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IBERIAN DAILY 24 JULY + 2Q’24 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ENDESA, GLOBAL DOMINION, LAR ESPAÑA, MERLIN PROPERTIES, METROVACESA, MINOR HOTELS, SANTANDER.


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 2Q’24 results to be released over the coming days in Spain.

The Ibex hits 11,200 points
Stock markets saw gains in a session marked by the 2Q earnings release at both sides of the Atlantic. In the STOXX 600, Technology (benefiting from SAP’s results) and Travel&Leisure led gains whereas Basic Resources and Energy posted the biggest drops. On the macro side, in the euro zone, July’s consumer confidence improved in line with expectations. From the ECB, L. de Guindos suggested a possible rate cut in September although subject to the performance of the upcoming data. In Spain, Congress rejected the 2025 budgets with the Junts party’s vote against. In France, the centre-right-wing party offered the possibility of a legislative agreement with Macron’s party to form government, although no PM will be chosen until the Olympics have ended. In the US, second-hand home sales and July’s Richmond Fed index fell more than expected. In US business results, Moody’s, Invesco and General Motors beat expectations, Coca Cola, MSCI, Visa and Google were in line and Tesla came in below.
What we expect for today
Stock markets would open with losses of -0.5% following the poor session in Asia. Currently, S&P futures are down -0.53% (the S&P 500 ended -0.43% lower vs. the European closing bell). Asian stock markets are sliding (China’s CSI 300 -0.43%, Japan’s Nikkei -1.07%)
Today in the euro zone we will learn July’s preliminary manufacturing and services PMI, in the US June’s new home sales and July’s PMI. In US business results, IBM, AT&T, Ford Motor, Qualcomm and General Dynamics, among others, will release their earnings.

COMPANY NEWS

2Q’24 Results highlights and rest of previews
Of the stocks releasing their earnings over the coming days, on the positive side we highlight (i) where we expect good results, in line with the 1Q’24 trends, with a robust performance of RevPAR although with fewer rooms available and significant EBITDA growth (excl. one-offs) and margins. Furthermore, we should already see an improved financial position. Additionally, the company could announce the completion of new asset sales.

MERLIN PROPERTIES. Capital increase to invest in data centres. OVERWEIGHT
At the closing bell the company announced a cash capital increase (without preemptive rights) at € 9.80/sh. (-4.7% vs. closing price) through a “private accelerated bookbuild”. The number of new shares is equivalent to 20% of the prior total, and the main shareholders (Santander with 24.6% and Nortia with 8.2%; 90-day lock-up) have subscribed their proportional parts. The funds obtained (€ 921 M net) will be used to invest in a second phase of the data centre business. According to our numbers, the deal has a dilutive effect on NTA (June’24) of -7.0% (and -4.5% on our T.P.), although we believe it will have a clearly positive effect on long-term NTA, given the solid value generation outlook for the business.

GLOBAL DOMINION, OVERWEIGHT
2Q’24 Results showed an operating performance in line with expectations (EBITDA € 37 M vs. € 36 M BS(e) and consensus), although underscoring organic growth slowdown in 1H’24 to +4.7% (vs. +5.2% in 1Q’24 and vs. +>5% guidance’24) given the delay in the starting operating of new 360 projects. In terms of cash, NFD rose by € -123 M up to € 198 M (~1.4x NFD/EBITDA), above our € 182 M estimate due to higher investments and working capital consumption. As for prospects, the company maintains its organic growth guidance in sales > 5% CAGR’23-26e (vs. +5.8% BS(e)) and in EBITDA > +7% CAGR’23-26e (vs. +6.9% BS(e)).
Even though the 2Q’24 Results are in line on the operating level, the greater weakness in cash, along with the organic growth slowdown could provide a negative slant to today’s market reaction although limited following the poor share price performance (-4% in 2024; -15% vs. IBEX).

SANTANDER. 2Q’24 results very much in line in Net Profit, with slight increase to guidance’24. OVERWEIGHT
The 2Q’24 results were in line in revenues (+1%) due to higher transaction fees (+2%). Although there was a positive surprise in costs (-4% lower), this was not passed on to Net Profit (in line) due to the worse data in other provisions. The bank has raised its guidance for revenue growth (from mid-single-digit to high-single-digit vs. +6.2% consensus and BS(e)) and ROTE (from ~16% to >16% vs. 16.3% in 2Q’24). SAN maintains CET1 above 12% vs. 12.5% in 2Q’24 (in line and with no extraordinary impact). We expect a positive reception after the stock’s -4% drop over the past three months (vs. +3% sector), despite having been the Spanish bank with the most estimates increases in NII (+5% in 2024 and +4% in 2025-26).

MINOR HOTELS, UNDERWEIGHT
2Q’24 Results practically in line with expectations in both sales (+10.5% vs. +10.8% BS(e) and +9.0% consensus) and EBITDA (+9.8% vs. +10.9% BS(e) and +9.7% consensus). The trend continues to be positive, with RevPAR growing +7% (+7.2% BS(e) and +6.6% consensus) thanks mainly to prices (90%; +6%). EBITDA is marked by one-offs (€ +6 M in 2023) and consolidation scope changes in ramp-up phase. The 2Q’24 NFD (pre IFRS) came in at € 241 M (vs. € 233 M expected; 0.7x NFD/EBITDA LTM). Conference call today at 11:00 (CET).
In general, good results although we believe they will not have a significant impact on the share price given the company’s low liquidity (