IBERIAN DAILY 24 NOVEMBER (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: APPLUS, FERROVIAL, OHL, REPSOL, TÉCNICAS REUNIDAS.MARKETS YESTERDAY AND TODAY
Market consolidation
Following the bullish opening of the US market and November’s mixed PMI data in the Euro zone (with the Services PMI contracting more than expected and the Manufacturing PMI slowing less than expected), the Euro zone’s indices ended with slight increases after it was known that AstraZeneca’s vaccine is less effective than Pfizer’s or Moderna’s, but cheaper and easier to store. Thus, within the Euro STOXX, Energy and Banks were among the sectors that rose the most, vs. Household Goods and Telecoms, which were the worst relative performers. On the macro side, in the US, the Chicago Fed activity index climbed above expectations. Separately, J. Yellen could be nominated by Biden for Treasury Secretary.
What we expect for today
Stock markets would open with gains of around +0.5%, underpinned by the Trump Administration’s willingness to cooperate with Biden’s team in the transfer of power and the vaccination schemes outlined in different countries. Currently, S&P futures are up +0.7% (the S&P 500 closed up +0.8% vs. its price at the closing bell in Europe). Volatility in the US decreased (VIX 22.66). Asian markets are trading with mixed results (CSI 300 -0.7%, Japan +2.5%).
Today we will learn in Germany November’s IFO and the final 3Q’20 GDP data, and in the US, the Richmond Manufacturing index. In debt auctions: Netherlands (€ 2.5 Bn in bonds due 2027).
COMPANY NEWS
OHL. Sells its stake in Toledo Hospital. SELL.
Yesterday the company announced the sale of its 33.34% stake in the new Toledo Hospital, as well as 100% of the share capital in Mantohledo for € 76.1 M (32% market cap; 37% NFD; ~4x net book value). Positive news, as the price is above our valuation of €~16 M (~90% NV), and it will allow debt to be lowered to ~1.7x NFD/EBITDA (vs. the previous 2.6x). In any event, our T.P. adjusted for this deal would stand at € 0.81/sh. (+35% vs. previous), still lacking enough upside (-3.4%) to change our recommendation, which we hold at SELL.
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.
Ferrovial is a transportation company based in Spain. Co. is engaged in operations in the transportation sector. Co. specializes in the design, construction, management, administration and maintenance of transport infrastructures. Co.'s services range also includes the maintenance of parking lots, and land-, sea- and air-based transport networks. Co. is also engaged in the promotion and operation of short-stay parking lots, parking regulation and management services and promotion and sale of residents' parking.
Obrascon Huarte Lain is an international concession and construction groups based in Spain. Co. maintains significant operations in 30 countries across all five continents. Co. is engaged in hospital and railway construction, transport infrastructure concessions, oil and gas, energy, solids handling and fire protection systems and international contracts. Co.'s operations are organized along four divisions: OHL Concesiones, OHL Construccion, OHL Industrial y OHL Desarrollos. Co. is also engaged in real state project developments of mixed use managed by the international hotel chains.
Repsol is an oil and gas company. Co. is engaged in all the activities relating to the oil and gas industry, including exploration, development and production of crude oil and natural gas, transportation of oil products, liquefied petroleum gas (LPG) and natural gas, refining, the production of a wide range of oil products and the retailing of oil products, oil derivatives, petrochemicals, LPG and natural gas, as well as the generation, transportation, distribution and supply of electricity. Co. operates in more than 40 countries. Co.'s operations are divided into four segments: Upstream, Downstream, LNG and Gas Natural Fenosa.
Tecnicas Reunidas is a general contractor company based in Spain. Co. engages in the engineering, design, and construction of industrial facilities for refining and petrochemical, oil and gas, power, and infrastructure and industries sectors worldwide. Co. constructs nuclear plants, conventional thermal plants, and renewable energy and cogeneration facilities for power sector; refineries and facilities for petrochemicals; water treatment, desalination, waste management, air, land, and marine transport facilities; and liquefaction, and storage facilities, as well as oil and gas fields and pipelines. Co. also provides engineering, management and operating services for industrial plants.
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