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IBERIAN DAILY 22 NOVEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: BANKING SECTOR, COLONIAL, GRIFOLS, POSSIBLE TAX CHANGES.

Doubts on the markets
It was a session that improved in European stock markets after Nvidia’s results release, with the markets ending with moderate gains and the IBEX rising back above 11,600 points. Within the STOXX 600, Insurance and Energy led the gains, with Telecoms and Consumer Goods ending with the biggest losses. In the euro zone, November’s preliminary consumer confidence fell more than expected. On the macro side, in Spain the Govt. approved the new progressive tax (with rates between 1-7%) on banks and a possible tax on energy companies, and if an agreement is not reached the current tax would be extended one year. From the ECB, Y. Stournaras was in favour of continuing to make monetary policy more flexible until the 2.0% inflation target is reached, while R. Holzman (Austria) was in favour of lowering rates, but still maintaining a restrictive monetary policy to battle inflation. In the US, November’s Philadelphia Fed index fell unexpectedly. Second-hand home sales rose more than expected and weekly jobless claims fell unexpectedly. In Mexico, September’s retail sales fell more than expected. In Japan, October’s general inflation fell in line with expectations, but the core figure rose more than expected.
What we expect for today
Stock markets would open slight gains with defensive stocks performing better. Currently, S&P futures are unchanged (the S&P 500 ended +0.29% higher vs. the European closing bell). Asian markets are mixed (China’s CSI 300 -2.1%, Japan’s Nikkei +0.87%).
Today in the euro zone and US we will learn November’s PMIs, in Germany the final 3Q’24 GDP, in the UK October’s retail sales and in Mexico September’s IGAE economic activity index.


COMPANY NEWS


POSSIBLE TAX CHANGES
The final agreement on tax changes voted on yesterday includes the energy tax, where there is a pledge to work until the end of the year on a tax that does not levy decarbonisation or to extend the current tax, as well as a tougher tax on banks. A change to the REIT tax regime would not be included. Regarding the bank tax, it will be valid for three years and will apply a gradual tax rate of 1-7% that grows depending on revenues (NII + fee revenues), compared to the 4.8% tax currently applied to banks with revenues in Spain above € 800 M (now the minimum would be € 750 M). The maximum rate would apply to revenues of more than € 5 Bn, which would affect Caixabank (impact of €~200 M of addition al taxes, included in the 2027 strategic plan / 3.7% Net Profit), Santander (with an additional €~150 M / 1.3% of Net Profit) and BBVA. Bankinter and Unicaja would have the same rate applied as currently (4.8%, subtracting 11% and 14% of Net Profit, respectively). For the energy sector, awaiting information on what is agreed on in the end and what discounts on decarbonisation are included, the impact would be small, as it would be lessened in companies maintaining their investment pledge for decarbonisation in Spain (which would apply to all the companies in our coverage universe). Note that in 2024e, against 2023 reserves, estimates of the impact from the current tax would be: Iberdrola € 160 M (0.21% market cap; vs. € 216 M previously in 2023, 3% Net Profit’24e), Naturgy € 100 M (0.4% market cap; vs. € 165 M previously, 5% Net Profit’24e), Endesa € 202 M (1% market cap; vs. € 208 M previously, 11% Net Profit’24e) and Repsol € 350 M (2.5% market cap; vs. € 445 M). With all this in mind, if the news is confirmed it would be positive for the REITs (Colonial and Merlin).

INMOBILIARIA COLONIAL, OVERWEIGHT
Aguila announced at yesterday’s closing bell the sale of its entire stake of ~5.0% in COL through an accelerated bookbuild. The sale price was € 5.23/sh. (-5.1% vs. closing price).
COL’s main shareholders are: QIA 19.0%, Criteria 17.3%, Grupo Finaccess 14.8%, Puig 7.4%, Corp. Fin. Alba 5.0%, Credit Agricole 4.2%, BlackRock 3.4%.