EUR 100.00 For Business Accounts Only

IBERIAN DAILY 10 DECEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: CHANGES IBEX, PROSEGUR, UNICAJA.

MARKETS YESTERDAY AND TODAY

The Ibex underpinned at 8,400 points
Slight drops on the European stock markets, which paused for a break following the rally from previous sessions. In this regard, the latest data from South Africa’s hospitals continues to suggest that the Omicron variant is much more transmissible than previous variants but its symptoms are less severe. Still, after the initial relief, fears are growing that it has the capacity to collapse the healthcare system . Within the Euro STOXX, high-quality sectors such as Household Goods and Consumer Goods prevailed, whereas Retail and Travel & Leisure saw the biggest losses. On the macro side, in the Euro zone, countries are negotiating to limit the duration of Covid-19 certificates to 9 months and to homogenise restrictions on non-EU travellers. In the US, weekly jobless claims fell more than expected, and October’s wholesale inventories climbed more than hinted at by the preliminary data. On the geopolitical front, tensions heightened between the US and Russia due to military moves on the Ukrainian border after J. Biden has granted his support. Lastly, the Senate passed the draft bill that will allow Democrats alone to prevent the country from defaulting on its debt on 15 Dec (with a simple minority of 50 seats). In Mexico, November’s inflation came in at 7.4%, beating expectations, which underpins the rate hike the market expects for the benchmark rate next week (+25bps to 5.25%). In China, Fitch downgraded Evergrande’s and Kaisa’s credit ratings, declaring them in partial default after they failed to repay their loans in USD. Separately, the PBoC took further actions to curb the yuan’s depreciation by raising the foreign currency reserve ratio for the second time this year.
What we expect for today
European stock markets would consolidate positions after the materialization of the positive newsflow on the Omicron variant. Currently, S&P futures are up +0.1% (the S&P 500 ended -0.36% lower yesterday vs. its level at the European closing bell). Volatility in the US increased (VIX 21.58. Asian markets are falling (China’s CSI 300 -0.7% and Japan’s Nikkei -1%).
Today we will learn in Germany November’s final inflation, in the UK, Spain and Mexico October’s industrial output, and in the US, November’s inflation and December’s preliminary University of Michigan confidence. In debt auctions: Italy (€ 5 Bn in 12M T-bills).

COMPANY NEWS

CHANGES IBEX. Viscofan replaced with Rovi.
The Technical Advisory Committee has decided to add Rovi (with a 60% weighting), replacing Viscofan. Moreover, due to changes in the free float, it will adjust the weightings of Almirall (from 80% to 60%), Colonial (from 60% to 80%), Siemens Gamesa (from 40% to 60%) and Solaria (from 100% to 80%). The changes will be effective on 20 December (the index will be adjusted on the 17th). The exclusion of Viscofan was our first choice.

UNICAJA. The 2021-24 Strategic Plan’s target leave room for estimate increases. BUY.
We highlight the following targets: (i) +13% CAGR’21-24 in core Operating Income, with an efficiency ratio 8% RoTE’24 (vs. ~5.5% BS(e) and consensus in 2023e and previous guidance of ~6%); (iv) 50% payout (already known, implying >7% yield) and ~+6% CAGR in TE/sh; (v) Generation of € 1.5 Bn of capital (~+400bps BS(e)), with a target CET1 ratio of ~12.5% that implies maintaining the current level. These targets leave much room for estimate increases and we believe that they include additional capital/balance optimisation measures (share buybacks/additional impairments/restructurings). UNI is trading at a P/TE ratio of 0.3x, meaning that the plan should boost the share price on both estimate increases and re-rating.