EUR 100.00 For Business Accounts Only

IBERIAN DAILY 16 APRIL + 1Q’24 RESULTS. PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: BANKING SECTOR, NATURGY, TALGO, TELEFÓNICA.

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 1Q’24 results to be released over the coming days in Spain.

All eyes on the Middle East
European stock markets saw a good start to the week despite Iran’s attack without consequences against Israel last weekend and with sovereign yields widening significantly (US yield above 4.6%), mainly after the good retail sales data released in the US. The Ibex, slightly lagging behind, ended flat yesterday below 10,700 points. In the STOXX 600, most sectors ended with gains, led by Consumer Goods and Industrials vs. Energy and Utilities that posted the biggest losses. On the macro side, in the euro zone, the slowdown in February’s industrial output moderated less than expected. In the US, April’s Empire Manufacturing index recovered less than expected although March’s retail sales climbed far above expectations whereas April’s NAHB construction confidence index remained unchanged, in line with expectations. In China, the YoY growth in GDP speeded up in the 1Q’24 unexpectedly thanks to investments in infrastructures although the slowdown of both retail sales and industrial output moderated in March much more than expected. On another note, the annual drop in home prices deteriorated in March to -2.2% vs. 1.4% previously. In US business results, Goldman Sachs came in above expectations whereas M&T was practically in line.
What we expect for today
Stock markets would open with drops >-1.0% and with growth and bond proxies faring worse. Doubts about the Middle East and the poor macroeconomic data released in China are weighing on markets, which is leading to corrections in Asian markets. Currently, S&P futures are down -0.10% (the S&P 500 ended down -1.52% vs. the European closing bell). Asian stock markets are sliding (China’s CSI 300 -0.61%, Japan’s Nikkei -1.78%).
Today in Germany we will learn April’s ZEW index, in the UK February’s unemployment rate and March’s number of unemployed, in the US industrial output, housing starts and March’s construction licences. In US business results, Bank of NY, Bank of America and Morgan Stanley, among others, will release their earnings.


COMPANY NEWS

NATURGY, SELL
According to the press, a group from the UAE would be negotiating the acquisition of 40% of NTGY’s capital in a move mentioned yesterday by La Vanguardia that would see GIP and CVC divest their stake (~40% in NTGY between the two). The main candidate would be the UAE oil company, Adnoc (specifically TAQA, its renewable and green hydrogen subsidiary). Both parties would have reached a prior agreement with these funds to launch a friendly takeover bid on 100% of NTGY’s capital. The negotiation, which has been in the works for over a month, would have been carried out with the Government’s knowledge, which would not frown on the Emirate group entering the capital (although conditions would be set in order for authorisation to be obtained). Criteria (26.7% NTGY) would abstain from the TOB, as would IFM (15%). The negotiation would be at such a late stage that some sources even state that shareholders would have reached a governance agreement for NTGY’s management. News with a positive impact due to the possibility of a TOB. However, although the news states that the Govt. would not frown on the deal, we think it is a complex task to formulate a TOB like the one considered. On one hand, the current share price would not be attractive for GIP and CVC to sell their stake (bearing in mind they entered at €~19/sh. and the stock has fallen around -22% on the year), unless a premium were paid. On the other hand, NTGY’s strategic character makes it difficult for the Govt. to allow a Middle Eastern fund to enter the shareholding structure.