EUR 100.00 For Business Accounts Only

IBERIAN DAILY 03 JANUARY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: CELLNEX, FCC.

MARKETS YESTERDAY AND TODAY

Promising start to the year
Stock markets started 2020 with solid gains, mainly Europe and emerging countries. In the Euro STOXX, all sectors saw gains, led by Banks and Technology while Consumer Goods and Chemicals were the worst performers. On the macroeconomic level, in the euro zone, the final PMI was unexpectedly raised to 46.3 thanks to France and Germany and despite the drops of Spain and Italy. In Brazil, December’s trade surplus came in above expectations thanks to the positive surprise in the progress of exports.
What we expect for today
Stock markets would open with drops of as much as -1.0%, dragged down by the +3.0% rise in Brent cure and the tightening in debt yields after the US killed the leader of Iran’s revolutionary guard corps (General Q. Soleimani) in an air strike in Bagdad airport (Iraq). Currently, S&P futures are down -0.8% (the S&P 500 closed +0.6% higher vs. its price at the closing bell in Europe). Volatility in the US dropped (VIX 12.5%). Asian markets are sliding (Japan is closed and Hong Kong -0.3%).
Today in Spain we will learn December’s number of unemployed, in Germany inflation and December’s number of unemployed and in the US December’s manufacturing ISM and November’s construction expenses.

COMPANY NEWS

CELLNEX, BUY
The company yesterday communicated the acquisition of 100% of OMTEL (MEO towers – Portugal Telecom-, the incumbent player in Portugal). The company owns ~3,000 sites (60% towers, 40% rooftops; with a tenancy ratio of 1.25x vs. CLNX’s 1.61x as of 9M’19), and the deal includes an additional construction programme of 750 new sites (for € 140 M). The equivalent EV (100% stake) stands at € 800 M (~3.5% of CLNX’s EV), in addition to a € 140 M future expansion capex (for BTS programme of 750 towers). The initial investment totals ~300 M (in addition to around € 200 M of debt), while the remaining amount (€ ~300 M NAV) will be paid in 2027. The expected adjusted EBITDA amounts to € ~90 M (~8.5%of CLNX’s), leaving the final multiple of the transaction at ~10.7x (13.8x pre IFRS16), below CLNX’s ~21x 2020e..
Positive news. The company continues to execute its inorganic growth plan, extending its footprint in Europe through a new country (Portugal, which can benefit from Spain’s platform) and a new client, Altice, with assets in other countries, which can increase the capacity of future acquisitions. The price paid would be consistent with the company’s capacity of carrying out acquisitions without rights issues (that would total € ~2.5 Bn, according to our estimates). We stress cash generation thanks to OMTEL’s tax assets in the country. The NFD’20e would rise around 8.4%.