IBERIAN DAILY 11 OCTOBER (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: BANKING SECTOR, BBVA, IBERDROLA, REPSOL, UNICAJA/MAPFRE.Central Banks continue to set the agenda
Global stock exchanges dropped, facing another escalation of the war between Ukraine and Russia and some pessimism about business results. The Euro STOXX saw a mixed performance, with Household and Basic Resources being the best-performing sectors whereas Technology (hit by Biden’s measures) and Real Estate ended with the biggest drops. On the macro side, in the euro zone, SENTIX investment confidence index deteriorated more than expected in October, standing at April’20 lows, which questions the 0.9% YoY growth forecasts in the 4Q’22. From the ECB, N. Knot (Holland, hawkish) was in favour of significant rate hikes in the next two meetings ahead of the quantitative tightening. In Germany, the panel of experts proposed a € 91 Bn aid package to households due to the rising energy bills. In the US, C. Evans from the Fed expects an improvement of inflation data, seeing rates near 4.5% in March, a level the Fed would see as more comfortable and which could mean a pause in order to see the effect from the rising interest rates on inflation. In Japan, PM F. Kishida supported maintaining the ultra-accommodative policy of the BoJ despite the plunging yen.
What we expect for today
European stock markets would open with slight drops in a transition session awaiting the US inflation data to be made public next Thursday. Currently, S&P futures are down -0.5% (the S&P 500 ended -0.2% lower vs. the European closing bell). Volatility in the US remained unchanged (VIX 32.45). Asian markets are mixed (China’s CSI 300 +0.5% and Japan’s Nikkei -2.7%).
Today in the UK we will learn August’s ILO unemployment rate, in Brazil September’s inflation and the IMF will release the forecast revision and the financial stability report. Debt auctions: Spain (€ 2.5 Bn in 3M and 9M t-bills).
COMPANY NEWS
REPSOL. The refining margin eases in the 3Q’22 trading statement vs. 2Q’22. BUY (T.P. € 18.38/sh.; +47.63% upside)
The 3Q’22 trading statement did not bring any surprises in crude oil prices (-11% vs. 2Q’22 to US$ 100.80/b), whereas output climbed slightly by +2% vs. 2Q’22 to 549kboe, with the annual average also standing at 549kboe, below the 2022 guidance (570kboe) and our estimate (585kboe). The refining margin dropped to US$ 12.70 in the 3Q’22 (vs. US$ 23.3 in the 2Q’22), exceeding our annual estimate of US$ 10.50. Even though refining margins eased vs. 2Q’22, as expected, they remain at high levels. The company will release its 3Q’22 Results on 27/10 and after this trading statement, we keep our 3Q’22e Net Profit estimate at € 1.485 Bn (-30% vs. 2Q’22), slightly below consensus expectations (€ 1.569 Bn). We maintain our thanks to the operating improvement and attractive yield (22e around 10.4%).
Banco Bilbao Vizcaya Argentaria is an international financial group, engaged primarily on providing banking services and consumer finance to private individuals and businesses in Spain and Portugal; providing real estate activity in Spain; providing services to international companies and investment banking, capital markets and treasury management services to clients; and providing the banking, insurance and pension businesses in Mexico and the U.S., as well as in South America.
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.
Mapfre is an insurance company based in Spain. Co. is the parent company of a group engaged in the underwriting and provision of insurance in Spain and abroad. Insurance policies provided include: life, non-life, accident, home-owner, general and health. Through its subsidiaries, Co. is also engaged in the provision of reinsurance, the management of investment funds, pension funds and pension plans, real estate and related services. On the domestic market, Co.'s activities include managing investment funds, pension funds and pension plans, real estate and other service businesses.
Unicaja Banco SA is a Spain-based financial institution (the Bank) engaged in the banking sector. The Bank offers services to individual and business customers. Its products and services range includes current and savings accounts, debit and credit cards, consumer and commercial loans, real estate credit, securities brokerage, funds management, leasing, factoring, pension plans, life and non-life insurance, international trade financing, money transfer, as well as treasury, among others. The Bank operates a number of branches in Spain and Morocco. The Bank is controlled by Fundacion Bancaria Unicaja.
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