IBERIAN DAILY 25 SEPTEMBER (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: CAF, IBERDROLA, SANTANDER.Drivers lacking to hit new highs
In a session without drivers, European stock markets were a mixed bag after Trump reaffirmed his support of NATO’s defence. In the STOXX 600, the best-performing sectors were cyclicals linked to raw materials like Basic Materials and Energy, but also the industrial subsector of Defence, whereas Construction and Financial Services ended with the biggest drops. On the macro side, in Germany the IFO worsened unexpectedly in September, with drops in both the current conditions and expectations components. In the US, building permits contracted slightly less than expected, whereas new home sales rallied sharply. In Japan, the minutes from the BoJ’s last meeting conveyed a more hawkish message, with its members more concerned about inflation. On another note, the Finance Minister notified the financial institutions that issuances in the ultra-long maturities will be cut further due to the lack of interest. In US business results Micro’s earnings beat expectations, fuelled by memory chip and data centres.
What we expect for today
European stock markets would open flat. Currently, S&P futures are up +0.1% (yesterday the S&P 500 ended flat vs. the European closing bell). Asian markets are climbing (China’s CSI 300 +0.6% and Japan’s Nikkei +0.2%).
Today in the euro zone we will learn August’s M3, in the US the second reading of the 2Q’25 GDP, August’s durable goods orders, weekly jobless claims and August’s pending second-hand home sales.
COMPANY NEWS
CAF, OVERWEIGHT
According to the press, in a resolution made public yesterday Belgium’s Council of State rejected Alstom’s lawsuit requesting the suspension of CAF selection as preferred bidder for the mega contract of Belgium’s SNCB where it competed with the French group and Germany’s Siemens that also submitted a lawsuit on technical issues that the Council of State would have rejected in the last few days. According to this body, none of the critics alleged by Alstom to question the legality of CAF’s selection are serious. Note that this contract totals € 1.7 Bn (11% backlog) that could be extended up to € 3.4 Bn (22% backlog) in 12 months. The contract could be formalised before the end of the year.
Positive news not only bearing in mind the volume of the contract but this also means the confirmation of the company’s credentials for relevant contracts on the international level.
IBERDROLA. 2025-28 Strategic Plan. Operating improvement thanks to greater investment effort. OVERWEIGHT
The greater investment effort in Networks (US and UK) will allow the company to raise Net Profit growth (to a CAGR’24-28e of high single digits from the previous mid to high single digits, consensus and BS(e)), with a bullish slant if electricity demand/prices were to improve vs. the conservative hypotheses assumed. The shareholder remuneration policy will be in line with Net Profit (65-75% payout) and will mean an average yield of ~4.9%. The company will maintain its financial robustness, and even with room on the balance sheet IBE does not consider large acquisitions. IBE remains our top pick among domestic integrated utilities. OVERWEIGHT. T.P. € 17.32/sh. (upside +12%).
Banco Santander is a holding company, providing a range of financial products. Co.'s products and services include: retail banking business that covers all customer banking businesses; wholesale banking business; as well as asset management and insurance business. Co.'s principal operations are in Spain, the U.K., Portugal, Germany, Italy and Latin America. As of Dec 31 2014, Co.'s total assets amounted to Euro1,266,296,000,000 and total customer deposits amounted to Euro647,627,000,000.
Iberdrola is a holding company. Through its subsidiaries, Co. operates in four segments: network business, which includes all the energy transmission and distribution activities, and other regulated activity originated in Spain, the U.K., the U.S. and Brazil; deregulated business, which includes electricity generation and sales businesses as well as gas trading and storage businesses carried on by Co. in Spain, Portugal, the U.K. and North America; renewable business, with activities related to renewable energies in Spain, the U.K., the U.S. and the rest of the world; and other businesses, including the engineering and construction businesses and the non-power businesses.
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