EUR 100.00 For Business Accounts Only

IBERIAN DAILY 22 MAY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: FERROVIAL, LAR ESPAÑA, UNICAJA.

The uncertainty surrounding the US debt ceiling set the pace for stock markets
The encouraging message on the resolution for the US debt ceiling where positions are increasingly closer marked the stock market performance, with the Euro STOXX climbing around +2.0%, near the technical levels of 4,400 points. The DAX also ended the week with gains of around +2% after hitting record highs near 16,300 points, whereas the Ibex35 saw more moderate gains, closing the week near 9,300 points. Thus, in the Euro STOXX, Technology and Travel&Leisure were the best-performing sectors whereas utilities and Real Estate ended with the wors relative performance. In the absence of macroeconomic references last Friday, the eyes were set on the G7 meeting and the possible new sanctions to Russia. In the US, the flow to monetary funds hit a new record high whereas deposits hit lows since July’21. On another note, Powell was in favour of halting rate rises whereas Kashkari bets on a last rise in June. In China, as expected, the PBoC kept the 1 & 5Y loan rate unchanged at 3.65% and 4.3%. On another note, the government banned chip imports from US Micro, alleging security problems. In Japan, machinery orders slowed down much more than expected in Mach for the second consecutive month.
What we expect for today
European stock markets would open flat, with a slightly bearish slant on a day lacking big macro releases and awaiting news on the debt ceiling negotiations, where today both parties will sit back down at the negotiating table following the abrupt interruption on Friday. Currently, S&P futures are flat (the S&P 500 ended unchanged vs. the European closing bell). Volatility in the US rose (VIX 19.85). Asian stock markets are climbing (China’s CSI 300 +0.48%, Japan’s Nikkei +0.83%).
Today in the euro zone we will learn May’s consumer confidence.


COMPANY NEWS
LAR ESPAÑA, 1Q’23 Trading Update. BUY
The numbers released in the company’s Business Update are solid, showing growth of more than +20% in rents (above our estimates). Gross rental revenues (post-incentives) reached € 24 M (+21% vs. +10% BS(e)). The strong rental revenue growth is due to an indexation effect (due to CPI), to rising renewal prices (+4.5%) and to lower incentives, which this year were significantly lower (as discounts granted to tenants due to Covid-19 disappear). The difference vs. last year from this concept is around € -1.7 M (around +8% of rent growth). LTV fell -420bps over the last year to 35.7%. There will be no asset appraisal this quarter. Although the improvement seen in the figures is partly due to lower incentives in 2023, we think the numbers are positive (the share price rose +4.7% on Friday). We think the stock is cheap, trading at around a -53% discount to NAV (adjusted for the dividend paid this month).