IBERIAN DAILY 01 OCTOBER (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: APPLUS, ARCELOR MITTAL, LIBERBANK, MERLIN PROPERTIES, SACYR, TELEFÓNICA, UNICAJA.MARKETS YESTERDAY AND TODAY
US macro data turns market around
Mixed performances by European stock markets, and positive in the US where the solid macro data (ADP Employment, Chicago PMI and pending home sales rose more than expected) boosted cyclical growth sectors such as consumer goods and technology. Meanwhile, Europe is being hit by a second wave of Covid-19, with countries like Germany, the UK and Spain readying new restrictions. Thus, in the Euro STOXX Energy and Real Estate led the gains, with Consumer Goods and Basic Materials falling the most. In Germany, the number of unemployed in September decreased less than expected. From the ECB, Lagarde suggested the ECB will align its strategy with the Fed’s. In Spain, the Health Ministry would order a selective lockdown in Madrid that the region would not admit. Meanwhile, the IMF warned about a new drop in GDP given the outbreaks although it kept its GDP’20 forecast for Spain at -12.8% while it raised that of 2021 to 7.2% given the European funds. In the US, the Fed would extend the share buyback prohibition and dividend payment restrictions until 2021. In Japan, Tankan’s manufacturing and non-manufacturing index recovered less than expected in the 3Q.
What we expect for today
European stock markets would open with slight gains that should increase thanks to growth sectors fuelled by the good evolution of negotiations for the fiscal package in the US that could reach 1.5-2.0 tr including a new check for families. Currently, S&P futures are up +0.45% (the S&P 500 ended down -0.5% vs. its price at the closing bell in Europe). Volatility in the US increased (VIX 26.37). Asian markets are rising (Japan +0.2% and Hong Kong +0.8%).
Today in the euro zone we will learn August’s unemployment rate and September’s final manufacturing PMI; in the US weekly jobless claims, August’s personal outlays, September’s manufacturing ISM and August’s construction spending; in Brazil September’s manufacturing PMI. Debt auctions: Spain (€ 4 Bn in bonds due 2025, 2030, 2066 and I/L 2033) and France (€ 11.5 Bn in bonds due 2030, 2034, 2040 and 2050).
COMPANY NEWS
SACYR. We change our recommendation to BUY following the stock’s recent drop.
After the stock’s sharp drop in the past three sessions (-25%, -26% vs. IBEX 35), our T.P. yields 33% upside. We believe that the market largely prices in the losses stemming from the arbitral award, as the company’s value on the stock market has been reduced by €~300 M in the last three sessions, an amount that exceeds the cash outflows expected as a result of the arbitral award (€ 86 M plus another € 29 M in contingencies) and that should cover a lower likelihood of receiving positive rulings going forward. Let’s forget about Panama. Going forward, the focus will be on the Concessions division (85% of EV), which has a brilliant outlook in terms of creation of value as new assets are put on stream, and as long as interest rates remain at their lows.
Applus Services SA is a Spain-based company that provides inspection, testing and quality assurance services. The Company's activities are divided into five segments: Applus+ RTD, which provides non-destructive testing services mainly to the oil industry; Applus+ Velosi-Norcontrol, which offers solutions for technical assistance, supervision, inspection, quality control testing, certification and consulting services mainly to industrial, electrical, oil and telecommunications facilities; Applus+ Laboratories, which focuses on laboratory testing, system certification and product development services within aerospace, industrial and consumer goods sectors, among others; Applus+ Automotive, which is responsible for the vehicle roadworthiness testing services, and Applus+ IDIADA, which delivers design, engineering, testing and certification services mainly to car manufacturers. The Company operates in Europe, Africa, Asia and the Americas.
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.
Sacyr is the parent company of a group engaged in the acquisition, development and construction of urban properties for their subsequent rental or resale. Co. primarily leases and sells office buildings and complexes, housing units, and shopping centers. Co. is also engaged in the operation of urban car parking facilities. Co. offers services related to the real estate industry such as technical assistance in energy savings, inventory management, architectural design, telecommunications management, property maintenance, as well as gardening and landscaping. Co. also provides consulting services in the real estate fund management sector.
Telefonica is engaged in the provision of public or private telecommunications services, including ancillary or complementary telecommunications services or related services. Co.'s fixed business includes: traditional fixed telecommunication services, Internet and broadband multimedia services, data and business-aplications services, and wholesale services for telecommunication operators. Co. also provides a range of mobile and related services and products to consumer and business customers, including mobile voice services, value added services, mobile data and Internet services, wholesale services, corporate services, roaming, fixed wireless, and, trunking and paging.
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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