EUR 100.00 For Business Accounts Only

IBERIAN DAILY 31 OCTOBER + 3Q’24 RESULTS. PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: BANKING/ENERGY SECTOR, CAIXABANK, EBRO FOODS, FCC, FLUIDRA, NATURGY.

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’24 results to be released over the coming days in Spain.

Inflation rises in October
European stock markets fell, with October’s inflation data in Europe higher than expected. In the STOXX 600, all the sectors ended with drops, with Travel & Leisure and Retail the best performers, whereas Technology and Basic Materials ended with the biggest losses. On the macro side, in Spain the 3Q’24 GDP and October’s inflation were both unexpectedly higher than expected. In Germany October’s number of unemployed rose unexpectedly, and again the 3Q’24 GDP and October’s inflation were both unexpectedly higher than expected. In the euro zone, the 3Q’24 GDP beat expectations by 2x (0.4% QoQ). In the US, the 3Q’24 GDP slowed its advance more than expected (2.8% QoQ). Separately, October’s ADP job creation once again rose unexpectedly. In Japan, the BoJ kept its monetary policy unchanged, while September’s retail sales fell more than expected, with industrial output rising more than expected. In China, October’s manufacturing PMI rose more than expected (services in line). In US business results, Microsoft, Meta (Facebook) and Booking beat expectations, Kraft Heinz was in line and Caterpillar released disappointing earnings.
What we expect for today
Stock markets would open with losses of more than -0.5%, with the US election uncertainty having an increasingly bigger effect. Currently, S&P futures are down -0.53% (the S&P 500 ended -0.36% lower vs. the European closing bell). Asian markets are mixed (China’s CSI 300 +0.33%, Japan’s Nikkei -0.50%).
Today in the euro zone we will learn October’s inflation, in the US weekly jobless claims, September’s personal outlays and the core personal consumption deflator. In US business results, Apple, Amazon.com, Mastercard, Merck&Co, Intel, Stellantis and ConocoPhillips, among others, will release their earnings.


COMPANY NEWS

CAIXABANK: 3Q’24 results slightly above expectations. € 500 M buyback announced.
The 3Q’24 results beat expectations in Total Revenues (+1% vs. expected) despite some weakness in fee revenues stemming from maintenance. Net Profit beat expectations by +3% thanks to lower provisions (25bps CoR over the last 12 months vs. 29bps in 1H’24). The company has once again revised its NII guidance from high-single-digit growth to >€ 11 Bn, meaning >+8.7% growth (+9.5% BS(e) and +8.9% consensus). ROTE reached 16.9% and CET1 12.24% net of the buyback programme announced today (€ 500 M / 1.25% capital). We expect a very neutral reception with a slight bullish slant following the +0% performance over the past three months (vs. -9% for Spanish banks). CABK is our top pick in domestic banks, even if it is trading at a demanding multiple of 1.22x P/TE, as we see leeway for ROTE’26 to be raised from 13.6% (13.8% consensus) to around 15%.

EBRO FOODS. 3Q’24 EBITDA above expectations. We raise our T.P. to € 22.00/sh. OVERWEIGHT
The 3Q’24 results beat expectations in EBITDA, benefiting from higher profitability (12.7% reported vs. 11.9% BS(e) and 12.1% consensus). We highlight the pasta division, underpinned by higher volumes, a smaller impact from the dog days of summer and the drop in some costs. The company expects to end the year with EBITDA’24 of € 402-407 M. We revise our estimates in view of the better performance than initially forecast on the margin level in 2024. Thus, in sales we cut our estimate -2.1% and in EBITDA we raise it +1.4%. We now expect € 410 M of EBITDA’24. Additionally, we carry out a rollover’25 and reach a new T.P. of € 22.00/sh., reiterating our OVERWEIGHT recommendation. With all this in mind, following the stock’s underperformance in 2024 (-11% vs. IBEX 35), we believe it should gain traction in view of the solid results released, where despite the backdrop of heavy inflation seen since 2019, the company has been able to improve its margins by around +150bps, pricing in the pros of its business model.

FLUIDRA. Results in line, with the guidance’24 raised slightly. OVERWEIGHT
The results are in line with our estimates and the consensus: 9M’24 sales € 1.64 Bn (+0.9% vs. +1.2% BS(e) and +0.4% consensus), EBITDA € 386 M (+5.5% vs. +5.2% BS(e) and +4.6% consensus). Revenues grew once again (after several quarters in the red) due to higher volumes, despite the fact that the new pool segment remains weak. The gross margin increased +346bps vs. 9M’23 due mainly to the effect from the simplification programme, whereas the EBITDA margin rose +103bps, with somewhat higher operating cost inflation than expected. The company also raised its 2024 guidance very slightly (+0.2% in sales at the midpoint, +1.1% in EBITDA). We do not expect a significant market impact following the stock’s solid recent performance (+16% in six months).