Report
EUR 100.00
For Business Accounts Only
MARKETS YESTERDAY AND TODAY
Fears of a new outbreak sink the markets
The words of J. Powell continued to weigh on the markets, as he warned of slow recovery, although the US markets rallied at the end of the session. In the Euro Stoxx, all sectors closed in the red, with Retail and Consumer Goods leading the drops vs. Telecoms and Travel&Leisure, which were the best performers. On the macro side, in Germany, April’s final inflation was raised slightly to +0.9% YoY, whereas that of Spain confirmed the preliminary data of -0.7%. France announced that it will quarantine visitors from Spain in response to the measure from the Spanish Govt. From the ECB, F. Villeroy stated that the organisation will be flexible in implementing the purchase programme for the pandemic depending on market dynamics. In the US, weekly jobless claims rose more than expected, although they decreased compared to last week. J. Bullard admitted that the Fed will not have enough visibility on the economy in the upcoming June meeting to offer a quarterly estimate. In China, industrial output rose more than expected in April to 3.9% YoY, whereas retail sales and fixed investment fell more than expected. In US business results, Exicure and Equitrans beat expectations, whereas EQM Midstream came in below expectations.
What we expect for today
European markets would open with gains of more than +1.0%, encouraged by the rally on the US market, but tempered by fears of new Covid-19 outbreaks and US-China trade tensions. Currently, S&P futures are up +0.1% (the S&P 500 ended up +2.0% vs. its price at the closing bell in Europe). Volatility in the US fell (VIX 32.6%). Asian markets are rising (Japan +0.6% and Hong Kong +0.3%).
Today in the euro zone and Germany we will learn 1Q’20 GDP and in the US April’s retail sales and industrial output, May’s Empire index and U. of Michigan consumer confidence. In US business results, Alliance Media, AeroCentury and DropCar, among others, will release their earnings. Debt auctions: Netherlands (€ 2 Bn in 3M t-bills), Germany (€ 4 Bn in 12M t-bills) and France (€ 5 Bn in 3M, 6M and 12M t-bills).
COMPANY NEWS
NH HOTELES. Weak results, but in line with expectations. Solid liquidity position. BUY.
The company was unable to offset the drop in revenues (-21%) through costs (-8.6%), leading to a -63% drop in EBITDA (in line). As for liquidity, NHH has € 675 M (vs. €~280 M of maturities over the next 2 years), and thus the situation appears to be comfortable. NFD (ex. leases) has risen to € 323 M at the end of April (vs. € 179 M as of YE2019), a month in which the company would have burned through €~70 M of cash. The significant liquidity level gives NH leeway, and furthermore it has real estate assets (€~2 Bn; 160% of market cap) that it could use to obtain more liquidity if needed. We will cut estimates (more than -30% in EBITDA for 2020-22). We place our T.P. Under Revision (from the previous € 6.30/sh.).
PRISA, SELL
PRS has sold 30.2% of MediaCapital to Pluris for € 10.5 M, meaning an implied valuation (EV) of € 130 M (-36.5% below the price agreed with Confina before the deal was shelved). According to the company, the sale will bring about an accounting loss of €~29 M (~35% of Net Profit’20).
Expected news, as a sale agreement was signed in late April (to reach an agreement before 15 May’20), although the price is far below the last reference (agreement with Confina) as a result of the significant impairment to the asset’s value following several years pending sale and due to the recent impact from Covid-19. With this sale PRS would reduce its leverage by around -3% and would continue to consolidate the asset because it maintains control (although it would remain as discontinued activity, held for sale). We welcome the “push†Pluris could provide as regards the asset’s performance, which has been “unattended†for the past few years due to the pending sale processes and the capacity to contribute resources that would ease this “burden†for PRS.
IBERIAN DAILY 15 MAY (ANÃLISIS BANCO SABADELL)
NEWS SUMMARY: IAG, NH HOTELES, PRISA.MARKETS YESTERDAY AND TODAY
Fears of a new outbreak sink the markets
The words of J. Powell continued to weigh on the markets, as he warned of slow recovery, although the US markets rallied at the end of the session. In the Euro Stoxx, all sectors closed in the red, with Retail and Consumer Goods leading the drops vs. Telecoms and Travel&Leisure, which were the best performers. On the macro side, in Germany, April’s final inflation was raised slightly to +0.9% YoY, whereas that of Spain confirmed the preliminary data of -0.7%. France announced that it will quarantine visitors from Spain in response to the measure from the Spanish Govt. From the ECB, F. Villeroy stated that the organisation will be flexible in implementing the purchase programme for the pandemic depending on market dynamics. In the US, weekly jobless claims rose more than expected, although they decreased compared to last week. J. Bullard admitted that the Fed will not have enough visibility on the economy in the upcoming June meeting to offer a quarterly estimate. In China, industrial output rose more than expected in April to 3.9% YoY, whereas retail sales and fixed investment fell more than expected. In US business results, Exicure and Equitrans beat expectations, whereas EQM Midstream came in below expectations.
What we expect for today
European markets would open with gains of more than +1.0%, encouraged by the rally on the US market, but tempered by fears of new Covid-19 outbreaks and US-China trade tensions. Currently, S&P futures are up +0.1% (the S&P 500 ended up +2.0% vs. its price at the closing bell in Europe). Volatility in the US fell (VIX 32.6%). Asian markets are rising (Japan +0.6% and Hong Kong +0.3%).
Today in the euro zone and Germany we will learn 1Q’20 GDP and in the US April’s retail sales and industrial output, May’s Empire index and U. of Michigan consumer confidence. In US business results, Alliance Media, AeroCentury and DropCar, among others, will release their earnings. Debt auctions: Netherlands (€ 2 Bn in 3M t-bills), Germany (€ 4 Bn in 12M t-bills) and France (€ 5 Bn in 3M, 6M and 12M t-bills).
COMPANY NEWS
NH HOTELES. Weak results, but in line with expectations. Solid liquidity position. BUY.
The company was unable to offset the drop in revenues (-21%) through costs (-8.6%), leading to a -63% drop in EBITDA (in line). As for liquidity, NHH has € 675 M (vs. €~280 M of maturities over the next 2 years), and thus the situation appears to be comfortable. NFD (ex. leases) has risen to € 323 M at the end of April (vs. € 179 M as of YE2019), a month in which the company would have burned through €~70 M of cash. The significant liquidity level gives NH leeway, and furthermore it has real estate assets (€~2 Bn; 160% of market cap) that it could use to obtain more liquidity if needed. We will cut estimates (more than -30% in EBITDA for 2020-22). We place our T.P. Under Revision (from the previous € 6.30/sh.).
PRISA, SELL
PRS has sold 30.2% of MediaCapital to Pluris for € 10.5 M, meaning an implied valuation (EV) of € 130 M (-36.5% below the price agreed with Confina before the deal was shelved). According to the company, the sale will bring about an accounting loss of €~29 M (~35% of Net Profit’20).
Expected news, as a sale agreement was signed in late April (to reach an agreement before 15 May’20), although the price is far below the last reference (agreement with Confina) as a result of the significant impairment to the asset’s value following several years pending sale and due to the recent impact from Covid-19. With this sale PRS would reduce its leverage by around -3% and would continue to consolidate the asset because it maintains control (although it would remain as discontinued activity, held for sale). We welcome the “push†Pluris could provide as regards the asset’s performance, which has been “unattended†for the past few years due to the pending sale processes and the capacity to contribute resources that would ease this “burden†for PRS.
Underlyings
Grupo Prisa (PRS SM)
International Consolidated Airlines Group SA
International Airlines Group is an international scheduled airline and global premium airlines. Co.'s principal place of business is London with significant presence at Heathrow, Gatwick and London City airports.
NH Hotel Group SA
NH Hotel is engaged in the operation and management of hotels throughout Spain, the Benelux countries, Germany, and South America.
Provider
Sabadell
Research Department
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