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IBERIAN DAILY 06 OCTOBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: FLUIDRA, NEINOR HOMES, REPSOL.

Awaiting the US job data
European stock markets saw an increasing performance, whereas sovereign yields continued to tighten for the second consecutive session. Thus, in the STOXX Travel&Lsisure, Household and Utilities led gains (>1.0%) vs. Automobiles and Basic Resources that saw the biggest drops. On the macro side, in Spain, August’s industrial production dropped more than expected. In the US, weekly jobless claims rose less than expected although the strikes in the automotive sector could lead to an increase in October. From the Fed, M.C Daly admitted that the recent rate hike could avoid the Fed’s last rise and T. Barkin blamed the move on the strong issuances although not seeing in any case a poor performance of the bond market. In Japan, the slowdown in real household outlays moderated more than expected, remaining in negative month for 6 consecutive months.
What we expect for today
European stock markets would open with a slight bullish slant awaiting US employment data. Currently, S&P futures are down -0.15% (the S&P 500 ended +0.57% higher vs. the European closing bell). Volatility in the US dropped (VIX 18.48). Asian stock markets are sliding (China’s CSI 300 closed, Japan’s Nikkei -0.10%).
Today in Germany we will learn August’s factory orders and in the US September’s unemployment rate and non-farm employment.


COMPANY NEWS

FLUIDRA. On the path to normalisation. BUY.
The share price has skyrocketed since last year’s low (+60%), and although the valuation is not as attractive as a few quarters ago, there is still upside. We raise our T.P. +7% to € 21.50/sh. (+19% upside) and reiterate our BUY recommendation. The swimming pool industry is in a “normalisation” phase following two years of very sharp growth (FDR’s organic sales’20-22 rose +58%). 2023 will still be a weak year, but we expect to see an improvement/stabilisation in 2024, and with margins improving thanks to the Simplification Plan implemented in late 2022.

REPSOL. Solid 3Q’23 trading statement thanks to the refining margin improvement. BUY
As expected, the refining margin recovered (to US$ 13.50 vs. US$ 6.40 in in 2Q’23) and leaves the door open to an increase to the annual guidance (at US$ 9.00 vs. US$ 11.80 in 9M’23). By contrast, the higher price of Brent crude (at US$ 81.60/barrel in 9M’23 vs. US$ 80 from the guidance) would be offset by the negative gap in the gas price (US$ 2.70 vs. US$ 3.00 from the guidance). Production remains at 595 kboe (vs. 600 kboe as of 9M’23), within the guidance range (590-605 kboe). We expect solid 3Q’23 results (to be released on 26/10) and 3Q’23 Net Profit of around € 1.07 Bn (around +30% vs. 2Q’23, vs. € 1.10 Bn consensus following the revisions of around +20% over the past month). Despite the strong trading statement, the stock could be dragged down today by the renewed fears on Brent prices.