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IBERIAN DAILY 27 OCTOBER + 3Q’21 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ELECTRICITY SECTOR, FERROVIAL, IBERPAPEL, METROVACESA, NATURGY, RESIDENTIAL PROPERTY DEVELOPERS, SANTANDER.

MARKETS YESTERDAY AND TODAY

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 3Q’21 results to be released over the coming days in Spain.

With the support of business earnings
It was a positive session for European stock markets where the good prospects for corporate results offset fears about inflation and growth. In the Euro STOXX, amid the generalised gains, the best-performing sectors were Travel&Leisure and Basic Resources, whereas Pharma and Energy were the only sector seeing drops. On the macro side, in Spain, September’s production prices came in at 23.6% (the biggest rise in 44 years) due to energy prices. Meanwhile, both the Commission and several European countries were sceptical about the proposal made by the Spanish government to unlink renewable and gas prices. In the US, Richmond manufacturing index and consumer confidence climbed unexpectedly. In the real estate sector, September’s new home sales recovered more than expected and even though home prices moderated in August, they continue to grow at levels close to 20% annually. Separately, the Democrats will propose a minimum corporation tax of 15% for companies with profits of more than US$ 1 Bn, which would raise up to US$ 400 Bn in 10 years. In US business results, Hasbro, 3M, PACCAR came in better than expected, Alphabet (Google), Microsoft, Hasbro, 3M, PACCAR and Twitter beat expectations, with Visa in line.
What we expect for today
European stock markets would open flat with some profit taking following the latest gains, dragged down by Asia. Currently, S&P futures are up +0.1% (the S&P 500 ended down -0.23% vs. its price at the closing bell in Europe). Volatility in the US increased (VIX 15.98). Asian markets are falling (China’s CSI 300 -1.3% and Japan’s Nikkei -0.2%).
Today we will learn in the euro zone September’s M3, in Brazil the BoB meeting decision, in the US, September’s preliminary durable orders. In US business results, Coca-Cola, Hilton, Kraft Heinz, General Motors, Boeing, eBay and Mc Donald’s, among others, will release their earnings. In debt auctions: Italy (€ 6 Bn in 6M T-bills), Greece (€ 652 M in 3M T-bills) and Germany (€ 2 Bn in bonds due 2026).

COMPANY NEWS

IBERPAPEL. Results in line with expectations, but with a negative outlook for costs. BUY.
The company’s 9M’21 results were in line with expectations, showing a recovery in demand and prices, but also the beginning of the current inflationary process (in raw materials and energy prices). Thus, sales increased by +40% vs. 9M’20 and EBITDA by +94%, although the margin contracted -130bps vs. the 1H’21. Net cash came in at € 51 M (vs. € 33 M as of YE2020). IBG expressed its concern on the rise in raw materials and energy prices (~5% of sales under normal conditions BS(e)), which the company will try to mitigate with price increases. These comments might lead to a negative share price reaction, especially when the stock has outperformed the IBEX by +5% YTD. There will be a conference call at 10:00 (CET).

SANTANDER. 3Q’21 results that beat the consensus in Core Revenues and CoR. We expect a good reception. BUY
The 3Q’21 results were in line with BS(e) but beat the consensus in the main figures. Thus, Core Revenues grew +9% vs. 3Q’20 (+7% consensus), helping to offset the slightly worse performance in costs (+6.5% vs. 3Q’20 and +3.8% expected) by activity. CoR stood at ~90bps, in line with 1H’21 (