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IBERIAN DAILY 23 FEBRUARY + 4Q’20 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: BANKINTER, FERROVIAL, IAG, LAR ESPAÑA, METROVACESA, RED ELECTRICA, TELEFONICA.
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 4Q’20 results to be released over the coming days in Spain.

MARKETS YESTERDAY AND TODAY

Debt curve continues to rise
The positive IFO data and the UK’s reopening plans mitigated somewhat the losses posted by the European stock markets as a result of the rapid increase in debt curves. In the Euro STOXX almost all the sectors closed in the red, with Travel & Leisure being the best relative performer in view of the outlook of a gradual reopening in the UK, with a 4-stage lockdown exit plan (school reopenings on 8 March, non-essential commercial activity on 12 April, leisure activity on 17 May and social restrictions on 21 June). On the macro side, in Europe, aside from February’s IFO data, which hints at a less negative growth rate in 1Q’21 than the -3.4% YoY expected by the consensus, C. Lagarde claimed that she is monitoring the long duration segment of the curves and F. Villeroy stated that the favourable financing conditions will be maintained, meaning that the most beneficial TLTROs for banks are likely to be extended. In Brazil, the state-owned oil company Petrobras fell sharply after J. Bolsonaro appointed a general as chairman, which suggests at greater control of the Govt. over the economy. In China, fears on the toughening of financial conditions by the PBoC also led to sharp drops in the CSI300. In US business results, Discovery came in better and Royal Caribbean Cruises worse.
What we expect for today
The greater stability of bonds should favour a bullish opening in Europe of +0.5%, with Energy (with another rise in crude oil), Basic Resources and Banks leading the performance. Currently, S&P futures are up +0.4% (the S&P 500 closed down -0.3% vs. its price at the closing bell in Europe). Volatility in the US rose (VIX 23.45). Asian markets are sliding (CSI 300 -0.3%, Japan is closed).
Today in the euro zone we will learn January’s final inflation, in the UK ILO unemployment rate and in the US consumer confidence and February’s Richmond manufacturing index. In US business results, Home Depot, Intuit and Pioneer, among others, will release their earnings. In debt auctions: Netherlands (€ 2.5 Bn in bonds due 2040) and Italy (€ 2.5 Bn in zero coupon bonds due 2027).


COMPANY NEWS

METROVACESA, Poor 4Q’20 results, especially in pre-sales. BUY
The company has released poor results both in pre-sales and in deliveries, although the latter came in within the company’s guidance range. The results were also impacted by the non accounting of a land plot in Valdebebas sold in 1Q’20 (the buyer has not complied with the payment calendar), meaning that there have been hardly any land sales on the year, and by an impairment due to a lower asset appraisal (with no impact on cash). Deliveries totalled 312 units in 4Q’20 standalone (vs. 336 units BS(e)), meaning 601 units on the year totalling € 130 M (+106%). The developer margin came in at 18%, in line with expectations. Land sales totalled € 16 M (mostly in 4Q standalone). The EBITDA figure is negative because the low number of deliveries is not enough to cover overhead costs.
The pre-sales figure is what we like the least in these results, only 242 units on the quarter on a standalone basis, clearly below the figures MVC should reach to meet at least 2,000 units/year (>500 units/quarter) and below AEDAS’ levels over the same period (397 units). The company estimates that 80% of the deliveries planned in 2021 are already pre-sold. The asset valuation generates a € -137 M impairment that results in € 163 M losses in FY2020 and a -8% drop in NAV to € 16.48/sh. The share price is trading at a -63% discount vs. that level. The LTV ended FY2020 at 8.5% with € 228 M of net debt.