EUR 100.00 For Business Accounts Only

IBERIAN DAILY 18 MARCH (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ENCE, IAG, MEDIASET ESPAÑA.

The market halts the gains
European stock markets ended flat after Russia put peace talks with Ukraine on ice and Putin made a speech defending the annexation of Crimea in 2014. Furthermore, J. Biden warned that Russia could threat to use nuclear weapons if the war drags out, while he continues to fear China’s closer approach with Russia. With this in mind, in the Euro STOXX the best-performing sectors were Energy (after Brent rose back above US$ 100/barrel) and Telecoms, whereas Retail and Banks were the worst performers. On the macro side, in the euro zone February’s final inflation rose +0.1% vs. the preliminary data to 5.9%. In the UK the BoE interest rates meeting led to a +25bps increase to 0.75% (for the third straight time), leaving the door open to more hikes this year. In the US, the data was surprisingly resilient, with weekly jobless claims falling more than expected, February’s industrial output rising in line with expectations and building permits contracting less than expected (whereas housing starts rose to a greater extent). In Japan, February’s inflation was in line with expectations, the general data, and the core data slightly higher.
What we expect for today
The European stock markets would open with minimal gains that could be reversed throughout the session following the rally of the past few days and before the weekend. The Ibex could be affected by the noise surrounding regulatory changes in the electricity sector (setting limits to the pool prices) and because the income agreement sought by the government may limit profit and business dividends. Currently, S&P futures are down -0.3% (yesterday the S&P 500 ended +0.68% higher vs. the European closing bell). Volatility in the US dropped (VIX 25.67). Asian markets are climbing (China’s CSI 300 +0.7%, and Japan’s Nikkei +0.65%).
Today in the US we will learn February’s second-hand home sales and March’s University of Michigan consumer confidence index.

COMPANY NEWS

ENCE. CMD: The company is starting to make decisions regardless of the Pontevedra plant. BUY.
From the Capital Markets Day held at the end of yesterday’s session we highlight that ENC is starting to make investment decision (although not highly relevant) mainly in the pulp business (~33% of normalised EBITDA). In this regard, regardless of the final outcome on the Pontevedra factory, the group will implement an efficientisation plan in Navia immediately that starting with € 105 M of CAPEX (11% of EV) will mean (according to ENC) around € +20 M of EBITDA (+11% in a normalised average cycle year without Pontevedra). With this measure, which includes several improvement plans and adjustment in pulp prices, we will revise our estimates and T.P. where in principle we would foresee between +6 and +11% vs. € 3.60/sh. currently (+15% upside). ENC has outperformed the IBEX by +42% YtD (-1% since the announcement of the resolution against the Pontevedra factory in July’21).