EUR 100.00 For Business Accounts Only

IBERIAN DAILY 15 MARCH (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACCIONA, ACS, GRIFOLS, IBERDROLA, MAPFRE, NATURGY, NEINOR HOMES.

MARKETS YESTERDAY AND TODAY

A week of euphoria in equity markets
With the exception of the Ibex and the CAC, European stock markets closed Friday’s session in negative territory after the new widening of debt curves although ending the week with gains >+4.0%, where value outperformed growth slightly at both sides of the Atlantic. In the Euro STOXX, Retail and Telecommunications were the best performers last week, while Banks and Food were the worst performers even though all of them saw gains during the week. On the macroeconomic level, in the euro zone, January’s industrial output climbed unexpectedly. Separately, Italy announced new mobility restrictions that will be in force until at least April’s second week. In Germany, A. Merkel’s party was defeated by the Greens in the regional elections. In the US, March’s U. of Michigan sentiment index rose more than expected while February’s production prices climbed slightly more than expected (as opposed to the core component). In China, industrial output and retail sales increased more than expected in February.
What we expect for today
The stock markets would open with slight gains that might slow throughout the session, and dragged down by the Technology and Basic Resources sectors as a result of the falling iron ore prices in Asia (due to pollution problems in China). Currently, S&P futures are practically flat (the S&P 500 was up +0.4% vs. its price at the closing bell in Europe). Volatility in the US fell (VIX 20.69). Asian markets are mixed (CSI 300 -2.7%, Japan +0.2%).
Today we will learn in Brazil February’s industrial output, in the euro zone the Eurogroup will meet, and in the US we will see March’s manufacturing Empire. As for auctions, Holland will issue € 3 Bn in 3 & 6M T-bills, France € 6.5 Bn in 3, 6, 9 & 12M T-bills and Germany € 6 Bn in 6 & 12M T-bills.



COMPANY NEWS

MAPFRE, BUY
At the AGM held last Friday, the chairman specified the guidance for 2021, when the group expects to see stability in revenues, an increase in premiums of around +3% at constant currency (vs. +3.4% consensus and +2.5% BS(e)), a combined ratio of around 95% (vs. ~96.5% BS(e ) and consensus)) and an operating ROE of ~8.5%. This last reference would mean > € 700 M of operating Net Profit, which Mr. Huertas defined as Net Profit excluding significant one-off effects. In this regard, we believe he is referring to Net Profit only excluding impairments of stakes but including one-off claims. Based on this definition, in 2020 it totalled € 658 M (vs. € 526 M of reported Net Profit). He also outlined that the performance in the first two months of 2021 has been positive, with +2.3% growth in premiums, a combined ratio of 94.6% (vs. 100% in the 1Q’20) and € 99 M of Net Profit, meaning an improvement of +41% vs. 2020.
The guidance given by MAP is difficult to compare with the market’s and our expectations, which assume one-off claims and impact from FX. That said, it seems to be more in line with our estimates in Net Profit (€ 737 M) and above those of the consensus (€ 690 M), although we ignore whether it includes impairments (our estimates do not). In this regard, we recall that MAP will hold its Investor Day tomorrow, where it will overview the group’s recent performance, and we believe that the company will give further details on the guidance announced on Friday. As for the +41% improvement in Net Profit over the Jan-Feb’21 period, we believe that it would be largely due to a lower number of claims registered due to lockdowns and mobility restrictions, which will increase gradually again as the economy opens, meaning that we do not think it can be extrapolated. We will revise our estimates in accordance with the messages to be provided by the company tomorrow, although we do not expect any significant changes neither in our estimates or our valuation, which yields >20%. That said, we believe that these messages are positive and should contribute to restore confidence in MAP’s delivery of results, which is key for the stock to close the gap vs. the sector (implied P/E’21 of ~8x for MAP vs. 10.5x for the sector). Since its lows of the year, in early February, the stock has risen +11%, in line with the Ibex, but has underperformed its sector by around -7%.