IBERIAN DAILY 07 FEBRUARY + 4Q’24 RESULTS. PREVIEWS (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: IBERDROLA, NATURGY, ROVI, TALGO.At the end of today’s report, and during the entire results season, we will include a presentation with positive and negative results highlights and previews for the 4Q’24 results to be released over the coming days in Spain.
The Ibex at annual highs
With all eyes on the job data to be released today in the US, yesterday’s session allowed the Ibex to hit 2008 levels. Thus, in the STOXX 600, all sectors except for Media and Utilities saw gains, led by Basic Resources and Banks. On the macro side, in the euro zone, December’s retail sales rose in line with expectations. In Italy, the government expects the EU to ease the tax rules to raise defence spending. In the UK, as expected, the BoE cut interest rates by -25bps to 4.5% (with two members voting in favour of a -50bps cut). In the US weekly jobless claims climbed more than expected. In Mexico, the Central Bank cut the benchmark rate by -50bps, as expected, to 9.5%. In India, the Central Bank cut rates for the first time in 5 years to bolster growth. In US business results, Phillip Morris, Ralph Lauren and Amazon (with disappointing guidance but maintaining strong capex in AI infrastructures) beat expectations, MetLife came in worse than expected.
What we expect for today
Stock markets would open with drops of around -0.5%, which could widen throughout the session in view of signs of overbuying in the short term. Currently, S&P futures are down -0.1% (the S&P 500 ended +0.2% higher vs. the European closing bell). Asian markets are mixed (China’s CSI 300 +0.7% and Japan’s Nikkei -0.6%).
Today in the US we will learn January’s job data, in Germany December’s industrial output, and in Brazil and Mexico January’s inflation. In US business results, Cboe, Kimco and Camden Property, among others, will release their earnings.
COMPANY NEWS
TALGO. Sidenor (and the consortium) confirms and improves its bid for 29.8%. UNDERWEIGHT
The consortium comprising Sidenor, the Basque Govt. and the Vital Foundation has presented an offer to acquire 29.8% of TLGO for a total of up to € 177 M (€ 4.80/sh.) structured in two tranches: (i) a first fixed payment of € 4.15/sh. and (ii) a second variable payment of € 0.65/sh. that will depend on TLGO meeting certain financial milestones in 2027 and 2028 (not specified). The news has a positive slant for the stock (which rose +0.9%) due to the price increase, although a TOB on 100% would be ruled out. However, we will have to wait until next week to see how the rest of the potential bids pan out (Pesa and Jupiter Wagons) and the decision made by TLGO.
ROVI. Predicts an EBITDA level below consensus expectations for 2024. OVERWEIGHT
The company has just announced that it expects EBITDA to be between 10% and 15% lower than what the market is expecting for 2024 (€ 236 M /Bloomberg and € 240 M BS(e)). The reason behind this difference would lie in lower activity in the CDMO business in the 4Q’24. However, the company keeps its 2025 expectations made public unchanged (mid-single digit drop in operating revenues). We foresee a negative market reaction not only due to the fact that the impact on EBITDA is relevant (€ ~30 M BS(e)), but also because we believe this will arise new doubts about its CDMO business, which is the most relevant one at the moment (>40% sales and 70% EV). The share price has climbed +5% YtD (-4.5% vs. IBEX) after Moderna’s guidance cut earlier this year.
Iberdrola is a holding company. Through its subsidiaries, Co. operates in four segments: network business, which includes all the energy transmission and distribution activities, and other regulated activity originated in Spain, the U.K., the U.S. and Brazil; deregulated business, which includes electricity generation and sales businesses as well as gas trading and storage businesses carried on by Co. in Spain, Portugal, the U.K. and North America; renewable business, with activities related to renewable energies in Spain, the U.K., the U.S. and the rest of the world; and other businesses, including the engineering and construction businesses and the non-power businesses.
Laboratorios Farmaceuticos Rovi is engaged in the sale of its own pharmaceutical products and the distribution of other products for which it holds licenses granted by other laboratories for specific periods, in accordance with the terms and conditions contained in the agreements entered into with said laboratories.
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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