EUR 100.00 For Business Accounts Only

IBERIAN DAILY 19 NOVEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: CAIXABANK, POSSIBLE TAX CHANGES, SOLARIA.

Awaiting drivers
European stock markets managed to recover ground at the end of the session, ending mixed, with the Ibex and FTSE MIB being the best relative performers. Thus, in the STOXX 600, Basic Resources and Telecoms were the best relative performers vs. the bigger drops of Real Estate and Retail. From the ECB, De Guindos insisted that concerns about inflation have now shifted to growth. On the macro side, in the US November’s NAHB residential confidence index climbed to the highest level seen since April. Separately, the latest survey on loan access by the NY Fed showed a rise in the rejection rate for vehicle loans and mortgage refinancing, which hit record highs.
What we expect for today
Stock markets would open with slight gains, with the recovery of bond proxies. Currently, S&P futures are up +0.2% (the S&P 500 ended flat vs. the European closing bell). Asian markets are climbing (China’s CSI 300 +0.6%, Japan’s Nikkei +0.33%).
Today in the euro zone we will learn October’s inflation and in the US October’s building permits and housing starts. In US business results Walmart and Lowes, among others, will release their earnings.


COMPANY NEWS

CAIXABANK. Ambitious Strategic Plan for a conservative interest rate scenario. OVERWEIGHT
CABK has set a target of average ROTE’25-27 above 15% (14.1% BS(e) and 14.5% consensus) and above 16% in 2027 (this would mean an average Net Profit level +15% above expectations). It expects to offset the low Euribor (2.19% in 2025, 1.8% in 2026 and 2% in 2027 vs. 2.5% BS(e)) with loan volumes and ALCO coverage. The company maintains its cash dividend policy (50-60% payout / ~7-8% yield). CABK will distribute the excess capital above 12.5% CET1 (which we see as unlikely, as the average CET target is 11.5%-12.5%). The plan could be met with skepticism awaiting better delivery in the 4Q’24 results (late Jan’25 / early Feb’25). After rising more than 40% over the past year (+12% vs. ES50 Banks and +20% vs. Bankinter and Unicaja), the share price could stagnate.

POSSIBLE TAX CHANGES
Yesterday Congress again rejected most of the PSOE’s tax proposals. Thus, the proposal to make the bank tax or utility tax permanent was not approved, nor were the new PSOE-Sumar proposals to eliminate the REIT regime or to tax private insurance. On Thursday there will be another vote, but all signs suggest the only proposal that will move forward will be the minimum 15% tax on multinationals or the increase to the marginal tax on savings income to 30% starting at € 300,000. With all this in mind, if the news is confirmed it would be positive for the banks and utilities (although this was already very much priced in), and especially for the REITs (Colonial and Merlin), which are the stocks that had suffered the most from the possibility of a change in their tax regime.

SOLARIA. 3Q’24 Results below expectations with capacity targets postponed again. OVERWEIGHT.
3Q’24 Results came in below expectations in sales due to prices (around -18% vs. BS(e)) whereas production was +2% higher. EBITDA was disappointing due to weaker margins (86.3% reported vs. 89% BS(e)), with the main impact stemming from the 7% tax on electricity generation. No new MW were connected to the system. In terms outlook, the company keeps its EBITDA guidance’24/25 unchanged but it cut the installation target once more. It expects to reach around 3,000MW at the end of 2025 (vs. summer’25 previously and vs. 2,139MW BS(e)). We expect a negative market reaction although its strong YtD underperformance (-37% vs. Ibex) could curb corrections.