EUR 100.00 For Business Accounts Only

IBERIAN DAILY 02 AUGUST + 2Q’22 RESULTS PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: AENA, CAF, ELECTRICITY SECTOR, SIEMENS GAMESA, SOLARIA, TELEFÓNICA.

At the end of today’s report, and during the entire results season, we will include a presentation with previews for the 2Q’22 results to be released over the coming days in Spain.

Markets kick off August with a lacklustre performance
The European stock markets fell as the session progressed, in line with the slowdown signs. On the geopolitical front, the tension with China continues, as N. Pelosi will visit Taiwan today. Separately, the UN celebrated the first wheat shipment from Ukraine. Within the Euro STOXX, the best-performing sectors were Consumer Goods and Technology, whereas Real Estate and Energy saw the biggest drops. On the macro side, in the Euro zone, July’s final PMI data improved slightly despite negative surprises in Spain and Italy. The data are consistent with drops in activity in 3Q’22, standing below 50 in Spain for the first time since Feb’21 (at 48.7 vs. 52.6). June’s unemployment rate was unchanged at 6.6%. In Germany, retail sales contracted more than expected in June. In the US, July’s ISM manufacturing index slowed less than expected, with a significant slowdown in paid prices. In China, the authorities cut growth forecasts, suggesting that the 2022 target of 5.5% is just some guidelines and that this target is unlikely to be met. In US business results, Williams Cos came in better, Activision Blizzard, Pinterest and Mosaic Co released disappointing figures.
What we expect for today
European stock markets would see a bearish open with the better performance of cyclical and financial companies due to recession risks and the tightening of yields. Currently, S&P futures are down -0.49% (the S&P 500 ended -0.4% lower vs. the European closing bell). Volatility in the US rose (VIX 22.84). Asian markets are sliding (China’s CSI 300 -1.9% and Japan’s Nikkei -1.3%).
Today we will learn in Spain July’s unemployment data. In US business results, DuPont, Caterpillar, Zebra Tech, Paycom and EA, among others, will release their earnings.

COMPANY NEWS
SIEMENS GAMESA, ACCEPT TOB
The company has just released 3Q’22 results slightly above expectations in sales (+2% vs. BS(e) and +3% vs. the consensus) and below in adjusted EBIT (€-343 M vs. €-313 M BS(e) and €-235 M consensus) due to lower margins than expected (-14.1%; -100bps vs. BS(e) and -420bps vs. the consensus). Net debt came in at € 2.27 Bn (vs. € 207 M as of YE2021 and €~1.9 Bn BS(e)). Order intake totalled € 3.52 Bn (+132% vs. 3Q’21), mainly driven by the offshore segment. The company sets a new guidance’22 of ~-9% growth in sales vs. 2021 (vs. -10% BS(e) and -6% consensus; between -9% and -2% previously) and ~-5.5% growth in the adjusted EBIT margin (vs. -4.2% BS(e) and consensus; -4% previously). Likewise, it sets an adjusted EBIT margin guidance’23 still in negative territory (vs. 0.8% BS(e) and 0.7% consensus). Although the results came in somewhat below expectations and the new guidance is slightly lower than the previous one, as the stock is currently impacted by the ongoing TOB (at € 18.05/sh.) launched by its parent company Siemens Energy, we do not expect them to have an impact on the share price. SGRE has underperformed the IBEX by -20% YTD

SOLARIA, SELL
Solaria share price saw a strong correction yesterday (--8%) after the notification to the CNMV that the Diaz Tejeiro family, main shareholder in the company through DTL Corporación S.L., had lowered its stake by -5.05% to 34.910% (vs. previous communiqué on 08/20). The average price (prior to the communiqué, the share price slid -3.8% vs. annual highs) or the sale pace have not been made public although no significant placements have been carried out on the open market. Negative news, as the main shareholder in the company takes advantages of annual highs to lower its stake, which was already the case in Aug’20 when it announced a similar reduction (-4.869%).

TELEFÓNICA, BUY
According to the press, the Supreme Court has not accepted the appeal brought by the State Attorney against the ruling of the Spanish High Court from Oct’21 that ruled in favour of TEF in the dispute of around € 1 Bn for the settlement of the corporate tax in 2009 and 2010. Thus, the ruling is final, and according to the information given, the State should compensate TEF with a cash amount that could reach € 1.2 Bn (including interest for late payment). Positive news, albeit largely expected. The amount represents 4.9% of the company’s market cap and ~4.1% of its NFD. On the other hand, if confirmed, we welcome the fact that the payment is made in cash, as opposed to an accounting entry that would serve to offset future tax payments, which we had assumed.