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IBERIAN DAILY 04 SEPTEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ELECTRICITY SECTOR, FERROVIAL, IAG, MAPFRE, PROSEGUR CASH.

MARKETS YESTERDAY AND TODAY

Awaiting new catalysts
Following the US holiday, markets ended with drops (that eased at the closing bell), awaiting new drivers to define the next move. In the Euro STOXX, Automobiles and Pharma saw the biggest gains (moderate) while Basic Resources and Energy were the worst performers. On the macroeconomic level, in the US August’s manufacturing ISM and July’s construction expenses came in below expectations, confirming the slowdown in the manufacturing sector and the deterioration of the exporting sector with the index of external orders falling to lows of 43. In the UK, the labour party along with the conservative rebels defeated B. Johnson, voting against his no-deal Brexit plan (or threat), leaving for today the vote so that the chamber takes the control of the process and demand, among other things, a delay through January’20. The PM threatened to call elections in Oct’19 . In China, August’s services PMI climbed unexpectedly while in Japan it remained at July’s levels (53.3). Meanwhile, in Spain, the PSOE party yesterday offered Podemos 370 measures to obtain its support although the press considers this as the new electoral programme for new elections. These mesuares include recover the income tax gradual scheme, a miminum 15% corporate tax (18 for Banks and oil groups) and the implementation of the Tobin rate and Google rate, increasing social spending with changes in the labour reform and in the pension system.
What we expect for today
Europe shows a generalised bullish opening where technological companies could lead gains. Currently, S&P futures are up +0.63% (the S&P 500 closed unchanged vs. its price at the closing bell in Europe). Volatility in the US rose (VIX 19.66%). The Asian markets that are open are climbing (Hong Kong +0.26% and Japan +1.35%).
Today in the euro zone we will learn August’s services PMI (also in Italy and Spain) and July’s retail sales, in the UK August’s services PMI, in the US July’s trade balance and the Fed Beige book, and in Brazil, August’s services PMI. As for auctions, Germany will issue € 3 Bn in bonds due 2024.


COMPANY NEWS

MAPFRE, SELL
According to the press, MAP and the financial adviser Abante would have reached an agreement whereby the former would have acquired 10% of the latter, although it would have reserved the right to increase its stake to 20% within a 3-year period. The deal would include a capital increase, and for the time being we do not know how much it will total. In this regard, we should point out that Abante would have some € 2 Bn of AuM, and according to the press 100% of the company would be valued at between € 80 M and € 100 M. This would mean paying a ratio of between 4% and 5% of AuM, which at first glance seems high, bearing in mind that the listed asset managers normally move within a range of 1.5%-1.8% of AuM. The alliance would also be sought in order to acquire other fund managers or financial advisers in Spain, as well as to study expanding Abante’s private banking model in LatAm, where MAP is leader in general insurance. This could be one reason behind the high multiplier. Assuming the numbers mentioned in the press, MAP would earmark between € 8-10 M (irrelevant in terms of its market cap) to acquire 10% of Abante and between € 16-20 M for 20% (the high end of the range would mean 0.2% of MAP’s market cap).
News with no financial impact, as we estimate that MAP will spend € 8-10 M and that the contribution to Net Profit over the coming years will be insignificant.