IBERIAN DAILY 06 MARCH (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: CELLNEX, ELECTRICITY SECTOR, GRIFOLS, TALGO.Awaiting the message from the ECB and Powell
Following the release of the latest leading activity indicators, European debt curves tightened and equity markets saw slight drops. Thus, in the STOXX 600, most sectors ended in negative territory (13 out of 20), with Utilities and Insurance being the best-performing sectors, whereas Technology and Basic Resources saw the biggest drops. On the macro side, in the euro zone, February’s final services PMI was raised slightly, suggesting an economy near recovery. The composite PMI saw the best reading since June’23 with some positive surprises in Spain, France and Germany. As for the ECB, the press leaked that- inflation prospects in the euro zone will be cut for 2024 and maybe for 2025. In the US, February’s non-manufacturing ISM fell more than expected, with the job and price headings falling but with orders and activity rising. In the Super Tuesday primaries, D. Trump won easily and is the front runner to be the Republican candidate for the presidency.
In currencies, the euro remained within the same sideways range from the past sessions at between 1.0842/1.0876 against the dollar, awaiting the ECM meeting (currently at 1.0856). In raw materials, Brent crude futures slid from US$ 82.44/barrel to lows near US$ 81.70/barrel (currently at US$ 82.27/barrel). Gold rose to US$ 2,141/oz. from US$ 2,116/oz., fuelled by growing expectations of a rate cut by the Federal Reserve in June (currently at US$ 2,126/oz).
Today in the euro zone we will learn January’s retail sales, in the US February’s private ADP employment survey and January’s job vacancies (JOLTS), the Fed’s Beige Book and J. Powell will speak before Congress.
COMPANY NEWS
CELLNEX. CMD’24: Focus on profitability, debt reduction and shareholder remuneration. BUY
The new plan focuses on improving efficiency, simplifying the backlog and business (as shown in the sale of the Irish business for € 971 M, 4.8% NFD and 24x EV/EBITDAaL vs. 20.2x CLNX) and strengthening the balance sheet (S&P confirmed the investment grade rating at the end of the event, already meeting the target’24), which will allow the company to raise shareholder remuneration. CLNX reiterates its targets’25 (basically in line with the consensus) and offers a guidance’27: adjusted EBITDA between € 3.8-4.0 Bn (+7% CAGR’23-27) and FCF between € 1.1-1.3 Bn (~8x the amount from 2023). After obtaining an IG rating in 2024 (target confirmed), the new NFD/EBITDA IFRS16 ratio target will be between 5.0x and 6.0x, offering a minimum of € 3 Bn of dividends between 2026 and 2030 (12.7% yield) and growing +7.5% annually with a minimum of € 500 M in 2026 (2.1% yield). Furthermore, the remaining cash generated (more than € 7 Bn through 2030) opens the door to the possibility of an extraordinary dividend, share buyback or an investment in industrial opportunities.
GRIFOLS. Moody’s will revise the company’s rating. We place our T.P. and recommendation Under Revision.
According to the press, Moody’s would have decided to place GRF’s rating Under Revision in view of a possible downgrade due to the lower cash generation and the delay to release its audited accounts. Note that Moody’s had a B2 rating with negative outlook for GRF. Negative news of limited impact. The cash generation forecast for 2024 given by GRF did not meet our expectations either and the company will be forced to sell assets to reach the target of
Cellnex Telecom SA is a Spain-based company engaged in the wireless telecommunications (telecom) business. Its activities are divided into three segments: Broadcasting infrastructure, Telecom site rental, as well as Network services and other. The Broadcasting infrastructure division comprises distribution and transmission of television (TV) and frequency modulation (FM) radio signals, operation and maintenance (O&M) of radio broadcasting network, as well as over-the-top (OTT) radio services, among others. The Telecom site rental division provides access to wireless infrastructure, primarily through infrastructure hosting and telecom equipment co-location, mainly for mobile network operators and other wireless and broadband telecom network operators. The Network services and other division offers connectivity services for a variety of telecom operators and radio communication, among others. The Company also develops 5th generation mobile networks (5G) through Alticom BV.
Talgo is engaged in designing, manufacturing, repairing and maintaining the railway rolling stock, as well as the manufacturing, assembling, repairing and maintaining the engines, machinery and parts of the railway systems. Co. has an industrial presence in seven countries: Spain, Germany, Kazakhstan, Uzbekistan, Russia, Saudi Arabia and U.S.A. Co. has an active fleet in Europe, Asia and North America that comprises of 94 high-speed trains and more than 1,400 Talgo tilting passenger cars. Also, Co. purchases, redesigns, constructs, leases and sells all types of real estate.
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