EUR 100.00 For Business Accounts Only

IBERIAN DAILY 31 DECEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ARCELOR MITTAL, INMOBILIARIA DEL SUR, LIBERBANK, TELEFÓNICA, UNICAJA.


MARKETS YESTERDAY AND TODAY

The market awaits the new year
It was a transition session in stock markets, which remained practically flat during the entire session with low trading volume. Thus, in the Euro STOXX, Retail and Technology stood out, as they were the only sectors ending in positive territory vs. the slight drops of Telecommunications and industrials. On the macroeconomic level, wholesale inventories and pending home sales slowed down unexpectedly. In the UK, the Chambers approved the post Brexit agreement with the EU, as expected, as well as AstraZeneca’s vaccine (ahead of the rest of the world once more). China also gave green light to the first public vaccine. The EU also signed, as expected, an investment agreement with China, which could generate some tension with Biden’s administration that planned to make a common front against China. Thus, the Trump’s administration announced last night the implementation of tariffs on components in the aerospace sector and on French and German wines starting on the 12th of January as retaliation for those previously applied from Europe. In China, December’s manufacturing and services PMI were slightly disappointing.
What we expect for today
European stock markets would open mixed the last session of the year amid good news on new vaccines approved, doubts on their distribution speed and poor data on the second Covid-19 outbreak. Currently, S&P futures are up +0.08% (the S&P 500 closed -0.20% lower vs. its price at the closing bell in Europe). Volatility in the US dropped (VIX 22.7%). Asian markets are climbing (China +2.12%, Japan is closed today for holiday).
Today in the US we will learn weekly jobless claims.


COMPANY NEWS

UNICAJA / LIBERBANK. Merger details. We reiterate our BUY recommendation for both companies.
The merger will allow the combined group to endure the challenging environment of interest rates and NPL the sector is faced with in 2021-2022e thanks to the fact that Net Profit growth will be based on cost savings being met (€ 192 M before taxes, € 160 M for the merger), with an estimated improvement on EPS’23 >60% and >5.5% of RoTE. It is the same case as in CABK and BKIA merger although with lower execution risk, thanks to the fewer overlapping/concentration of share in some areas and better initial solvency (12.4% CET1), NPL coverage (72%) and liquidity, among other factors. We have carried out a preliminary valuation of the impact and we estimate a T.P. Dec’21 for UNI with all the merger details announced yesterday of € 1.18/sh.,yielding>65% upside. In the case of LBK, our calculation is based on the exchange ratio announced (0.3609 LBK share x 1 UNI share), resulting in a T.P. of around € 0.43/sh. (+58% upside). We see yesterday’s reaction as pure trading (+1.97% UNI and -3.7% LBK, with the greater correction being explained by the exchange ratio adjustment). Thus, we believe there is an opportunity to take positions at highly appealing prices.