EUR 100.00 For Business Accounts Only

IBERIAN DAILY 10 JULY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: CHANGES IBEX, ENAGÁS, FERROVIAL, OHLA, GRIFOLS, TELEFÓNICA.

The Ibex falls in the end below 11,000 points
The political blockade expected in France due to the refusal to negotiate a government coalition by the New National Front dragged European indices (the CAC almost -2.0%). Thus, in the STOXX 600, all sectors with the exception of Media and Food dropped, led by Construction and Technology. On the macro side, in the US, June’s SMEs confidence improved to the highest level since Dec’23 although remaining below the historical average for 2.5 years given the high inflation. From the Fed, J. Powell stressed once more the need of positive inflation data to cut rates. In Mexico, June’s inflation climbed more than expected to 5.0% YoY. In China, June’s inflation fell more than expected, while production prices reduced their drop in line with expectations.
What we expect for today
Stock markets would open with slight gains in a session with few macro references. Currently, S&P futures are flat (the S&P 500 ended unchanged vs. the European closing bell). Asian stock markets are mixed (China’s CSI 300 -0.2%, Japan’s Nikkei +0.7%).
Today in Brazil we will learn June’s inflation.

COMPANY NEWS

CHANGES IBEX 35
As expected, the Ibex Technical Advisory Committee yesterday decided the inclusion of Puig in the Ibex (with the 100% weighting of B shares), replacing Meliá. This change will be effective starting on the 22nd of July.

GRIFOLS, OVERWEIGHT
According to the press, Brookfiled’s preliminary offer would set a range with a low end that would stand at around € 10/sh. (+3.5% premium vs. yesterday’s closing price). Note that the founding family and the investment fund confirmed on Monday that they are negotiating a partnership to make a TOB on 100% of the company with the aim of delisting it. Brookfield’s proposal would include the creation of an investment vehicle to which the Grifols family would contribute 30% of the capital. Currently the process would be at a stage of due diligence, and the negotiations between Brookfield and the family would be at a very early point. Awaiting confirmation of the deal’s details, an offer of € 10/sh. would be very unappealing for shareholders, as it clearly clearly undervalues the company, coming in around -40% below our valuation. Note that, according to other sources, the Grifols family could consider a higher range of around € 12-13/sh., but in any event the family must reach an agreement with Brookfield, given that it could not undertake the deal by itself. Also note that the Spanish market watchdog (CNMV) should validate the price offered in a hypothetical TOB and confirm it is fair, and thus it could require a better price. One of the points to be looked at is GRF’s average share price over the past six months, which is € 9.19/sh., although severely hit by Gotham’s first report from 9 January. Before this date the share was trading at € 14.24/sh. and at € 11.90/sh. on average in 2023.