EUR 100.00 For Business Accounts Only

IBERIAN DAILY 24 DECEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ENDESA, FERROVIAL, PRISA, TELEFÓNICA.

MARKETS YESTERDAY AND TODAY

European markets hit new one-year highs in a session with little trading volume
Stock markets rallied further yesterday, boosted by the announcement that China will cut the tariffs applied on a wide range of imports. However, the daily trading volume was low, as usual over this period. Within the Euro STOXX, Energy and Pharma led gains, whereas Banks saw the biggest drops. On the macro side, in the US, November’s durable goods orders fell unexpectedly. On the other hand, the Chicago Fed national index beat expectations. In Spain, public deficit as of Sep 2019 increased to 1.47% of the GDP vs. 1.21% in Sep 2018 due to lower tax collection and higher regional spending.
What we expect for today
Stock markets would see a flat opening without references.
Currently, S&P futures are trading unchanged (the S&P 500 closed unchanged vs. its price at the closing bell in Europe). Volatility in the US remained flat (VIX 12.61%). Asian markets are trading flat (Japan +0.04% and Hong Kong -0.15%).
Today, the Spanish stock market will close at 14:00 (CET). On the macro side, we will learn in the US the Richmond Fed manufacturing index.

COMPANY NEWS

PRISA, SELL
The company announced yesterday that it has agreed to reduce the sale price of Media Capital to Confina to € 205 M EV (-19.6% vs. € 255 M previously) and an equity value of € 123.3 M (-31% vs. € 180 M previously) in order to secure the execution of the deal. Additionally, the company mentioned that the transaction progresses as expected and continues to be subject to receiving the approval from the Portuguese regulator and competition authorities (which have already stated that they will not opposed it), certain waivers from creditors and being approved at AGM. The company expects the deal to be closed in 1Q’20.
With the reduction to the sale price, an additional loss of € 54.3 M will be accounted in the 4Q’19 (48% of Net Profit’20e), in addition to the € 76.4 M loss from the 3Q’19.
We recall that PRS holds a 94.69% stake in Media Capital, which represents ~16% of its EBITDA.
Negative news due to the reduction in the sale price. The sale of the asset allows PRS to cut its NFD by -18%, bringing the NFD/EBITDA ratio to 3.5x (vs. 5.5x as of 9M’19). As regards the valuation of the asset, it would mean