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IBERIAN DAILY 26 JULY + 2Q’24 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: FERROVIAL, GRUPO CATALANA OCCIDENTE, NEINOR HOMES, TALGO.

At the end of today’s report, and during the entire results season, we will include a presentation with positive and negative results highlights and previews for the 2Q’24 results to be released over the coming days in Spain.

Drops moderate with US data
It was a negative session again in Europe, with poor macro data from France and Germany, but drops moderated after the good 2Q’24 GDP data released in the US. Thus, most sector in the STOXX 600 ended with corrections, led by Media and Technology (again among the worst performers for the second consecutive session) vs. Telecoms and Household that were the best performers. On the macro side, in Germany, July’s IFO dropped, as opposed to expectations due to the current situation and expectations components. In France, July’s business confidence fell significantly to Feb’21 lows. In the US, the 2Q’24 GDP climbed to +2.8% q/qa (+2.0% q/qa expected) due mainly to inventory pileup and increase in consumption. June’s durable goods orders dropped sharply, as opposed to expectations, to the lowest level seen since April’20. Weekly jobless claims dropped more than expected. In Japan, Tokyo’s inflation for July fell to 2.2%. In US business results, Nasdaq and American Airlines came in better than expected.
What we expect for today
Stock markets would open with gains of around +0.10% following the drops from the last few days. Currently, S&P futures are up +0.5% (the S&P 500 ended flat vs. the European closing bell). Asian stock markets are rising (China’s CSI 300 +0.10%, Japan’s Nikkei +0.12%).
Today in Spain we will learn July’s retail sales and the 2Q’24 unemployment rate, in the US June’s core consumption deflator and personal income and outlays. In Paris the Olympic Games will begin. In US business results, Colgate, 3M and Aon among others, will release their earnings.

COMPANY NEWS

NEINOR HOMES, OVERWEIGHT
Revenues: € 182 M (+1% vs. 0% BS(e)); EBITDA: € 21 M (-2% vs. +5% BS(e)). As in 2023, most deliveries will take place in the second half, and thus the P&L statement figures are not representatives of the full year.
Development revenues (accounting for 98% of the total) grew +1% up to € 179 M, with lower deliveries vs. last year (582 units, all of them BtS, vs. 637 units in 1H’23) but at higher average prices. The gross development margin came in at 27.9% (in line BS(e)). EBITDA only totalled € 21 M (20% of our FY’24 estimate), as such a low number of deliveries does not dilute fixed costs in addition to one-off expenses. With this in mind, we do not modify our estimates, betting that the 2H’24 weight will be also greater in EBITDA, as was the case in 2023.
Net Profit reported significant growth due to lower financial results (thanks to strong growth in revenues) and negative one-offs in 1H’24.
As for pre-sales, the company already announced last week the sale of 836 homes in its build-to-sell business for a total of more than € 300 M. On the negative side we could add that the number of homes initiated in the 1H’24 was below 800/1,000 units that would be advisable to meet its medium-term targets (according to our estimates it would have initiated the construction of 396 units) although the company outlines it plans to initiate constructions more intensively in the second half of 2024.
HOME reiterates its intention of paying out € 4.34/sh. as dividends over the next 20 months, equivalent to 31% of its market cap. We believe that the high dividend payment and the good sector fundamentals should continue to underpin the positive share price performance.