EUR 100.00 For Business Accounts Only

IBERIAN DAILY 11 MAY + 1Q’22 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: GLOBAL DOMINION, IBERDROLA, NEINOR HOMES, ROVI.

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 1Q’22 results to be released over the coming days in Spain.

Decompression on debt markets
The drop in US and European debt yields favoured European stock markets, although the US stock market reeled in the gains from the opening bell. In the Euro STOXX, almost all the sectors posted gains, led by Financial Services and Banks. By contrast, Retail lost -0.6% and Media was the worst relative performer. On the macro side, in Germany the ZEW index for May recovered unexpectedly, although the current conditions component worsened slightly more than expected. From the ECB, the Bundesbank President, J. Nagel, defended the first rate hike in July because inflation continues to gain momentum, while De Guindos expects the monetary normalisation to start in the third quarter. In China, April’s inflation (2.1% YoY) climbed more than expected whereas the core data remained low at 0.9% and the rise in production prices moderated less than expected. In US business results, Sysco beat expectations and Norwegian Cruise and Fox Corp. came in below expectations.
What we expect for today
European stock markets would open with a bullish slant, awaiting the US inflation data. Currently, S&P futures are up +0.36% (yesterday the S&P 500 ended unchanged vs. the European closing bell). Volatility in the US dropped (VIX 32.99). Asian markets are rising (China’s CSI 300 +2.56% and Japan’s Nikkei +0.3%).
Today in Germany we will learn April’s final inflation figure and in the US April’s inflation. In US business results, Walt Disney and STERIS, among others, will release their earnings. In debt auctions: Germany (€ 4 Bn in bonds due 2032).

COMPANY NEWS

1Q’22 Results Previews.
Of the stocks releasing their earnings over the coming days, on the positive side we highlight Colonial (17/05), whose results should show the current positive momentum of the P&L statement, with recurring EBITDA growing by almost double-digit rates. That said, the market sentiment towards the sector has worsened significantly in the last month, which we believe would be due to fears that interest rate hikes may cause a recession (the stock is down -8% in the last month, although it has beaten the EPRA sector index by +6%).

ROVI. 1Q’22 Results above expectations on the operating level. The company keeps its 2022 guidance unchanged. BUY.
1Q’22 Results showed an operating performance above expectations (EBITDA € 74 M vs. € 70 M BS(e) and € 69 M consensus), marked by the drop in gross margins (-360bps sequential) to 60.9% (vs. 60.5% BS(e)) due to the higher weight of Becat’s sales (21% total), which was offset in EBITDA with a better performance of sales (+57% vs. +52% BS(e) and +54% consensus) and the containment of R&D expenses (-18% vs. -14% BS(e)). Net cash remained stable at € 31 M (vs. € 14 M BS(e)) and the company kept its 2022 guidance unchanged with between +15% and 20% revenue growth (vs. +11% BS(e) and +22% consensus). We expect a positive reception following its poor performance (-18% in 2022; -11% vs. IBEX).

NEINOR, BUY.
The company has released good 1Q’22 Results, above our expectations both in terms of P&L statement, although slightly below in commercial activity (pre-sales). Revenues came in at € 283 M (+189% vs. +112% BS(e)) and EBITDA at € 49.6 M (+199% vs. +136% BS(e)). The company delivered 866 units over the period, with revenues totalling € 283 M (including residential services/servicing) and EBITDA € 50 M. Despite the higher delivery volumes, the EBITDA margin fell slightly (-0.3pp to 17.5%) given the higher sales contribution from QBT portfolio (with lower margins). The rental business is seeing a good ram-up, with its NRI improving to € 0.6 M.
Net pre-sales came in at 505 gross units in the 1Q’21 (vs. 550 units BS(e), 434 net units), and although satisfactory, they are somewhat below expectations. Moreover, in view of the high pre-sale coverage the company is raising prices (+6% on average) to protect margins vs. the inflation in costs.
The company reiterates its guidance for the full year and, with 88% of deliveries already pre-sold and 30% of EBITDA already generated as of March’22, visibility is really high. The next two years (2023 and 2024) are on track, as 44% of the expected deliveries have already been pre-sold. We reiterate our BUY recommendation. T.P. € 13.94/sh. (+31.02% upside).