IBERIAN DAILY 20 SEPTEMBER (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: FERROVIAL, GRIFOLS, IAG, IBERDROLA, NATURGY, TOURISM SECTOR.MARKETS YESTERDAY AND TODAY
Europe tightens following the inflation data
The European stock markets closed the week with losses of -1% as a result of increased regulatory risks in China, the path of monetary policy normalisation and rising debt curves. Thus, within the Euro STOXX, the best-performing sectors were cyclical ones such as Travel & Leisure and Energy, whereas Basic Resources (due to the correction of iron ore) and Consumer Goods ended the week with the biggest losses. On the macro side, in the Euro zone, August’s final inflation climbed as expected, reaching 2011 highs of 3.0%, whereas core inflation confirmed the preliminary 1.6% data. In the coming months, high crude oil prices and supply distortions still leave room to see new rises. In Spain, the BoS governor P. Hernández de Cos warned about the detrimental effects of raising the minimum wage on youth and unskilled employment. In the United Kingdom, the Govt. will lift restrictions to travel to the country from the 4th of October (the PCR test will not be necessary before returning to the country an antigen test will be allowed the second day after the arrival) for fully-vaccinated citizens. In the US, there are concerns about the political blockade, J. Yellen urged the congress or raise or suspend the debt ceiling (from US$ 28 Trillion debt) in view of the risk that the administration comes to a stop in October. In China, rumours suggest that the regulation on real estate companies could be toughened, already hit by the contagion of Evergrande situation.
What we expect for today
The European stock markets would see a bearish opening due to the beginning of tapering by the Fed and fears on the Chinese economy.
Currently, S&P futures are up +0.7% (the S&P 500 ended -0.15% lower vs. its price at the closing bell in Europe). Volatility in the US rose (VIX 20.81). Asian markets are closed for the holiday.
Today we will learn in the US September’s NAHB real estate confidence index. In debt auctions: Germany (€ 6 Bn in 6M & 12M T-bills) and the Netherlands (€ 2 Bn in T-bills).
COMPANY NEWS
GRIFOLS. Positive messages from the conference call on the acquisition of Biotest. BUY.
From the conference call on the acquisition of Biotest we highlight GRF’s detailed explanations on the synergies that will allow the company to obtain € 300 M of incremental EBITDA in 2024e and € 600 M in 2026e, which means +30% this year vs. our estimate for 2025. Separately, the company confirmed that there will not be a rights issue to finance the deal, and that the current A and B shares structure will not be modified. We continue to think that the deal has a strong strategic fit, although it could bring debt levels to 5.7x NFD/EBITDA BS(e) (vs. 4.7x as of 2Q’21). The stock rose by around +6% on Friday, which in our view would be due to the stock already pricing in a very negative operating scenario (it had fallen by -10% in 2021; -18% vs. IBEX and it is trading -35% below pre Covid-19 levels and -47% vs. peers).
Ferrovial is a transportation company based in Spain. Co. is engaged in operations in the transportation sector. Co. specializes in the design, construction, management, administration and maintenance of transport infrastructures. Co.'s services range also includes the maintenance of parking lots, and land-, sea- and air-based transport networks. Co. is also engaged in the promotion and operation of short-stay parking lots, parking regulation and management services and promotion and sale of residents' parking.
Iberdrola is a holding company. Through its subsidiaries, Co. operates in four segments: network business, which includes all the energy transmission and distribution activities, and other regulated activity originated in Spain, the U.K., the U.S. and Brazil; deregulated business, which includes electricity generation and sales businesses as well as gas trading and storage businesses carried on by Co. in Spain, Portugal, the U.K. and North America; renewable business, with activities related to renewable energies in Spain, the U.K., the U.S. and the rest of the world; and other businesses, including the engineering and construction businesses and the non-power businesses.
International Airlines Group is an international scheduled airline and global premium airlines. Co.'s principal place of business is London with significant presence at Heathrow, Gatwick and London City airports.
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