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IBERIAN DAILY 03 NOVEMBER + 3Q’21 RESULTS. PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: CAF, ELECTRICITY SECTOR, ROVI, UNICAJA.

MARKETS YESTERDAY AND TODAY

At the end of today’s report, and during the entire results season, we will include a presentation with previews for the 3Q’21 results to be released over the coming days in Spain.

IBEX having trouble breaking above 9,000 as the S&P 500 hits new highs
It was a session of mixed performance on European stock markets, with debt markets tightening and disappointing macro data, where peripheral markets ended up doing worse than core markets. As for the Euro STOXX, the best-performing sectors were Household Goods and Industrials, whereas Travel & Leisure (due to the sharp drop in Flutter after lowering its profit guidance) and Basic Materials brought up the rear. On the macro side, in the euro zone October’s manufacturing PMIs were lowered, where high energy prices and supply problems should continue to press the figures lower. In Spain, October’s manufacturing PMIs also fell more than expected. In politics, the Govt. coalition reached an agreement on repealing labour reform, although within the terms set out in the Recovery Plan sent to the EC, and which should tackle the problems of dualism and job insecurity. In China, the Caixin Services PMI climbed unexpectedly in October. In US business results, Pfizer, Under Armour and Estee Lauder beat expectations, among others.
What we expect for today
The European stock markets would open with slight drops with the Energy sector in the spotlight due to the falling Brent price and awaiting the Fed. Currently, S&P futures are down -0.05% (the S&P 500 ended +0.1% higher vs. its price at the closing bell in Europe). Volatility in the US dropped (VIX 16.03). Asian markets are sliding (China’s CSI 300 -0.2% and Japan’s Nikkei is closed).
Today in Spain we will learn October’s unemployment rate, in the euro zone September’s unemployment rate, in the US the ADP employment survey and October’s non-manufacturing ISM, as well as the Fed meeting. In US business results, Discovery, Evergy, Fox, QUALCOMM and Electronic Arts among others, will release their earnings. Debt auctions: Germany (€ 4 Bn in bonds due 2026).

COMPANY NEWS

ROVI. Better 3Q’21 Results on all levels. The group announced a share buyback programme and upgraded its 2021 guidance. BUY.
3Q’21 Results came in above expectations on the operating level (EBITDA € 65.5 M vs. € 54 M BS(e) and € 48 M consensus) thanks to higher margins (37.7% vs. 32% BS(e) and 30% consensus) and better sales (+56% vs. +52% BS(e) and +44% consensus). Good performance of cash (€ +18 M up to € 74 M of net cash), the company announced a € 125 M share buyback programme (around 3% capital in 1 year starting today). The group also upgraded its 2021 guidance to +40%/+45% operating revenue growth (vs. 35%/+40% previously; vs. +40% BS(e) and +43% consensus) with +0% and +10% of revenue growth guidance’22 (vs. +22% BS(e) and +25% consensus), which we see as conservative. We expect a positive market reaction despite the good recent performance (+11% in the past month and +7% vs. IBEX).

UNICAJA. 3Q’21 Results in line with expectations. Merger impact also in line. Positive guidance. BUY.
The company’s results (pro forma) came in as expected in core revenues and costs, with lower provisions. Recurring Net Profit (€ 54 M) stood slightly below expectations (€ 67 M BS(e) and € 59 M consensus) due to lower integration adjustments. As for the merger, NPLs increased by around +4% (€~100 M, a marginal increase), and the provisions against the badwill rose by €~95 M (NPAs coverage of 72%). The company cleaned up DTAs and raised first integration adjustments, bringing the CET1 ratio post merger to 13.6% (-260bps from the merger; -7bps from the accrual of the 50% payout). Cost synergies’23 increased to € 210 M (vs. € 192 M previously) and the bank announces € 80 M of revenue synergies (~4% of the total) and a CoR’23 of 20bps.