IBERIAN DAILY 24 JULY (ANÃLISIS BANCO SABADELL)
NEWS SUMMARY: CELLNEX, EUSKTALTEL, IAG, TELEFÓNICA.MARKETS YESTERDAY AND TODAY
A flat market in Europe but not in the US
It was a calm session (although with a decreasing performance) in Europe, with the main indices trading stable despite the tensions between the US and China due to the closure of Houston’s consulate although more penalised following the poor weekly jobless claims data in the US. In the Euro STOXX, Automobiles and Consumer Goods were the best performing-sectors, while Insurance and Real Estate saw the worst relative performance. On the macroeconomic level, in Europe, July’s consumer confidence dropped more than expected. As for the EU-UK negotiations, the more optimistic comments from the UK negotiator, hinting at being able to reach an agreement in September contrast with those made by that of the EU (M. Barnier). In the US, weekly jobless claims climbed more than expected. In US Results, AT&T, American Airlines, and Feeport McMoran came in better while Tweeter worse than expected.
What we expect for today
Stock markets would open with losses amid concerns about new trade tensions (after China ordered the US to shut its consulate in Chengdu in retaliation for the closure of China’s consulate in Houston) and rising doubts on the recovery of the US economy. Currently, S&P futures are down -0.30% (the S&P 500 was down -1.16% vs. its price at the closing bell in Europe). Volatility in the US rose (VIX 26.08%). The Asian markets that are open are falling (Hong Kong -1.83%).
Today in Europe, Germany and the United Kingdom we will learn the Manufacturing and Services PMIs, in the US the new home sales data, and in Mexico the IGAE economic activity index. In US business results, American Express, Verizon and Hasbro, among others, will release their earnings.
COMPANY NEWS
CELLNEX. The Benettons will sell their rights. BUY
The Benetton family (who hold a 16.45% stake in CLNX through Edizione) will not subscribe to the rights issue and will sell all of their rights (63.39 M) via a transaction including an accelerated bookbuild of ~13.2 M shares (3.4% of the total) to avoid downward pressure on the trading rights. This rights sale comes after Atlantia announced it had decided not to acquire them. Following the rights sale, the Benetton family’s stake in CLNX will be ~13% (vs. 16.45% currently). The Benettons have expressed their support to the company’s strategy.
EUSKALTEL. Good results and in line, with very limited impact from Covid-19. We expect a positive impact. SELL.
We stress the positive performance of the client base with 11,300 net adds (+1.4%, with 6,500 stemming from Virgin) and +3.7% EBITDA growth in the 2Q’20 up to € 87.5 M, with a 51% margin (vs. 49.4% in the 2Q’19) thanks to the continued cost efficiencies. Despite the good share price performance (+22% vs. IBEX from highs), we expect a positive impact thanks to the better performance of the client base and the good evolution in profitability (in line with expectations). However, we maintain caution, as the valuation upside is not sufficiently appealing to offset the risks (execution of expansion and tougher competition), and we do not see consolidation in the short-term.
Almirall is engaged in the acquisition, manufacture, storage, sale and mediation in the sale of pharmaceutical specialties and products and all manner of raw materials used to prepare pharmaceutical specialties and products. Also, Co. acquires, manufactures, storages, sales and mediates in the sale of cosmetics, chemical, biotechnological and diagnostic products for human, veterinary, agrochemical and food-industry use, as well as all manner of utensils, complements and accessories for the chemical, pharmaceutical and clinical industries. In addition, Co. is engaged in the acquisition, sale, lease, subdivision and development of land lots, land and properties of all kinds.
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.
CIE Automotive is the parent company of an industrial group formed by several companies that are engaged in the design, manufacture and sale of automobile component and sub-units on the world market. In addition, Co. is also engaged in the bio-fuels business which is in the initial stages of development and is made up of various companies devoted to the production and distribution of bio-fuels.
Euskaltel SA is a Spain-based company engaged in the provision of integrated telecommunication services. The Company's activities are divided into three segments: Residential, Business, as well as Wholesale and Other. The Residential segment provides fixed and mobile telecommunication services, broadband and wireless Internet, as well as digital television (TV) as a single service and in packages. The Business division primarily offers fixed and mobile telephony, as well as Internet access for enterprises. The Wholesale and Other area serves wholesale customers and is responsible for the delivery of communication services, such as infrastructure leasing, information technology (IT) outsourcing, as well as sell of installation material and electronics. The Company operates in the Basque Country, Spain.
International Airlines Group is an international scheduled airline and global premium airlines. Co.'s principal place of business is London with significant presence at Heathrow, Gatwick and London City airports.
Mapfre is an insurance company based in Spain. Co. is the parent company of a group engaged in the underwriting and provision of insurance in Spain and abroad. Insurance policies provided include: life, non-life, accident, home-owner, general and health. Through its subsidiaries, Co. is also engaged in the provision of reinsurance, the management of investment funds, pension funds and pension plans, real estate and related services. On the domestic market, Co.'s activities include managing investment funds, pension funds and pension plans, real estate and other service businesses.
Telefonica is engaged in the provision of public or private telecommunications services, including ancillary or complementary telecommunications services or related services. Co.'s fixed business includes: traditional fixed telecommunication services, Internet and broadband multimedia services, data and business-aplications services, and wholesale services for telecommunication operators. Co. also provides a range of mobile and related services and products to consumer and business customers, including mobile voice services, value added services, mobile data and Internet services, wholesale services, corporate services, roaming, fixed wireless, and, trunking and paging.
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