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IBERIAN DAILY 10 SEPTEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: CHANGES IBEX, INDITEX, PUIG BRANDS, SANTANDER.

IBEX holds on above 15,000
It was a session of little movement and few macro references on European stock markets after the fall of the French Govt. was confirmed. In the STOXX 600, the best-performing sectors were Basic Materials and Energy, with Autos and Construction falling the most. On the macro side, in the US, August’s SME confidence (NFIB) rose more than expected to its highest level since January. The preliminary annual review of non-farm employment data from March’24 to March’25 was higher than expected (-900,000). In France, E. Macron appointed the loyal, conservative and current Defence Minister S. Lecornu as new PM. In Mexico, August’s inflation rose in line with expectations to 3.6% YoY. In China, August’s inflation deteriorated more than expected to negative territory whereas the drop in production prices moderated, in line with expectations. On the geopolitical side, Israel launched an air attack on Hamas leaders on Qatari soil, driving oil prices up. Meanwhile, Poland shot down several drones that entered its airspace last night. Lastly, the US is pressuring the EU into imposing tariffs of up to 100% on China and India to add pressure on negotiations with Russia.
What we expect for today
European stock markets would open with modest gains of around +0.2% and with mixed performance between cyclicals and defensive stocks, where consumer goods will be dragged down by the deflationary situation in China. Currently, S&P futures are up +0.26% (yesterday the S&P 500 ended +0.32% higher than the European closing bell). Asian markets are rising (China’s CSI 300 +0.43% and Japan’s Nikkei +0.80%).
Today in Spain we will learn July’s industrial output, in the US August’s production prices and in Brazil August’s inflation.


COMPANY NEWS

CHANGES IBEX 35. Technical Advisory Committee to meet today. We do not expect any changes.
The IBEX 35 Technical Advisory Committee will meet at today’s closing bell in its second control meeting of the year. We do not expect any changes to be made to the composition. As in June, if there were to be any made, ArcelorMittal would be the main candidate to be removed and Viscofan to be included.

INDITEX. Worse 2Q’25 results due to FX, but with a stronger start to 3Q’25. OVERWEIGHT
The 2Q’25 sales were worse than expected due to slightly lower LfL growth (~5.8% vs. more than +6% expected and around +6% from the trading update) and a bigger FX effect (-4.2%). Good performance in gross margin, which remained stable at -5bps in 2Q’25 (56.4%), with costs still very well controlled, growing practically in line with sales. This means EBIT reached € 1.93 Bn (+1.4% vs. 2Q’24 and vs. +1.5% BS(e) and consensus) and the EBIT margin fell -6bps to 19.2%. The indications for 3Q’25 sales growth (01 Aug to 08 Sep) are very positive, with significant acceleration to +9% (vs. +6%/+7% expected), and the company confirmed the target’25 of a stable gross margin (±50bps vs. 2024; in line with BS(e) and consensus), although raising the negative FX effect to -4% (vs. the previous -3%). We expect a positive reaction.

PUIG BRANDS, OVERWEIGHT
The 1H’25 results beat expectations in adjusted EBITDA (+8.6% vs. +6.5% BS(e) and +6.7% consensus), meaning a +48bps improvement to the margin (vs. around +10bps BS(e) and consensus) and despite the increased investments in advertising (+1.4pp to 33% over sales) in Fragrances. This is the segment that grew the least in EBIT (around +2% vs. 1H’24; -80bps to 17.8%), as expected due to the investments mentioned, whereas the rest saw a steady positive performance. The company confirmed its LfL sales’25 target of +6%/+8% (vs. +7.6% in 1H’25 and around +7% BS(e) and consensus) and around +20bps adjusted EBITDA margin expansion (in line with BS(e) and consensus). PUIG indicates that demand in the Fragrances segment continues to slow, and its best estimate for 2H’25 is low-single-digit growth (vs. mid-single-digit a few months ago), although it is still too early to confirm this.
Despite the strong operating performance and confirmation of the 2025 targets, the positive slant of these results could be marred by the indications in Fragrances, despite the solid performance even against a backdrop of more moderate growth in the sector. The stock has fallen -12% in absolute terms in 2025 (-41% vs. IBEX and vs. +20% for L’Oréal and -22% for Interparfums).