IBERIAN DAILY 12 AUGUST (ANÃLISIS BANCO SABADELL)
NEWS SUMMARY: IBERDROLA, MÃSMOVIL.MARKETS YESTERDAY AND TODAY
Moderate drops with low volumes awaiting catalysts
European markets continued to see small drops, with lower volumes (in view of the lack of newsflow) over the entire session. In the Euro Stoxx, Pharma (again boosted by Bayer, this time due to the expected agreement on Glyphosate) and Real Estate were the only sectors to close with gains, whereas cyclical sectors, once again led by Basic Materials and Autos, along with Banks (dragged down by the Italian banks after the risk premium shot up due to the breakup of the coalition government), ended with the biggest drops. On the macro side, in the UK the 2Q’19 GDP was worse than expected, with the QoQ rate falling for the first time since 2012, and June’s industrial output also fell more than expected. In the US, wholesale inventories and sales also came in below expectations. In Argentina, Macri lost the PASO elections ahead of the October’19 presidential election to the Fernandez-Fernandez duo by a larger margin than expected. No US business results were released on Friday.
What we expect for today
Stock exchanges will open with gains of +0.5%. Currently, the S&P futures are up +0.1% (the S&P 500 was +0.5% higher vs. its price at the closing bell in Europe). Volatility in the US climbed (VIX 16.02%). Asian markets are trading with mixed results (Hong Kong flat and Japan +0.4%).
Today there will be no relevant macro data releases, with only June’s economic activity index in Brazil. In US business results, only Sysco Corp. will release its earnings.
COMPANY NEWS
MÃSMOVIL, BUY
British Telecom (BT) would have hired an investment bank to sell its Spanish subsidiary, a deal it would wish to close before the year end. The company being sold, which according to the CNMC has a 24% market share, would be valued at € 250-300 M. According to the press, there would already be some 20 companies interested, among them Orange and MAS. Both companies declined to comment. In our opinion, following the deal with Providence’s convertible bond and the restructuring of the company’s financial situation, MAS’s financial situation is tight enough (>3.5x NFD/EBITDA) to be able to undertake large-scale projects. In this regard, in the short term we think MAS will be focused on organic development in Spain. On Friday MAS fell -7% (unjustified), which in our opinion could be due to the rumour of this potential acquisition.
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.
Masmovil Ibercom SA, formerly World Wide Web Ibercom SA, is a Spain-based company primarily engaged in the telecommunication sector. The Company focuses on the sale and distribution services for Internet, Data Center and Telecommunications. The Company's product and services portfolio comprises Internet access through Asymmetric Digital Subscriber Line (ADSL) and Symmetric Digital Subscriber Line (SDSL) technologies, Internet domains and Domains Management and Registration Service through IberDNS application, Web hosting, virtual servers, dedicated servers, telephony services and routers. The Company also offers collocation services through two Internet Data Centers located in Madrid and San Sebastian. It operates through subsidiaries, such as Embou Nuevas Tecnologias SL and Ebesis Sistemas SL, among others. The Company owns a number of brand names, such as Pepephone, Yoigo and Llamaya.
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