EUR 100.00 For Business Accounts Only

IBERIAN DAILY 21 SEPTEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ECOENER, ENCE, SOLARIA.

The Fed sticks with higher for longer
European stock markets improved by the end of the session (especially the IBEX, which was once again the best-performing index in the euro zone and neared 9,600 points), awaiting the Fed’s decision on optimism, which intensified its bet on higher rates for a long period. In the Euro STOXX, all the sectors except Energy and Insurance ended with gains, led by Autos and Banks. On the macro side, in the US the Fed meeting kept the interest rate unchanged, continuing to suggest an additional rise in 2024 but the main surprise came from the lower-than-expected rate cuts for 2024-25 that would leave the benchmark rate at 5.1% and 3.9% vs. 4.6% and 3.4% in June against a backdrop of strong and optimistic GDP upward revisions. In Brazil, the Central Bank cut the Selic interest rate by -50bps as expected to 12.75%.
What we expect for today
European stock markets would open with losses of more than -1.0% that would be reeled in by the end of the session. Currently, S&P futures are down -0.34% (the S&P 500 ended down -1.37% vs. the European closing bell). Volatility in the US rose (VIX 15.14). Asian stock markets are sliding (China’s CSI 300 -0.58%, Japan’s Nikkei -1.28%).
Today in the euro zone we will learn September’s preliminary consumer confidence, in the UK the BoE will meet, in the US we will learn weekly jobless claims and in Mexico July’s retail sales. In debt auctions: Spain (€ 6.5 Bn in bonds due 2026, 2028 and 2031).


COMPANY NEWS

ECOENER. We expect poor 1H’23 results and a possible cut to targets. BUY
We expect the 1H’23 results (28/09) to be affected by the falling pool price in Spain (-57% vs. 1H’22), the review of remunerative parameters and the delay in capacity being installed. Thus, we estimate EBITDA will come in at € 15 M (-42% vs. 1H’22) and Net Profit at € 4 M (-64% vs. 1H’22), whereas CAPEX would reach €~60 M, which would leave the leverage ratio at 7.2x (based on EBITDA over the past 12 months). We do not rule out the possibility the Company will announce a cut to its installation targets for 2023 (~179 MW could be pushed back to 2024 vs. 510 MW in operation by the end of 2023). Despite underperforming the IBEX by -22% YtD, we think if the poor results and target cuts are confirmed, we could see additional pressure put on the stock, at least in the short term.

SOLARIA. We do not expect any surprises in the 2Q’23 results or the CMD. BUY
The company will release its 2Q’23 results on 28 September and will hold a Capital Markets Day (we do not expect any new power to be installed). The 2Q’23 sales should come in at € 51 M (+30% vs. 2Q’22) due to higher installed capacity (around +50% vs. 2Q’22), which will offset the lower pool prices. In terms of profit, we do not expect any surprises, and EBITDA will reach € 45 M (+28% vs. 2Q’22), meaning a margin of 89%. As for the CMD, we do not expect it to be a game changer, but it should confirm the positive outlook for the renewable energy sector, especially for solar PV, which should be no surprise for the market.