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IBERIAN DAILY 23 JULY + 2Q’24 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ENAGÁS, GRIFOLS.


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 2Q’24 results to be released over the coming days in Spain.

All eyes on the earnings season and the US
After the worst week since April for the S&P500, this week got off with gains at both sides of the Atlantic but with all eyes on the results to be released this week by the magnificent 7. In the STOXX 600, Technology and Banks led gains vs. the big losses of Travel&Leisure after Ryan Air’s guidance cut. On the macro side, in France negotiations to find a PM candidate continue after L.Tubiana was rejected (proposed by the Socialist Party), as it lacked the endorsement from extreme left parties. In the US, K. Harris would have raised a record level in just 24 hours (US$ 81 M), obtaining the endorsement of more than 50% of her party delegates for her nomination as presidential candidate but the initial polls continue to suggest she would be beaten by D. Trump in the presidential race. In Mexico, May’s IGAE economic activity grew more than expected but retail sales slowed down, as opposed to expectations. In US business results, Verizon came in worse than expected and Truist Financial and IQVIA better.
What we expect for today
Stock markets would open with gains, with small caps and bond proxies performing well. Currently, S&P futures are down -0.12% (the S&P 500 ended +0.53% higher vs. the European closing bell). Asian stock markets are mixed (China’s CSI 300 -1.05%, Japan’s Nikkei +0.12%).
Today in the euro zone we will learn July’s consumer confidence and in the US June’s existing home sales. In US business results, Google (Alphabet), Tesla, Visa, Coca Cola, Moody’s, Invesco and MSCI, among others, will release their earnings.

COMPANY NEWS

2Q’24 Results highlights and rest of previews
Of the stocks releasing their earnings over the coming days, on the positive side we highlight (i) Ence (30/07), where we expect good results thanks to the good performance of pulp prices, currently near record highs, and to the good control of cash cost, which bearing in mind the poor recent share price performance (-7.8% in the past month in absolute terms) should have a positive impact; (ii) Ferrovial (30/07), where we expect solid operating performance in the Managed Lanes and the 407 ETR, which along with progressive margin expansion in Construction, should continue to underpin the stock. (iii) CAF (31/07), where we expect a better trend in 2Q’24 results vs. 1Q’24 with the robust performance of order intake (one of the 1Q’24 weaknesses), which would improve the confidence in a stock that is trading far below its peers (6.9x EV/EBIT vs. >9x peers).

ENAGÁS. Better recurring 1H’24 results, with the reported figures including the capital losses from Tallgrass. OVERWEIGHT
Recurring EBITDA (excluding asset rotation) came in at € 385.6 M (+3.7% vs. 1H’23 and vs. +1% BS(e) and -2% consensus) thanks to efficiencies, the contribution from Musel and the solid investee performance. Recurring Net Profit reached € 148 M (+10% vs. 1H’23, vs. +4% BS(e) and flat consensus, without considering the sale of Morelos in 1H’23). With the Tallgrass capital losses (€ -360 M), reported Net Profit stood at € -210 M. NFD fell to € 3.35 Bn and the NFD/EBITDA ratio to 4.1x (vs. 4.3x in Dec’23). The results would be in line with the guidance (€ 750-760 M EBITDA and € 260-270 M Net Profit, in line with our estimate and the consensus). We expect a positive impact and will pay close attention to the conference call (8:30 CET), which will focus on all the impacts from Tallgrass and the GSP ruling.