Report
Research Department
EUR 100.00 For Business Accounts Only

IBERIAN DAILY 23 JULY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ARCERLOR MITTAL, CELLNEX, GLOBAL DOMINION, IAG, PROSEGUR.

MARKETS YESTERDAY AND TODAY

Stock market hangover following the EU deal
After rallying on the approval of the recovery fund deal, the main European indices fell by around -1%. Within the Euro STOXX all sectors closed in the red, save for Financial Services and Real Estate, with Media and Energy being the worst relative performers. On the macro side, in Europe, from the ECB, C. Lagarde admitted that the agreement could have been improved. In the US, second-hand home sales increased as expected. In Mexico, May’s retail sales fell more than expected. In US business results, Biogen, KeyCopr and Nasdaq came in better, Bakes Hughes worse.
What we expect for today
Stock markets would open with slight gains backed by the results of the US companies and despite heightening tensions between China and the US. Currently, S&P futures are unchanged (the S&P 500 was up +0.36% vs. its price at the closing bell in Europe). Volatility in the US dropped (VIX 24.32%). Asian markets are mixed (Japan -0.55% and Hong Kong +0.37%).
Today in Europe we will learn consumer confidence, in the Us weekly jobless clams and consumer confidence. In US Results, Twitter, AT&T, American Airlines, Intel and Feeport McMoran, among others, will release their earnings.

COMPANY NEWS

CELLNEX. Announces a € 4 Bn rights issue, additional € 11 Bn in the pipeline. BUY.
The company yesterday announced a € 4 Bn rights issue (18.5% market cap) at € 39.45/sh. (-29.7% vs. yesterday’s close and -25% vs. TERP: € 52.66/sh.) and 19 rights will be necessary for 5 new shares (101.382 M new shares; 26.3% total), backed by 19% of the shareholding structure, leaving Edizione out (16.45% Cellnex) for the first time. The rights issue is aimed at financing its inorganic expansion and it offered a new € 11 Bn pipeline. This move is expected and would reduce NFD/EBITDA to ~2.8x (from the current ~5.8x including the acquisitions of Arqiva and NOS). Note that our base-case scenario included a €~4.6 Bn capital increase (21.3% market cap) to carry out € 13 Bn of M&A moves while still keeping its NFD/EBITDA ratio at ~6x

G.DOMINION: Weak 2Q’20 Results, as expected, but with good cash performance. 2020 guidance reiterated. BUY
The 2Q’20 EBITDA fell slightly less than expected (-52% vs. –56% BS(e) and –55% consensus) thanks to slightly higher margins (6.7% vs. 6.1% BS(e) and 6.3% consensus) and sales in line with expectations (-16% vs. –17% BS(e) and consensus). Good net cash performance, which remained stable at € 102 M (vs. 103 M BS(e) and € >100 M 1Q’20), the company also reiterated its 2020 guidance (positive Net Profit vs. € 9 M BS(e) and € 12.5 M consensus). After outperforming the IBEX by +6% since the beginning of the pandemic, we do not expect a significant impact although we continue to see high room for rises as the recovery materializes (2H’20) and it shows progress in meeting its long-term terms (doubling Net Profit to € 64 M in 20203).
Underlyings
ArcelorMittal

Bankinter SA

Bankinter is the parent company of a group engaged in banking activities. Services provided include: investment banking; capital market services; financial services insurance; international services such as foreign exchange transactions and travelers' checks; wholesale corporate banking; and retail and private banking services. Co. offers its products and services through the following channels of distribution: branch network; telephone banking, interactive (software) banking; agents; and Internet banking. As of Dec 31 2014, Co. had assets totalling Euro57,332,974,000 and deposits totalling Euro29,966,129,000.

Cellnex Telecom S.A.

Cellnex Telecom SA is a Spain-based company engaged in the wireless telecommunications (telecom) business. Its activities are divided into three segments: Broadcasting infrastructure, Telecom site rental, as well as Network services and other. The Broadcasting infrastructure division comprises distribution and transmission of television (TV) and frequency modulation (FM) radio signals, operation and maintenance (O&M) of radio broadcasting network, as well as over-the-top (OTT) radio services, among others. The Telecom site rental division provides access to wireless infrastructure, primarily through infrastructure hosting and telecom equipment co-location, mainly for mobile network operators and other wireless and broadband telecom network operators. The Network services and other division offers connectivity services for a variety of telecom operators and radio communication, among others. The Company also develops 5th generation mobile networks (5G) through Alticom BV.

CIE Automotive S.A.

CIE Automotive is the parent company of an industrial group formed by several companies that are engaged in the design, manufacture and sale of automobile component and sub-units on the world market. In addition, Co. is also engaged in the bio-fuels business which is in the initial stages of development and is made up of various companies devoted to the production and distribution of bio-fuels.

Euskaltel SA

Euskaltel SA is a Spain-based company engaged in the provision of integrated telecommunication services. The Company's activities are divided into three segments: Residential, Business, as well as Wholesale and Other. The Residential segment provides fixed and mobile telecommunication services, broadband and wireless Internet, as well as digital television (TV) as a single service and in packages. The Business division primarily offers fixed and mobile telephony, as well as Internet access for enterprises. The Wholesale and Other area serves wholesale customers and is responsible for the delivery of communication services, such as infrastructure leasing, information technology (IT) outsourcing, as well as sell of installation material and electronics. The Company operates in the Basque Country, Spain.

Global Dominion Access SA

Global Dominion Access SA is a Spain-based company primarily engaged in the construction and engineering sector. The Company's activities are divided into two segments: Multi-technological Services, which offers design, implementation and maintenance of fixed and mobile telecommunications networks, manages sales and distribution processes for telecommunications carriers, as well as renders of inspection, maintenance, repair and renovation services for industrial and energy firms, and Solutions and EPCs, which executes turnkey Engineering-Procurement-Construction (EPC) projects, provides construction, repair and renovation of industrial heating installations, as well as develops processes and other technological and business solutions in numerous sectors. Its services are provided in three areas: Technology and Telecommunications (T&T), Industry and Renewable energies. It operates worldwide in Europe, the Americas, Asia and Africa. The Company is a subsidiary of CIE Automotive SA.

International Consolidated Airlines Group SA

International Airlines Group is an international scheduled airline and global premium airlines. Co.'s principal place of business is London with significant presence at Heathrow, Gatwick and London City airports.

Mapfre SA

Mapfre is an insurance company based in Spain. Co. is the parent company of a group engaged in the underwriting and provision of insurance in Spain and abroad. Insurance policies provided include: life, non-life, accident, home-owner, general and health. Through its subsidiaries, Co. is also engaged in the provision of reinsurance, the management of investment funds, pension funds and pension plans, real estate and related services. On the domestic market, Co.'s activities include managing investment funds, pension funds and pension plans, real estate and other service businesses.

Repsol SA

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.

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