadline on 22 March. In Japan, January’s retail sales rose more than expected, while industrial output contracted more than expected. Meanwhile, H. Takata, member of the BoJ, admitted the time has come to begin to reverse the monetary policy. In US business results, Paramount beat expectations, Salesforce was in line and Snowflake disappointed with its sales guidance.
What we expect for today
European stock markets would open flat with some bearish bias. Currently, S&P futures are up +0.08% (the S&P 500 ended -0.09% lower vs. the European closing bell). Asian stock markets are mixed (China’s CSI 300 +1.36%, Japan’s Nikkei -0.11%).
Today in Spain we will learn February’s inflation, in Germany January’s retail sales, in the US the core consumption deflator, January’s pending home sales and weekly jobless claims and in Brazil January’s unemployment rate.
COMPANY NEWS
MERLIN. Good 4Q’23 Results although the cashflow guidance is below our expectations. BUY.
Good 4Q’23 Results and in line with expectations: Rental revenues’23 +5% vs. +6% BS(e) and +6% consensus; FFO -2% vs. -1% BS(e) and -2% consensus. LfL rents grow+7% (+8% 9M’23) thanks to CPI and the higher occupancy. NTA came in at € 15.08 (-4% vs. Dec’23) with a -3% drop in LfL GAV (+42bps yield). The appraisal remains positive thanks to rents and new developments. The FFO guidance is slightly disappointing: € 0.59 and 0.68/sh. in 2024/25 (vs. BS(e) € 0.62/0.70), as data centres take time to generate cashflow. This factor of the results could have a negative impact on the market. The share price is sliding -12% YtD.
SOLARIA, BUY.
Before yesterday’s closing bell the company released its 4Q’23 results, which beat expectations in sales (+24.1% vs. +11.9% BS(e) and +4.9% consensus) and were practically in line in EBITDA (+21.5% vs. +23.2% BS(e) and +19.0% consensus), with disappointing margins that came in below expectations (80% vs. 90% BS(e) and 93% consensus). SLR did not reach the target’23 for installed capacity (2,000 MW, 1,658 MW already installed), as in 4Q’23 no MW were put on stream. The company raised the projects under construction figure and did not update the capacity guidance for 2025 of 6,200 MW (vs. ~3,700 MW BS(e)). Capex/MW remains at € 0.375 M (in line with BS(e)). The company cut its EBITDA’24-25 guidance by around -7% vs. the previous one, due mainly to the reintroduction of the tax on generation (7% over energy sales) and assumes captured pool prices of €~65/MWh (vs. €~75 BS(e)). SLR maintains its mix target of 70%/30% PPAs and merchant contracts, although it has mentioned that this could change, with PPAs taking on a greater proportion if conditions are right.. The stock reacted very positively to the results, rising around +7% intraday since the release, with the Capex/MW being one of the keys, as it allows the company to continue to obtain double-digit returns against a backdrop of falling pool prices. We would take advantage of the recent drops to BUY. T.P. € 20.40/sh. (upside +50.44%).
TALGO. SELL
Released FY2023 Results at yesterday’s closing bell far above expectations in sales and better in adjusted EBITDA although worse in NFD and Net Profit. The order backlog hit record high levels of € 4.22 Bn after the € 2.13 Bn order intake in 2023. Sales grew +39% vs. 2022, much better than expected (+17% BS(e) and +25% consensus). Adjusted EBITDA came in at € 82.6 M, above expectations (€ 78 M BS(e) and € 80 M consensus), with a 12.7% annual margin (vs. 11.2% in 2022). NFD totalled € 240.6 M, above expectations (€ 229 M BS(e) and 201 consensus), due to higher working capital consumption, meaning 2.9x NFD/EBITDA’23. The company unveiled its 2024 guidance: (i) adjusted EBITDA margin ’24 ~12.5% (vs. 12.4% BS(e) and 13.3% consensus), (ii) revenues 2023 and 2024 € ~ 618 M on average (leaving 2024 sales at around € 584 M (vs. € 648 M BS(e) and 638 consensus), (iii) the BtB target in 2024 was set at >1.0x and (iv) the NFD/ adjusted EBITDA at around 3x (vs. 1.8x BS(e) and 2.2x consensus).We believe that the possible TOB from Magyar could overshadow the impact from there results.
VIDRALA. Slightly better results than expected in both revenues and EBITDA. BUY.
Sales: € 1.56 Bn (+16% vs. +15% BS(e)); EBITDA: € 394 M (+46% vs. +45% BS(e)). The sharp growth in these annual results is due to the easily-beaten comparison, price increases, falling energy costs, scope of consolidation and improved efficiency. In 4Q’23 on a standalone basis we can see, as expected, a significant drop in margins due to a more difficult comparison. NFD closed at € 472 M (vs. € 167 M in Dec’22), rising to 1.1x EBITDA due to the acquisitions made. We do not expect a significant impact from this set of results.
Amadeus is a transaction processor for the global travel and tourism industry. Co. provides transaction processing power and technology solutions to both travel providers (including full service carriers and low-cost airlines, hotels, rail operators, cruise and ferry operators, car rental companies and tour operators) and travel agencies (both online and offline). Co. acts both as a worldwide network connecting travel providers and travel agencies through a processing platform for the distribution of travel products and services (through the Distribution business), and as a provider of a portfolio of IT solutions which automate certain business processes (through the IT solutions business).
Merlin Properties SOCIMI SA is a Spain-based company engaged in the operation of a real estate investment trust (REIT). The Company focuses on the acquisition, management and rental of commercial properties located in the Iberian Peninsula, primarily in Spain. The Company's activities are divided into the following segments: Office buildings, operating a portfolio of office space; High-street retail, engaged in leasing retail stores; Shopping centers, engaged in managing department stores; Logistics, operating logistics warehouses and distribution centers, and Others. The Company's other activities include property management services rendered to third parties.
Solaria Energia y Medio Ambiente manufactures both solar and thermal cells and panels, rolls out turnkey projects for large installations, operates solar plants and generates electricity through its owned plants.
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.
Vidrala SA is a Spain-based company principally engaged in the glass industry. The Company operates through two segments: Spain and European Union. The Company's activities include the production, distribution and sale of glass bottles and containers used in the food and beverages industries. The Company conducts its own research and development (R&D) operations. It operates production plants and melting furnaces located in such countries, as Portugal, France, Belgium and Italy. The Company owns such subsidiaries as Crisnova Vidrio SA, Inverbeira Sociedad de Promocion de Empresas SA, Gallo Vidro SA, Castellar Vidrio SA, Corsico Vetro SRL, MD Verre SA, Omega Immobiliere et Financiere SA, Investverre SA and CD Verre SA.
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