EUR 100.00 For Business Accounts Only

IBERIAN DAILY 15 MARCH (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ELECTRICITY SECTOR, INDITEX.

The market is confident
The European stock markets built further on early gains after the release of the US inflation data, offsetting two sessions of drops. Thus, within the Euro STOXX, all sectors posted gains, with Banks and Industrials leading the way, whereas Telecoms and Consumer Goods were the worst relative performers. On the macro side, in the United Kingdom, January’s unemployment rate was unchanged (better than expected). In Spain, the final inflation figure was lowered slightly, although core inflation stood at 7.6% YoY. In the US, inflation slowed to 6.0% (in line), whereas monthly core inflation increased slightly more than expected in February, with services (housing) putting upward pressure. With this in mind, the market still expects a +25bps rate hike at the Fed’s meeting next week. On another note, the Fed is considering tightening the regulation and supervision of US mid-sized banks, while Moody’s downgraded the outlook for the banking system as a whole from stable to negative. In China, February’s industrial production recovered less than expected, February’s retail sales grew in line with expectations and fixed asset investment rallied more than expected.
What we expect for today
European stock markets would open with slight gains, where oil companies would benefit from the Brent crude rally. Currently, S&P futures are up +0.1% (the S&P 500 ended +0.1% higher vs. the European closing bell). Volatility in the US fell (VIX 23.73). Asian markets are rising (China’s CSI 300 +0.18% and Japan’s Nikkei +0.05%).
Today we will learn in the Euro zone January’s industrial output, and in the US, February’s production prices and retail sales, and March’s Empire and NAHB real estate confidence indices. In debt auctions: Germany (€ 2.5 Bn in bonds due 2050 and 2053).


COMPANY NEWS

INDITEX. 4Q’22 results and DPS’22 in line with expectations. Strong start to 1Q’23 and increased investments in 2023. BUY.
The 4Q’22 results came in as expected in sales (+13.4% vs. +13.4% vs. +13.0% BS(e) and +12.9% consensus, ~+13% in LfL, as expected), with the gross margin rising by around +33bps (vs. -70bps BS(e)) and strong growth in EBIT thanks to good cost control (+36% vs. 4Q’21 vs. 39% BS(e) and +42% consensus). The 1Q’23 guidance (1 Feb/13 March) is positive, with +13.5% LfL growth (+17.5% excl. Russia and Ukraine) and the company announced the following targets: stable gross margin (vs. -25bps BS(e)), ~+3% growth in gross space (~-1% from the exchange rate effect) and sharp increase in investments, which would rise to € 1.6 Bn (through efficiencies and innovation). The company has proposed a DPS’22 of € 1.20/sh. (+29% vs. 2021, in line with BS(e) and consensus, 4% yield). The good momentum of sales in 1Q’23 should back the share price after it has risen by +18% in absolute terms YTD (+6% vs. IBEX35 and -1% vs. the rest of the sector).