EUR 100.00 For Business Accounts Only

IBERIAN DAILY 18 JANUARY + 4Q’23 RESULTS. PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: REPSOL.

At the end of today’s report, and during the entire results season, we will include a presentation with previews for the 4Q’23 results to be released over the coming days in Spain.

Markets marked by uncertainty
It was a session of drops for European stock markets, hit by doubts about China and the lower probability of rate cuts in the short-term. Thus, in the STOXX 600, all sectors ended in the red, with Media and Insurance being the best performers whereas Real Estate (given the more expensive financing) and Basic Resources suffered the biggest losses. On the macro side, in the UK the general inflation rose to 4.0% in December unexpectedly, whereas the core data was disappointing, remaining at 5.1% YoY. In the euro zone, C. Lagarde from the ECB outlined that their work on inflation is not over yet and that the first cuts will not materialize until the summer period. In this regard, K. Knot (Holland) warned the market, considering it is anticipating rate cuts. In the US, December’s retail sales doubled expectations, suggesting private consumption will exceed 2.0% q/qa in the 4Q’23 whereas December’s industrial production also beat expectations. Lastly, the NAHB index on the construction sector confidence climbed more than expected in January, returning to Nov’23 levels. In Brazil, November’s retail sales rose more than expected. In Japan, machinery orders slowed down much more than expected in November. On the geopolitical front, Pakistan is bombing military targets of Baloch separatists in Iran whereas the US launched 14 attacks on Houthis targets. In US 4Q’23 business results, Prologis were in line, Charles Schwarb and Alcoa better than expected whereas Taiwan’s TSMC beat expectations.
What we expect for today
European stock markets would open with slight gains of up to +0.2%. Currently, S&P futures are up +0.4% (the S&P 500 ended flat vs. the European closing bell). Asian stock markets are falling (China’s CSI 300 -0.47%, Japan’s Nikkei -0.05%).
Today in the US we will learn weekly jobless claims, December’s building permits and housing starts and January’s Philadelphia Fed index. In US business results, M&T Bank, PPG and Keycorp, among others, will release their earnings.


COMPANY NEWS

REPSOL. Solid 4Q’23 trading statement despite the lower refining margin. BUY
As expected, the refining margin fell on the quarter (to US$ 9/barrel vs. US$ 13.60 in 3Q’23), although the accumulated figure on the year meets the guidance (US$ 11). Brent crude prices also fell in 4Q’23 to US$ 84.30/barrel (-2.8%), but on the year is stands at US$ 82.60/barrel (slightly above the guidance of US$ 80). The Henry Hub gas price compares positively in 4Q’23 (US$ 2.90 vs. US$ 2.50 in 3Q’23) and would meet the annual guidance level (US$ 2.70). Production levels in 4Q’23 (595 kboe/d) would also be at the annual guidance level (590-605 kboe/d). We would expect strong 4Q’23 results (to be released on 22 February) to reach the guidance (CFFO slightly above € 7 Bn) and 4Q’23 Net Profit of €~995 M (around -9% below 3Q’23, -50% vs. 4Q’22), meaning around +9% above the consensus after the cuts seen over the past month. We would expect a positive reception.