IBERIAN DAILY 24 OCTOBER + 3Q’24 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: IBERDROLA, ROVI, VISCOFAN.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 3Q’24 results to be released over the coming days in Spain.
IBEX leading the way once again
It was a negative session on both sides of the Atlantic, except for the IBEX, in another day with all eyes on results. In the Stoxx 600, most of the sectors (15/20) ended with losses, led by Basic Materials and Financial Services, with Autos and Utilities being the best performers. On the macro side, in the euro zone, October’s consumer confidence recovered in line with expectations, reaching its best reading in 2.5 years. From the ECB, M. Centeno was in favour of a -50bps cut in the upcoming meeting to try to reach a neutral rate as soon as possible. In the US, second-hand home sales for September fell more than expected. From the Fed, the Beige Book showed an economy with flat and modest growth. In its latest survey, FT suggests Trump has an advantage over Harris, in line with bets. In Japan, both the manufacturing and services PMIs fell more than expected. In US business results, Tesla beat expectations, Coca-Cola and Hilton were in line and Boeing released disappointing earnings.
What we expect for today
Stock markets would open with mixed signals against an uncertain political backdrop and in the middle of the results season. Currently, S&P futures are up +0.14% (the S&P 500 ended -0.59% lower vs. the European closing bell). Asian markets are mixed (China’s CSI 300 -1.12%, Japan’s Nikkei +0.21%).
Today in the euro zone and US we will learn October’s PMIs and weekly jobless claims, as well as September’s new home sales. In US business results, Nasdaq, KKR and Hasbro, among others, will release their earnings.
COMPANY NEWS
VISCOFAN, OVERWEIGHT
The 3Q’24 results came in around -3% below expectations in sales (+2.5% vs. 3Q’23), although above in EBITDA (+18% vs. +11% BS(e) and +15% consensus), resulting in a margin growing +320bps. Operating performance was affected by: (i) recovering volumes in casings and the end of the inventory adjustment process; (ii) significant drop in energy revenues; (iii) greater savings from productivity efficiencies and lower raw material costs. Despite the improvement on the quarter, the company has slightly cut its targets’24 (-2.5% in EBITDA vs. previously) to € 285-290 M (€ 287 M consensus). VIS will pay out an interim dividend’24 of € 1.40/sh. (2.3% yield; in line with the previous year).
We take the opportunity to slightly lower our estimates, especially in 2024. Thus, for the 2025-27e period we lower our revenues estimate by around -2% and EBITDA -1%, leaving the average margin at 24.4%, and we place our new T.P. at € 74/sh. (+4% vs. previous; +24% upside), where the effect from the rollover’25 is partly offset by the estimates revision.
Despite having lowered the targets’24, which would already be priced in by the market, we welcome the sharp rise in profitability on the quarter and the messages that the inventory adjustment process is over. Moreover, the stock’s recent underperformance (-7% vs. IBEX over the past month) could lead to a positive reception of these results.
ROVI, OVERWEIGHT
The company has just announced that after analysing and assessing the non-binding offers received for its third-party manufacturing business (CDMO; ~45% of sales’24e), it has decided that given the strength, the good current performance and the outlook for the business, the best way to maximise value for shareholders is to protect and develop the CDMO business without involving foreign investors.
The partial sale of this division (which we value at € 2.97 Bn; 71% EV) was one of the main drivers we saw for the stock in the short term. With this in mind, we think the possible sale has allowed value to crystallise in this business, providing a valid reference on the market valuation level (between 12-14x EV/EBITDA). Separately, we expect this business to expand in the coming years (we estimate +10% CAGR’23-27e), where we expect new clients to be captured and investments to be made to expand capacity, which will continue to generate value for the company.
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.
Viscofan is the parent company of the Viscofan Group. Co. is divided into two major operational subgroups. The companies comprising the Naturin GmbH subgroup are engaged in the manufacture and distribution of artificial casings (small and big diameter collagen and plastics) for the meat industry. Through its wholly-owned subsidiary IAN, S.A., Co. also manufactures and distributes canned vegetables (asparagus, olives and tomato).
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