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IBERIAN DAILY 08 FEBRUARY + 4Q’22 RESULTS. HIGHLIGHTS AND PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ENCE, LAR.

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 4Q’22 results to be released over the coming days in Spain.

Flat markets ahead of the Fed
J. Powell’s speech (at the European closing bell) revived optimism on the stock markets that had lost some momentum after the strong job data released last Friday and led to gains of more than +1.0% in the US. Thus, within the Euro STOXX, Energy and Banks where the best performers vs. the sharper drops of Household and Real Estate. On the macro side, in Germany, December’s industrial output dropped more than expected whereas in Spain it climbed above expectations. From the Fed, N. Kashkari outlined that the Fed would have to raise interest rates to at least 5.4% following the robust job data released. J. Powell also warned of greater rate hikes if employment remains strong, although he insisted there are signs of deflation. In US Results, Dupont, Linde, Gartner and Incyte came in better than expected, Catalent worse.
What we expect for today
European stock markets would open with gains of as much as +1.0% with the good performance of technology in a session marked by the 4Q’22 Results. Currently, S&P futures are down -0.1% (the S&P 500 ended +1.2% higher yesterday vs. the European closing bell). Volatility in the US dropped (VIX 18.66). Asian markets are falling (China’s CSI 300 -0.27% and Japan’s Nikkei -0.29%).
Today in the US we will learn December’s final wholesale inventories. In debt auctions: Germany (€ 4 Bn in bonds due 2029). In US business results, Chipotle, Paycom and Illumina, among others, will release their earnings.


COMPANY NEWS
ENCE. Supreme Court confirms the extension for the Pontevedra factory. BUY
The Supreme Court yesterday ruled in favour of the 60-year extension of the Pontevedra factory (43% of its production and 25% consolidated EBITDA). We understand this is a firm ruling, and that the possible appeals should be filed before other jurisdictions (Constitutional Court or EU). The company could continue to operate the plant predictably until 2073 (we assumed it would be closed in 2023). We include this scenario in our T.P., which increases by +33% up to € 5.30/sh. (+37% upside). After yesterday’s +28% rally, the share price would have already factored in the news, and thus, its performance now will be marked by the business performance against a more challenging price backdrop (-2% in Europe this week).