EUR 100.00 For Business Accounts Only

IBERIAN DAILY 21 OCTOBER + 3Q’22 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: BANKING SECTOR, CONSTRUCTION SECTOR, ENAGÁS, GRIFOLS, IAG, IBERDROLA, SACYR, TELEFÓNICA, VIDRALA, VISCOFAN.

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’22 results to be released over the coming days in Spain.

L. Truss resignation boosts stock markets
The European stock markets posted gains in a session marked by the resignation of L. Truss (B. Johnson, J. Hunt and R. Sunak are among the candidates that could replace her) after only 45 days in office and after the failure of her controversial tax reduction plan. Peripheral indices stood out, with the Ibex and the MIB ending the session with gains of around +1%. Within the Euro STOXX, Technology and Real Estate were the best relative performers vs. the drops in Telecoms and Financial Services. On the macro side, in Germany, September’s production prices reached 45.8% YoY, equalling August’s levels and being the highest in the series, pushing inflation upwards. The European Council finally agreed on joint gas purchases for 15% of reserves, a dynamic cap on gas prices and a new benchmark for 2023, among other measures. In the US, weekly jobless claims fell more than expected, whereas the Philadelphia Fed index contracted more than expected in October, although with a rise in the prices component. Second-hand home sales fell for the eighth month in a row, as expected. In Japan, September’s core inflation climbed as expected to 3.0%, 1991 highs. In US business results, Philip Morris, American Airlines and AT&T came in better than expected, and KeyCorp worse.
What we expect for today
The European stock markets would open with drops of around -1.0% that could become more significant in view of the extremely high volatility seen in the bond market. Currently, S&P futures are down -0.4% (the S&P 500 ended -1.3% lower vs. the European closing bell). Volatility in the US fell (VIX 29.98). Asian markets are falling (China’s CSI 300 -0.15% and Japan’s Nikkei -0.4%).
Today is the second day of the European Council Meeting. In US business results, Verizon and American Express, among others, will release their earnings.


COMPANY NEWS

3Q’22 Results highlights and rest of previews
Of the stocks releasing their earnings over the coming days, on the positive side we highlight the financial sector. Specifically, Grupo C. Occidente (27/10), where Net Profit’21 would have already been achieved as of 9M’22. We also highlight BBVA and Caixabank (both 28/10), with a good performance in Core revenues, especially in NII, which should give rise to estimate and guidance increases.

VISCOFAN. 3Q’22 results above expectations in EBITDA, though with worse margins. BUY.
The 3Q’22 results beat expectations in EBITDA (+6.1% vs. +0.2% BS(e) and +3.4% consensus), underpinned by the improved sales (+24.3% vs. +14.9% BS(e) and +17.5% consensus), although margins were worse (22.3% vs. 22.8% BS(e) and 23% consensus). This was due to: (i) volumes near highs (around +4%); (ii) increased price mix (around +5% this quarter); (iii) higher energy and transport costs (+70% and +45%), as well as in raw materials and auxiliary equipment. Guidance maintained. With this in mind, we have raised our estimates significantly in sales’22-26 (+7.4% average vs. previously), although in EBITDA’22-26 very slightly (-1.7% on average) due to the rising inflation. We raise our T.P. +12% to € 68.00/sh. (+13% upside), supported by the higher estimates and rollover’23.

GRIFOLS, BUY.
According to the press, GRF could be hit with a class-action lawsuit from at least 54,000 plasma donors in Illinois (US) due to their privacy having been compromised. Specifically, the persons affected state that they would have been forced to provide their fingerprints in the collection centres, an unauthorised practice that would break privacy laws in the state of Illinois. Although the number of affected people is unclear (according to the article it could be close to double the figure mentioned), the fine could be between € 54-275 M (1% and 5.3% of market cap) depending on whether the action was intentional.
MARKET IMPACT


VIDRALA, BUY.
The results were in line in sales and above expectations in margins, but in any event they were poot, hit by the sharp rise in energy prices that the company was unable to pass on to clients in 3Q’22. Sales: € 645 M (+24% vs. +25% BS(e)); EBITDA: € 70 M (-39% vs. -34% BS(e)). Thus, the EBITDA margin came in at 12.8% vs. 10.0% BS(e).
We welcome the improved margins in a very challenging quarter due to the abrupt rise in energy costs. According to the company, “operating margins will recover progressively over the last quarter of the year thanks to the actions being taken to mitigate the energy cost and a gradual adaptation of our selling prices”. Our estimates already include the increased margins in 4Q’22 (15.0%).