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IBERIAN DAILY 12 JULY + 2Q’24 RESULTS. PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: CAIXABANK, LAR ESPAÑA.

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.

US inflation fuels European stock markets
The good inflation data released in the US and expectations that the Fed cuts rates in its September meeting enabled the rally of European stock exchanges, led by the Ibex that neared 11,200 points. In the STOXX 600, Utilities and Real Estate saw the biggest gains vs. the worse relative performance of Media and Energy. On the macro side, in the UK, the quarterly GDP rose more than expected, registering the highest level since Jan’22 thanks mainly to the contribution from services. In the US, general and core inflation moderated in June more than expected to 3.0% and 3.3% YoY, respectively. Weekly jobless claims dropped more than expected. In Brazil, May’s retail sales climbed more than expected. In China, exports grew above expectations but imports slowed down unexpectedly, underscoring the weakness of the internal demand. In US business results, Delta Airlines were in line with expectations and Pepsi better although both companies cut their prospects.
What we expect for today
Stock markets would open with slight gains, with small caps continuing the solid performance seen yesterday. Currently, S&P futures are up +0.12% (the S&P 500 ended at 5,591 vs. the European closing bell). Asian stock markets are mixed (China’s CSI 300 +0.11%, Japan’s Nikkei -2.25%).
Today in Germany we will learn May’s retail sales, in Spain June’s final inflation, in the US June’s production prices and the University of Michigan consumer confidence for July, and in Mexico May’s industrial output.

COMPANY NEWS

CAIXABANK, OVERWEIGHT
After yesterday’s closing bell, the company announced that the Board had approved a new share buyback programme (the fourth over the 2022-24 period) worth € 500 M (1.3% market cap) that will start at some point from 31 July’24, lasting until 31 Jan’25 maximum. This programme will have a 22bps impact on capital and will be accrued in 2Q’24 results. Positive news but expected, only pending clarification. According to our estimates, CET1 as of 2Q’24 will stand at 12.18% including this impact vs. 12.26% in 1Q’24. With this programme, CABK would have paid € 7.9 Bn between dividends and buybacks (21% market cap) over the 2022-24 period, with still € 4.1 Bn to be paid as DPS’24 (€ ~2.9 Bn BS(e)/ € 0.4/sh./ 7.7% yield) and new buybacks worth € 1.2 Bn (3.2% market cap) out of its 12 Bn commitment, expected to be announced before the final dividend’24 in April’25. If our expectations are met, CABK’s payment against 2024 results would mean € 0.57/sh. (11% yield) between cash (€ 0.40/sh.) and buybacks (€ 0.17/sh.).

LAR ESPAÑA. TOB at € 8.10/sh. (+16% premium vs. closing price). OVERWEIGHT.
Hines Grupo and Lar (10% LRE) have announced their intention of making a cash bid on 100% of LRE at a price of € 8.10/sh. The price means a +16% premium over yesterday’s closing price and +25% over the average from the past six months, but it is -19% below NTA’23 (excl. dividend) and -9% below our T.P. The TOB is voluntary and is subject to obtaining a minimum of 56% of shares addressed by the offer (which excludes Grupo Lar’s 10%), although the threshold could change if the Spanish watchdog considers the price fair. LRE’s main shareholders are: Vukile 25.5%, Grupo Lar 10.0%, Adamsville 5.2%, Brandes Investment Partners 5.0%, BlackRock 3.7%.