IBERIAN DAILY 13 DECEMBER (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: BANKING SECTOR, FCC, INDITEX, NATURGY.Inflation falls at a slower pace
European stock markets traded with slight drops in a session marked by the release of inflation data in the US, just before the Fed’s December meeting. In the STOXX 600, the gains were led by Media and Technology, whereas Basic Materials and Real Estate fell the most. On the macro side, in the UK October’s ILO unemployment rate was unchanged, as expected. In Germany, December’s ZEW index rose unexpectedly and despite a greater deterioration in the current conditions component. In the US, November’s general inflation fell -0.1% to 3.1%, as expected, whereas the core figure remained at the previous 4.0%, in line with expectations. We expect greater resistance to a drop from this level in 2024. In China, following the Central Economic Work Conference, state media announced that a proactive fiscal policy and cautious monetary policy will be implemented next year, aimed at underpinning economic recovery and with a growth target of between 4.5% and 5.0%. In Japan, the 4Q’23 Tankan index recovered more than expected. In US results, Oracle released disappointing results due mainly to the Cloud business.
What we expect for today
European stock markets would open flat, and lacking a clear direction ahead of the Fed meeting. Currently, S&P futures are up +0.03% (the S&P 500 ended +0.34% higher vs. the European closing bell). Volatility in the US dropped (VIX 12.07). Asian stock markets are mixed (China’s CSI 300 -1.39%, Japan’s Nikkei +0.25%).
Today in the UK and the euro zone we will learn October’s industrial output and in the US December’s Fed meeting.
COMPANY NEWS
INDITEX. Solid performance in 3Q’23 Results. Good indications on the trading update and 2023 targets raised. BUY.
Good performance in 3Q’23 Results, with ~+12% LfL sales growth (BS(e) in line) and hit by the higher FX effect (~-5% (vs. >-4% BS(e)). The gross margin improved more than expected to 61.7% in the 3Q’23 (~+150bps and vs. ~+40bps BS(e) and ~+70bps consensus), which along with the good cost performance leave EBIT at € 2.03 Bn (+16.2% vs. +8.8% BS(e) and +12.7% consensus). The indications on 4Q’23 sales (1 Nov-11 Dec) are positive, ~+14% and the company raised its gross margin target’23 up to +75bps (vs. +/-50bps previously; ~+15bps BS(e) and ~+50bps consensus), which should contribute to the positive momentum of the share price (around +54% in 2023; ~+31% vs. Ibex and ~+5% vs. the rest of the sector).
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.
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