IBERIAN DAILY 28 OCTOBER + 3Q’21 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: BANKING SECTOR, CELLNEX, EBRO, ECOENER, ENCE, FERROVIAL, GLOBAL DOMINION.MARKETS YESTERDAY AND TODAY
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’21 results to be released over the coming days in Spain.
Inflationary pressure increases awaiting the ECB
It was a session of profit-taking on the European stock markets, with growth beating value as the 2-10Y slope flattens. Within the Euro STOXX, most sectors posted losses, led by Banks and Travel&Leisure vs. the better relative performance of Utilities and Technology. On the macro side, in the Euro zone, M3 slowed in line with expectations, although the rise in corporate lending stood out. In the US, September’s durable goods orders fell less than expected. In the United Kingdom, car production plummeted by -41% to 1982 lows. In Brazil, the Central Bank raised the Selic reference interest rate by 150bps (more than expected) to 7.75%, hinting at a new 150bps rise for Dec’21. In Japan, the BoJ kept the monetary policy unchanged and backs a lax monetary policy after reducing its growth forecast for 2021 and estimating a low inflation rate for the coming years. In US business results, Coca-Cola, Kraft Heinz, and McDonalds came in better, and Boeing worse, among others.
What we expect for today
European stock markets would open flat with the better performance of technology and the energy sector dragged down by the drop in crude oil prices and automobiles by supply problems. Currently, S&P futures are up +0.2% (the S&P 500 ended down -0.44% vs. its price at the closing bell in Europe). Volatility in the US increased (VIX 16.98). Asian markets are falling (China’s CSI 300 -0.4% and Japan’s Nikkei -0.8%).
Today the ECB will hold its meeting. Also we will learn in the Euro zone October’s economic sentiment index, in Spain September’s unemployment data and October’s inflation, and in Germany, the number of unemployed for October. In US business results, Caterpillar, Merk, Mastercard, and Moody’s, among others, will release their earnings.
COMPANY NEWS
FERROVIAL, 407ETR Highway 3Q’21 Results, BUY.
The company has just released the 3Q’21 Results of the ETR 407 highway (43.23% FER; 57% T.P.) with quarterly sales and EBITDA -22% and -23% below 3Q’19 levels (we prefer to carry out the comparison with a normalized year). Traffic came in -26% below 3Q’19 levels (-43% in 9M’21) while tariffs (average revenues per trip) rose by +5%. On another note, the highway announced a quarterly dividend of CAD 300 M/€ 202 M, with € 88 M corresponding to FER.
The 3Q’21 Results are still weak although with a clear gradual improvement of traffic (–26% vs 3T’19 vs –52% en 2T’21 y -55% en 1T’21), which is consistent with the performance outlined by FER for the fist days of July’21 (-32% vs. 2019), explaining the beginning of phase 3 of Toronto’s reopening (July’21). On the positive side, we stress the positive performance of average revenue per trip, which is due to a more favourable vehicle mix (higher proportion of heavy vehicles) and the recovery of the dividend, even though it is in line with our estimates (around CAD 600 M in FY2021; around € 170 M corresponding to FER), it was one of the main uncertainties weighing on the share price.
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.
Ebro Puleva is a food manufacturing group based in Spain. Co. is engaged in the manufacture and marketing, export and import of sugar, rice, dairy products, and products destined for agriculture development and human and animal consumption. Co.'s brand names include: Panzani®, Ronzoni®, American Beauty®, Skinner®, Lancia®, Catelli®, Healthy Harvest®, etc. in pastas and sauces, Mahatma®, Sucess®, Carolina®, Lustucru®, Taureau Aile®, Oryza®, Bosto®, Reis-Fit®, Riceland®, Danrice®, Risella®, Brillante®, Nomen®, La Cigala® and La Fallera® in the rice sector, Puleva®, Ram® and El Castillo® in the dairy sector, and Azucarera® and Sucran® in the sugar sector.
Ence Energia Y Celulosa is engaged in the manufacture and commercialization of wood pulp and derivatives. Co. divides its activities into the following two business lines: Forest Division: Co. manages timberlands in South America and the Iberian Peninsula. Co. is involved in trading of wood, and supplies solid wood products including: plywood, sawn timber, parquet flooring and glued-edge paneling. Co. is involved in forest and environmental consulting. Pulp Division and Energy Production: Co. is engaged in the production of Eucalyptus globulus-based TCF and ECF paper pulp. Co. is also involved in the generation of electricity through biomass power producing plants.
Ferrovial is a transportation company based in Spain. Co. is engaged in operations in the transportation sector. Co. specializes in the design, construction, management, administration and maintenance of transport infrastructures. Co.'s services range also includes the maintenance of parking lots, and land-, sea- and air-based transport networks. Co. is also engaged in the promotion and operation of short-stay parking lots, parking regulation and management services and promotion and sale of residents' parking.
Global Dominion Access SA is a Spain-based company primarily engaged in the construction and engineering sector. The Company's activities are divided into two segments: Multi-technological Services, which offers design, implementation and maintenance of fixed and mobile telecommunications networks, manages sales and distribution processes for telecommunications carriers, as well as renders of inspection, maintenance, repair and renovation services for industrial and energy firms, and Solutions and EPCs, which executes turnkey Engineering-Procurement-Construction (EPC) projects, provides construction, repair and renovation of industrial heating installations, as well as develops processes and other technological and business solutions in numerous sectors. Its services are provided in three areas: Technology and Telecommunications (T&T), Industry and Renewable energies. It operates worldwide in Europe, the Americas, Asia and Africa. The Company is a subsidiary of CIE Automotive SA.
Indra Sistemas is engaged in the design, development, manufacture, assembly, repair, and installation of computer software and applications. Through its subsidiaries, Co. is engaged in consulting, graphic design and multimedia, web design and marketing, internet development and electronic trade, systems integration and hosting geared business to business and business to consumer, as well as in internet financing and electronic marketing. Co. serves defense and security, transport and traffic, energy and industry, telecom and media, finance and insurance, and public administration and healthcare markets. Co. operates primarily in Europe, the United States, Canada, and Latin America.
Gestevision Telecinco is a television network company based in Spain. Co. heads a group of dependent companies, which form the Telecinco Group. Through its subsidiaries, Co. is engaged in the management and commercial exploitation of a television network. Co.'s television network acquires, produces, and distributes audiovisual content. Co. also sells the network advertising airtime, carried out by its subsidiary. In addition, Co. is involved in the sale of other advertising products; production of news programs; the production and sale of audiovisual property rights; and teleshopping.
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