EUR 100.00 For Business Accounts Only

IBERIAN DAILY 02 APRIL (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: GRIFOLS, INDRA, MELIÁ HOTELS, PUIG BRANDS.

Positive and negative news in Gulf War but negative today
All risk assets (stock exchanges, bonds, CDS, €) saw a new session of euphoria, with crude oil prices falling sharply, driven by short covering and/or expectations of an imminent resolution of the conflict in Iran. However, after the markets closing bell, far from suggesting the end of the conflict, D. Trump pledged to intensify the attacks over the next 2-3 weeks, sending Iran back to Stone Age, where the country will also possibly intensify its attacks against the Gulf energy infrastructures that are difficult to repair in the short-term. After his speech, all risk assets turned around and fell. In the STOXX 600, as expected, cyclical sectors harder hit by the conflict such as Banks or Leisure, as well as Industrials (given the strong rise in Defence, partly explained by the growing tensions between the US and the rest of NATO countries from which D. Trump is threatening to exit) were the best performers whereas Energy was the only industry ending in negative territory, and in general defensive sectors rose to a lesser extent. On the macro side, in the euro zone March’s final manufacturing PMI was raised slightly thanks to Italy and despite Spain’s worse data. In the US, March’s ADP private employment survey and ISM, and February’s retail sales came in better than expected.
What we expect for today
European stock markets would open with drops >-2%. Currently, S&P futures are down -1.4% (the S&P 500 ended -0.3% lower vs. the European closing bell). Asian markets are sliding (China’s CSI 300 -1%, Japan’s Nikkei -2.4% and South Korea’s Kospi -5%).
Today in the US we will learn weekly jobless gains and in Brazil February’s industrial output.


COMPANY NEWS

INDRA. Ángel Escribano resigns as chairman (and CEO) and will be replaced by Angel Simón. OVERWEIGHT.
At an extraordinary Board meeting held yesterday, Ángel Escribano resigned as IDR’s chairman and CEO, who will be replaced by Ángel Simón, close to the Government and former CEO of Criteria Caixa and chairman of Aguas de Barcelona. The latter will not have executive powers and in principle Jose Vicente de los Mozos will remain the company’s CEO. The change is aimed at alleviating the tension but also leaves many doubts on the table. The first doubt is Escribano’s 14.3% stake in IDR, the second one the failed merger with EM&· (the press insists that Rheinmetall could launch a bid for the company for € 2.5 Bn), which would force the company to redesign a new strategic plan. The last doubt will be what will happen with those shareholders in favour of Escribano? (T. Rowe 5%, Amber 5% and Third Point).

PUIG BRANDS. The agreement with Estée Lauder could be mostly in shares. OVERWEIGHT.
According to the press, Estée Lauder and PUIG continue to make progress on their merger plans and in principle it would be conducted through share exchange. For the time being, a final agreement is far since rumours started, which have meant a -15% correction for Estée Lauder and a +11% rise for PUIG. The comments would be in line with our expectations, as we bet on a merger through share exchange and a limited amount in cash (€ ~1.5 Bn; ~17% yield), which would mean a total premium >+35% (vs. 23/03 close when rumours started) to €~21.0/sh. in PUIG. Thus, the Puig family would become the second largest shareholder.