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IBERIAN DAILY 05 NOVEMBER + 3Q’20 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ARCELOR MITTAL, ATRESMEDIA, CAF, CELLNEX, PRISA, SACYR, SIEMENS GAMESA, TALGO, TÉCNICAS REUNIDAS.

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’20 results to be released over the coming days in Spain.

MARKETS YESTERDAY AND TODAY

Without a clear winner in the US elections
It was a highly volatile session in Europe where losses of as much as -2.0% due to the electoral uncertainty in the US reverted and markets ended with gains close to 2%, underpinned by the positive US opening, where in the absence of a final result on the presidency (Biden would win thanks to the states of Nevada and Michigan), apparently the Republicans would maintain the control of the Senate while the Democrats will remain in the Congress. The Ibex, among the worst performers in Europe, closed with gains close to +0.4%. Thus, in the Euro STOXX, with the exception of Banks (dragged down by the drop in IRR) and Construction (disappointed by the lack of strong momentum to infrastructure spending in view of the party division in the US), all sectors rose, with Pharma, Financial Services and Travel&Leisure leading gains. In the US, October’s non-manufacturing ISM and ADP employment data were disappointing. In Spain, public contracts saved October’s job data although the European Commission will cut 2020-2021 growth to -12.4% and 5.4% vs. -11.2% and 9.8% expected by the government. In US Results Hilton Worldwide came in better.
What we expect for today
European markets would open with gains of +0.5%. Currently, S&P futures are up +0.75%, fuelled by technological groups (the S&P 500 was down -0.9% vs. its price at the closing bell in Europe with growth faring much better). Volatility in the US dropped (VIX 29.57%). Asian markets are climbing (Hong Kong +2.7%, Japan +1.7%).
Today, we will learn in the Euro zone September’s retail sales, in the UK the BoE meeting, in Germany September’s factory orders, and in the US the Fed meeting and J. Powell’s speech, weekly jobless claims, non-farm productivity and unit costs. In US business results, Westrock, Kimco Realty,Zoetis, Discovery and General Motors, among others, will release their earnings. In debt auctions, Spain (€ 2.75 Bn in bonds due 2040 and I/L 2023) and France (€ 11 Bn in bonds due 2029, 2030, 2050 and 2055).


COMPANY NEWS

SIEMENS GAMESA. Weak 4Q’20 Results and slightly worse in sales and adjusted EBIT. SELL
The company has just released weak 4Q’20 Results that came in below expectations in sales (-4% vs. BS(e) and -7% vs. consensus; slightly below the 2020 guidance) and slightly below in adjusted EBIT (€ 31 M vs. 43 BS(e) and 96 consensus). Reported Net profit dropped to € -113 M (vs. € -117 M BS(e) and € 21 M consensus). Net debt came in at € 49 M, better than our estimate (€ 41 M BS(e) and in line with the consensus. The company reiterated its 2021 guidance. Even though results came in below expectations in sales and adjusted EBIT, the fact that net debt was in line with the consensus and that it maintains its 2021 guidance unchanged could offset the results and lead to a neutral reaction. The share price has soared +90% vs. IBEX since the Ibex highs on Feb’20.

ARCELOR MITTAL: 3Q’20 Results better than expected. BUY.
EBITDA came in at US$ 901 M (-15.2% vs. -25.3% BS(e) and -21.2% consensus), thanks to the better performance than expected in Brazil (~20% EBITDA) and ACIS (~8% EBITDA). Although the company mentioned recovery and increases in output, the lack of visibility prevented it from unveiling its guidance (not expected, in any case). The company cut its working capital reduction target from US$ 1 Bn to US$ 600 M / US$ 1 Bn (although this was predictable) and announced that as its ND target has been met (US$ 7 Bn), its priority now is shareholder remuneration (the specific details will be made public in February). With these results, we will raise our estimates and T.P. to around € 15.00/sh. (+30%; +20% upside) and we maintain our BUY recommendation.