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IBERIAN DAILY 03 SEPTEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ENAGÁS, MEDIASET ESPAÑA, OHL, PROSEGUR, RENEWABLES SECTOR.


MARKETS YESTERDAY AND TODAY

European stock markets rally, driven by Germany
European stock markets rallied yesterday driven by the German DAX index, which ended up +2%, and with the Ibex seeing the smallest gains. Gains were backed by growth stocks, and within the Euro STOXX, all sectors, except for Travel & Leisure and Banks, posted gains, led by Household goods and Telecoms. On the macro side, in Spain, the number of unemployed increased by 30,000 persons following the end of the tourism season. In the US, July’s factory orders climbed above expectations, with durable goods orders being raised, whereas the ADP employment survey rose less than expected. From the Fed, L. Mester claimed that the recovery of the US economy is still fragile and further action will be needed from the Government, whereas Brainard spoke in favour of shifting towards a more accommodative monetary policy over the coming months. Meanwhile, the Fed’s Beige Book hinted at a more modest recovery of the US economy, with a good performance of the manufacturing and consumption sectors, and with the residential segment standing out. Separately, the latest Reuters/Ipsos survey continues to give Biden a +7p advantage over Trump. In Japan, August’s Services PMI contracted slightly as expected to 45. In China, August’s Caixin Services PMI remained virtually flat at 54 vs. 54.1 previously.
What we expect for today
European stock markets would open with gains of +0.5%, backed by the euro’s depreciation. Currently, S&P futures are down -0.3% (the S&P 500 ended up +0.86% vs. its price at the closing bell in Europe). Volatility in the US rose (VIX 26.57%). Asian markets are trading with mixed results (Japan +1.1% and Hong Kong -0.5%).
Today in the Euro zone we will learn July’s retail sales, in Spain and Italy August’s Services PMI, in the US August’s ISM Services index, and in Brazil July’s industrial output and August’s Services PMI. In debt auctions: Spain (€ 4.5 Bn of bonds due 2025, 2028, and 2035, and € 750 M of I/L bonds due 2033) and France (€ 7.433 Bn of bonds due 2030, 2036, 2052 and 2060).

COMPANY NEWS

MEDIASET ESPAÑA. Has released better results than expected by the consensus. We change our recommendation to BUY following the stock’s poor performance.
The results came in better than expected by the consensus but slightly below our estimates. Opex was reduced by -31% in 2Q’20 (vs. -31.6% BS(e)), bringing 2Q’20 EBITDA to € 32.3 M (-65.2%), with the margin coming in at 22.2% (vs. 36.1% in 2Q’19). Following the stock’s recent poor performance (-46.5% in absolute terms and -15.9% vs. Ibex since February’s Ibex highs), we expect a positive market reaction. We change our recommendation from SELL to BUY, as the upside potential begins to be attractive (+41.2%; T.P. of € 3.80/sh.). The main uncertainties weighing on the stock continue to be a weak advertising market (we expect a -19.9% drop in 2020) and the conditions of the future merger (after it was suspended due to Vivendi’s claims). Meanwhile, the company’s FCF yield stands at ~17%.