IBERIAN DAILY 07 JUNE (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: EBRO FOODS, ENAGÁS, FCC, INDITEX, METROVACESA, REDEIA.An uneventful day on the markets
It was a transitional session in Europe, where we highlight the falling consumer inflation expectations in the euro zone according to the ECB’s latest survey. In the Euro STOXX, the best-performing sectors were cyclicals like Basic Materials and Media, whereas Retail and Telecoms closed with the biggest losses. On the macro side, in Germany, factory orders fell unexpectedly in April, as did industrial output for April in Spain. On the geopolitical side, the Spanish Govt. approved the addendum to the Recovery, Transformation and Resilience Plan, with which it will request more than an additional € 90 Bn of Next Generation European funds. In the euro zone, retail sales came in worse than expected, stagnating in April. Separately, the EU would be mulling the possibility of banning member states from using 5G network equipment owned by companies posing a security risk, such as Huawei. Lastly, the World Bank raised its global growth forecast for 2023 to 2.1% (vs. the previous 1.7%) thanks to the strong start to the year, although it cut the estimate for 2024 to 2.4% (vs. 2.7% previously) due to the effects from the more restrictive monetary policy. In China, May’s exports fell more than expected, although imports fell less than expected.
What we expect for today
The European stock markets would open with slight gains in a session lacking drivers. Currently, S&P futures are up +0.10% (the S&P 500 ended flat vs. the European closing bell). Volatility in the US fell (VIX 13.96). Asian stock markets are falling (China’s CSI 300 -0.07%, Japan’s Nikkei -1.24%).
Today we will learn in Germany April’s industrial output, in Brazil May’s inflation, and in the US April’s trade balance. In debt auctions: Germany (€ 1 Bn in green bonds due 2025).
COMPANY NEWS
INDITEX. Better 1Q’23 results than expected, especially on the operating level, and strong start to 2Q’23. BUY.
Better 1Q’23 results than expected in LfL sales (~+15% vs. ~12.5% BS(e) and +13.4% consensus), with the gross margin improving by around +34bps to 60.5% (vs. ~-30bps BS(e) and -30/-50bps consensus) and EBIT growing significantly by ~+17% vs. 1Q’22 adjusted (>43% reported) thanks to good cost control (growth in opex lower than sales), and with the EBIT margin rising to 19.5% (vs. 17.5% BS(e) and 17.4% consensus). The indications for 2Q’23 are positive (01 May-04 June), with LfL up +16%, and the targets’23 are maintained (although the company raises the FX effect to around -2.5% vs. the previous -1%). The solid performance seen, along with the indications given, should serve to maintain the stock’s positive momentum (+28% in 2023; around +13% vs. IBEX 35 and around +15% vs. the rest of the sector).
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.
Enagas is a gas transportation company based in Spain. Co. is engaged in the technical distribution and storage of gas through pipelines as well as the provision of regasification services. Co. and subsidiaries are engaged in the ownership, administration, storage, pipeline transportation, distribution flow, and sale of natural gas. As a transport company, Co. also provides gas and manages the gas infrastructures.
Fomento de Construcciones y Contratas is the parent company of a group engaged in sanitation services, cleaning, maintaining, purification and distribution of water, construction of highways, hydraulic works, marine works, air and rail transport infrastructure, urban developments, housing, non-residential buildings, office buildings, toll highways, parking garages, marinas and water treatment plants. Co. is also engaged in the manufacture and sale of cement and cement infrastructures, such as precast concrete elements; and in the financial markets, and real estate development, leasing and tourism.
Metrovacesa SA, formerly Metrovacesa Suelo y Promocion SA, is a Spain-based real estate developer. The Company specializes in construction and sale of sustainable housing, both single-family and multi-family residential properties. Its activities also include promotion, urbanization and parceling of real estate in general, as well as real estate management for own benefit or on behalf of third parties. Its asset portfolio includes more than 6 million square meters of building land across Spain, as well as already developed properties in cities, such as Malaga, Almeria, Cordoba, Barcelona and Madrid, among others.
Red Electrica is engaged in the transmission of electrical energy, the operation of the system and the management of the transmission network in the Spanish electricity system. In addition, through its subsidiaries, Co. is engaged in the acquisition, holding and management of foreign securities, co-ordination of international exchanges, provision of telecommunications services for third parties, provision of consultancy, engineering and construction services outside the Spanish electricity system, securing of funds, carrying out of financial transactions and provision of financial services.
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