IBERIAN DAILY 17 OCTOBER + 3Q'24 RESULTS. PREVIEWS (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: GRUPO SANJOSÉ, TALGO.The Ibex near 12,000 points
Mixed session ahead of the ECB meeting, marked by the earnings release, with the Ibex standing out again (after climbing 9 of the 10 last sessions), hitting highs from the past 14 years. In the STOXX 600, Travel&Leisure and Retail were the best-performing sectors vs. the drops of Technology and Consumer Goods. On the macro side, in the US import prices fell more than expected. In Japan, September’s exports fell unexpectedly. In China, the Housing Minister announced he will double lending to unfinished housing projects through a US$ 562 Bn extension. In US business results, Morgan Stanley and US Bancorp beat expectations, whereas Citizens Financials came in worse than expected but Abbot in line.
What we expect for today
Stock markets would open flat with some bullish bias, awaiting the ECB’s message. Currently, S&P futures are down -0.1% (the S&P 500 ended +0.3% higher vs. the European closing bell). Asian markets are mixed (China’s CSI 300 +0.3%, Japan’s Nikkei -0.5%).
Today in the US we will learn September’s industrial output and retail sales, Philadelphia Fed index and October’s NAHB residential confidence. In US business results, today Neftlix, KeyCorp and Blackstone, among others, will release their earnings.
COMPANY NEWS
GRUPO SANJOSÉ. T.P. Upgrade. OVERWEIGHT.
We have upgraded our T.P. by +10% after analysing the valuation of all the divisions and updating the balance sheet data as of the end of June’24. We value the company at € 9.62/sh. (vs. € 8.78/sh. previously, +111% upside). Despite the good YtD share price performance (+36%, +13% vs. IBEX35), it still yields significant upside. The sale of some assets at a good price could be a driver for the share price. The € 212 M net cash position as of June’24 adjusted for provisions and excess current liabilities stands out (72% market cap). We reiterate our OVERWEIGHT recommendation.
TALGO, UNDERWEIGHT
Yesterday TLGO notified the CNMV it has received a letter of interest from the industrial group Sidenor where the latter considers the total or partial acquisition of the share capital of the train manufacturer, not providing additional details. The press outlines that the Basque (through Finkatuz) and Spanish government (through SEPI) could also take part in the deal, suggesting a price below € 5.00/sh. from Magyar’s rejected TOB (by the government). Some sources hint at € 4.40-4.30/sh. whereas others suggest around € 3.00/sh. As for the reach of the potential offer, some media outline it would reach 100% vs. 40% by others (Pegaso’s stake), not reaching 100%. The share price yesterday climbed +4.9% after the announcement of Sidenor’s interest (following the +4.5% rise seen the previous session). Even though the possibility of a TOB is positive news rumours suggest it would be below € 5.00/sh. without further details, even hinting at maximum levels of € 4.30/sh. (+18% upside). As the negotiations are still at an initial stage, there is still a risk this deal will not go through, and thus the risk/reward ratio would not be appealing for the time being to change our recommendation although the share price will be underpinned until the final outcome of this process.
Grupo Empresarial San Jose SA is a Spain-based holding company. The Company's main activities are structured in four business areas: Construction, which comprises the construction, design and execution of public and private infrastructure projects; Real Estate, which specializes in the acquisition and development of residential and non-residential properties; Energy and Environment, focused on the initiation, development and operation of energy efficiency projects using renewable energy, and Concessions and Services, which includes the management, operation, exploitation and maintenance of infrastructure, hospitals, public and private facilities, urban real estate, parks and gardens. The Company is a parent of such a number of controlled entities as Constructora San Jose SA, Cartuja Inmobiliaria SAU, Desarrollos Urbanisticos Udra SAU, San Pablo Plaza SAU and Comercial Udra SA, among others.
Talgo is engaged in designing, manufacturing, repairing and maintaining the railway rolling stock, as well as the manufacturing, assembling, repairing and maintaining the engines, machinery and parts of the railway systems. Co. has an industrial presence in seven countries: Spain, Germany, Kazakhstan, Uzbekistan, Russia, Saudi Arabia and U.S.A. Co. has an active fleet in Europe, Asia and North America that comprises of 94 high-speed trains and more than 1,400 Talgo tilting passenger cars. Also, Co. purchases, redesigns, constructs, leases and sells all types of real estate.
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