IBERIAN DAILY 01 NOVEMBER + 3Q’23 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: ENCE, FCC, FERROVIAL, REDEIA, SACYR, TELEFÓNICA, UNICAJA.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’23 results to be released over the coming days in Spain.
9,000 points in jeopardy for IBEX
The macroeconomy set Tuesday’s agenda in the euro zone, where the better inflation data and the worse GDP encouraged a possible early start to rate cuts, which looking at the composition of the IBEX (high weight in banks) was at the rear in Europe. In the STOXX 600 only Energy and Travel & Leisure ended the session with drops, whereas Real Estate posted the biggest gains, followed by Chemicals and Technology. On the macro side, in the euro zone the 3Q’23 GDP contracted unexpectedly (-0.1% QoQ vs. 0.0% expected and 0.2% previously), whereas October’s inflation slowed more than expected to 2.9% YoY from the previous 4.3%. From the ECB, J. Nagel stated he cannot say whether rates are at a peak, as he still sees numerous risks for inflation to rise. In the US, consumer confidence fell less than expected, although it has strung together three months of drops. In Mexico, the 3Q’23 GDP rose more than expected. In China, the Caixin Manufacturing PMI for October fell more than expected, below the growth zone. In US business results, Pfizer, Caterpillar and Franklin beat expectations, Hubbell came in below and Ecolab was in line.
What we expect for today
European stock markets would open with slight gains ahead of today’s Fed meeting. Currently, S&P futures are down -0.14% (the S&P 500 ended unchanged vs. the European closing bell). Volatility in the US fell (VIX 18.14). Asian stock markets are rising (China’s CSI 300 +0.10%, Japan’s Nikkei +2.41%).
Today in the US the Fed will meet, we will learn the manufacturing ISM, ADP private employment for October and the announcement of debt issuances for 4Q’23, in Brazil September’s industrial output. Debt auctions: Germany (€ 3 Bn in bonds due 2030). In US business results, Airbnb and MetLife, among others, will release their earnings.
COMPANY NEWS
FERROVIAL, BUY
The 3Q’23 results beat expectations on the operating level (€ 299 M of EBITDA vs. € 293 M BS(e) and € 285 M consensus) due to better performance in Construction (€ 70 M of EBITDA vs. € 55 M consensus), on both the sales level (+10% vs. 3Q’22) and in margins (3.7% EBITDA vs. 3.1% consensus). Toll Roads (83% of T.P.) was more in line with forecasts (€ 217 M of EBITDA vs. € 211 M consensus), although traffic and tolls continued to perform well (more than 8.4% vs. 9M’22 in Managed Lanes). Cash ex-infra fell by € -184 M in 3Q’23 to € 635 M (vs. € 745 M BS(e)) due to higher working capital consumption.
We do not expect a significant impact following the stock’s strong peformance (+19% in 2023; +9% vs. IBEX).
REDEIA, SELL
The 9M’23 results were in line with expectations, where 9M’23 EBITDA reached € 1.18 Bn (flat vs. 9M’22 and vs. BS(e) and consensus) and € 535 M of Net Profit (-3% vs. 9M’22, vs. -3.3% BS(e) and -3.6% consensus), affected by higher minority interests following the sale of Reintel. By divisions, EBITDA for the TSO and Telecommunications business fell vs. 9M’22, whereas international performed better. NFD in 9M’23 rose to € 4.97 Bn vs. € 4.63 Bn in 4Q’22 (due to working capital, dividend payment and higher capex, +28% vs. 9M’22). These results would be consistent with the company meeting its 2023 guidance: EBITDA above € 1.5 Bn and Net Profit in line with 2022 (around € 665 M), as well as with BS(e) and the consensus. The Board has approved the first interim dividend of € 0.2727/sh. (1.9% yield, in line with 2022 and as expected), to be paid out on 05 January’24.
These results, released at the closing bell (no conference call) provided no news. In 2023 RED has fallen -8% (+9.6% IBEX and +2.7% Enagás), and we reiterate our SELL recommendation due to the lack of short-term drivers and decreasing revenue generation.
Ence Energia Y Celulosa is engaged in the manufacture and commercialization of wood pulp and derivatives. Co. divides its activities into the following two business lines: Forest Division: Co. manages timberlands in South America and the Iberian Peninsula. Co. is involved in trading of wood, and supplies solid wood products including: plywood, sawn timber, parquet flooring and glued-edge paneling. Co. is involved in forest and environmental consulting. Pulp Division and Energy Production: Co. is engaged in the production of Eucalyptus globulus-based TCF and ECF paper pulp. Co. is also involved in the generation of electricity through biomass power producing plants.
Ferrovial is a transportation company based in Spain. Co. is engaged in operations in the transportation sector. Co. specializes in the design, construction, management, administration and maintenance of transport infrastructures. Co.'s services range also includes the maintenance of parking lots, and land-, sea- and air-based transport networks. Co. is also engaged in the promotion and operation of short-stay parking lots, parking regulation and management services and promotion and sale of residents' parking.
Fomento de Construcciones y Contratas is the parent company of a group engaged in sanitation services, cleaning, maintaining, purification and distribution of water, construction of highways, hydraulic works, marine works, air and rail transport infrastructure, urban developments, housing, non-residential buildings, office buildings, toll highways, parking garages, marinas and water treatment plants. Co. is also engaged in the manufacture and sale of cement and cement infrastructures, such as precast concrete elements; and in the financial markets, and real estate development, leasing and tourism.
Sacyr is the parent company of a group engaged in the acquisition, development and construction of urban properties for their subsequent rental or resale. Co. primarily leases and sells office buildings and complexes, housing units, and shopping centers. Co. is also engaged in the operation of urban car parking facilities. Co. offers services related to the real estate industry such as technical assistance in energy savings, inventory management, architectural design, telecommunications management, property maintenance, as well as gardening and landscaping. Co. also provides consulting services in the real estate fund management sector.
Telefonica is engaged in the provision of public or private telecommunications services, including ancillary or complementary telecommunications services or related services. Co.'s fixed business includes: traditional fixed telecommunication services, Internet and broadband multimedia services, data and business-aplications services, and wholesale services for telecommunication operators. Co. also provides a range of mobile and related services and products to consumer and business customers, including mobile voice services, value added services, mobile data and Internet services, wholesale services, corporate services, roaming, fixed wireless, and, trunking and paging.
Unicaja Banco SA is a Spain-based financial institution (the Bank) engaged in the banking sector. The Bank offers services to individual and business customers. Its products and services range includes current and savings accounts, debit and credit cards, consumer and commercial loans, real estate credit, securities brokerage, funds management, leasing, factoring, pension plans, life and non-life insurance, international trade financing, money transfer, as well as treasury, among others. The Bank operates a number of branches in Spain and Morocco. The Bank is controlled by Fundacion Bancaria Unicaja.
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