Professional Documents
Culture Documents
Iberian Daily
2015-07-31
Today's HIGHLIGHTS
Santander: Following 2Q15 earnings, we cut bottom-line estimates by c. 5%, with Spain and the US as the main drivers.
We expect an adj. EPS CAGR14-18F of 8% and reach a YE16 Price Target of 6.80. Although asset quality
improvements in Spain may offer positive surprises, top-line evolution comes as a concern. UK is a source of steady
earnings stream but the current low CoR levels limit the upside. Brazil is a revenant growth driver over the LT but the
impact on asset quality from the countrys economy downturn comes a threat to earnings in the ST. Despite the groups
decent capital position, regulation also takes its toll on the P&L as the bank guided towards 1bn of regulatory costs over
the next 3 years. SAN is trading at 1.22 PTBV16 for a ROTE17-18 of c. 11.5%. Neutral.
https://www.bpiequity.bpi.pt/others/PDF.aspx?id=80241
Our retail analysts Jose Rito and Bruno Bessa, released a report on Jeronimo Martins updating the YE16 Price
Target to E15.80, after better than expected Q2 results. The ongoing restructuring plan should continue to be noticed
over the next earnings releases and fuel the share price. The ROIC recovery is underway and EPS growth prospects are
quite attractive (avg. 18% in 2015-18), leading us to maintain a Buy recommendation.
https://www.bpiequity.bpi.pt/others/PDF.aspx?id=80141
Altri reported a record quarterly EBITDA and ahead of our estimates backed by better selling prices and lower than
expected costs. CF maintains a positive trend and we see scope to increase our estimates and net debt reduction in
FY15. Pulp momentum remains upbeat and we maintain a positive and CoRe Buy recommendation on the stock.
https://www.bpiequity.bpi.pt/others/PDF.aspx?id=80201
SONC reported its 2Q15 numbers with the underlying EBITDA standing broadly in line with our numbers. Still, the sale
of non-core real estate assets (Duque de Loul) allowed the company to book Eur6mn gains for a total cash-in of
Eur10mn which together with the disposal of a further relevant stake in Imosede resulted in a Eur28mn net debt reduction
in 2Q14 (30% of the market cap) which should trigger the stock price performance. The triggers are starting to be
unveiled and SONC remains a deep value case. Buy.
https://www.bpiequity.bpi.pt/others/PDF.aspx?id=80244
Ferrovial: 2Q15 What a great quarter! - 2Q15 Topline and EBITDA grew by 17% and 31% respectively, surpassing
our estimates by 5% (118mn) and 22% (60mn) in the same order and consensus by 8% and 21%. This set of results
should lead consensus to upgrade earnings and valuation. CoRe Buy.
https://www.bpiequity.bpi.pt/others/PDF.aspx?id=80181
OHL: weak Q2 results and a 1bn capital increase - OHL announced that will convene a general shareholders
meeting to approve a 1bn rights issue. The funds will be used to reduce net recourse debt by c.650mn and to invest
c.350mn in the development of new concessions awarded to OHL outside Mexico. Regarding results Q2 EBITDA stood
6% and 10% below our and consensus forecast while Recourse Net debt increased by 158mn qoq to 1.24bn and in
line with expected with better WK performance.
https://www.bpiequity.bpi.pt/others/PDF.aspx?id=80161
FCC: Good Q2 Cash flow despite operating level miss - Q2 sales reached 1.68bn, up 10% yoy. Q2 top line stood 6%
(96mn) and 5% above our estimates and consensus. Q2 EBITDA reached 200mn down 6% yoy and 9% below our
estimate and consensus, with the deviation explained by lower than expected Q2 EBITDA from construction (65% or
16mn below) and Cement (16% or 6mn below). Net debt reached 5.8bn, up 159mn qoq, impacted by seasonal NWC
deterioration still with a better performance than expected: -117mn in Q2 (o.w. -118mn in construction) vs. BPIF of
156mn. Capex stood also below our forecast by 26mn. All in all net debt stood 1% or 37mn below our estimate
despite the 19mn miss at EBITDA.
https://www.bpiequity.bpi.pt/others/PDF.aspx?id=80243
EDP: 2Q15 earnings largely impacted by one-offs - EDP 2Q15 EBITDA and net income outperformed our estimates by
35% and 88% in Q2, respectively, as a result of a Eur 295mn positive one-off related with the acquisition of 50% of
Pecm in Brazil. Besides this impact results were broadly in line with expectations. Take a look at our note released
yesterday after market closing for details.
https://www.bpiequity.bpi.pt/others/PDF.aspx?id=80121
Tecnicas Reunidas (TRE) reported better than expected 2Q15 results with EBITDA jumping by 30% yoy and coming
5% and 8% ahead of our and consensus estimates. The company benefited from strong top line and higher than
expected EBITDA mg of 5.5% (flat yoy; +10bps qoq) against our and consensus 5.4% forecast. Net cash has been the
main negative falling by Eur134mn (-24%) qoq due to the lack of relevant pre-payments. TRE has been delivering best-inclass earnings against the profit warnings from peers but the market has been reflecting this in the share price
performance and net cash remains subdue. The lack of relevant triggers ahead leads us to see more limited room for
outperformance.
https://www.bpiequity.bpi.pt/others/PDF.aspx?id=80249
Today's News
ENERGY
Abengoa: Abengoa Yield releases 2Q15 results
EDP: 2Q15 earnings largely impacted by one-offs
Repsol: 2Q15 Conference Call highlights
Saeta Yield: 2Q15 operating results above expected
FINANCIALS
Santander: Cutting estimates following 2Q15 release
BBVA: Positive 2Q15 earnings
Popular: Neutral 2Q15 earnings
Santander: Still interested in HSBC Brazil
BME: Solid set of 2Q15 Results
CaixaBank: 2Q15 earnings
HEALTHCARE
Rovi: highlights from 2Q15 results conference call
OTHERS
SONC: 2Q15 results unveil the sale of real estate assets
Prosegur: 2Q15 conf. call highlights
Greece: internal Syriza referendum on bailout while IMFs participation in bailout remains in doubt
Eurozone: economic sentiment increased to 104.0 in July
Eurozone: consumer confidence fell to -7.1 points in July
Germany: unemployment rate stood at 6.4% in July
Germany: HCPI increased 0.1% yoy in July
US: 2Q15 GDP rose 2.3%
US: consumer spending increased 2.9% in Q2
US: initial jobless claims increased to 267k in the week ended July 26
TODAY, WE HIGHLIGHT
ENERGY
Abengoa: Abengoa Yield releases 2Q15 results
(Reduce; PT 3.35)
Reaffirming FY15 and FY16 dividend guidance
Abengoa Yield announced a quarterly dividend corresponding to the 2Q15 amounting to USD 0.40/sh, which represents
an 18% increase over initial guidance for the quarter. Abengoa Yield reaffirmed its guidance on Dividend per Share of
USD 1.60 for 2015 and Dividend per Share in the range of USD 2.10 to USD 2.15 for 2016 and expects to update this
guidance when long term financing of the fourth acquisition is closed.
Q2 results above consensus
1H15 revenues reached USD 308.6mn +82% yoy vs. consensus USD 286mn. Further Adjusted EBITDA including
unconsolidated affiliates reached USD 264.8mn, + 93% yoy vs consensus USD 242mn. Cash Available for Distribution
reached USD 83.1mn, USD 44.6mn in Q2. Gross corporate debt at the end of June stood at USD 377.0mn and liquidity
reached USD 154.8mn at the holding company level on an unconsolidated basis (1.3x Net Corporate Debt / CAFD precorporate debt service ratio). Net project debt amounted to USD 4868mn (USD 3624mn at YE). (Press Release,
Bloomberg)
Avg.
estim ate
Dev.
BPI
Dev.
1,114
780-935
826
35%
828
35%
EBIT
758
410-579
470
61%
479
58%
Net Profit
290
122-271
176
65%
154
88%
Net Debt
17,700
17200-17800
17,203
3%
17,565
1%
EBITDA
No changes in consensus expected besides inclusion of one-offs: Overall trends in results came in line with
expectations and deviations were relatively small in absolute terms (ex-one-offs), so we shouldnt expect material
revisions in consensus estimates from these results, aside from the inclusion of the Brazilian capital gain. Focus in the
conference call should be on outlook for the Liberalised unit (softer comparables in H2), Brazilian business (drought),
potential corporate actions (EDPR yieldco?), thoughts on the tariff deficit in Portugal (and potential securitizations) and
continued deleverage process.
Continued tough earnings momentum; unchanged view following results: EDP offers an appealing dividend
policy (5.3% DY16F), lower than sector operational risk (c. 85% EBITDA regulated) and a competitive generation
portfolio (72% CO2-free by 15F). Upside potential from further asset rotation (EDPR and Brazil) is a plus but relatively
high leverage, stretched profitability in Iberia and drought in Brazil justify some caution in the short term. The
underperformance YTD (+9% vs. PSI20 +20%) reflects those risks, together with increased regulatory risk perception,
but we believe there is no visibility about a reversal of the current adverse operational sentiment. The potential listing
of a yieldco in Spain by EDPR may be a positive trigger and could resume speculation about a possible delisting of EDPR
(share swap+cash?). REDUCE.
Synergies and efficiency measures to allow c 500mn operating income improvement in 2016: The target for
synergies was increased from USD 220mn to USD 350mn (of which USD 70mn already executed). This, together with
efficiency measures are expected to allow a 500mn improvement in operating income in 2016. Repsol has detailed in
the conference call the impact of synergies and efficiency measures as follows: USD 280mn this year; USD 550mn in
2016; USD 700mn in 2017; USD 750mn in 2018.
No details on divestments yet: The agreement with rating agencies includes divestments of 1bn to be executed in the
next 15-16 months. No details on the geographies/projects have been advanced but the CFO added that a deal could be
announced ahead of the strategic presentation.
Integration of Talisman led to the recognition of USD 2.6bn of goodwill, of which USD 2.1bn are deferred tax liabilities
that Repsol believes to be supported by the synergies identified. Repsol has one year to adjust and refine the allocation.
Dev
1%
-1%
3%
ns
2%
-1%
8%
ns
1pp
2%
-57%
-34%
-72%
-67%
-74%
2Q15
58.8
25.1
34.2
-0.5
42.1
17.7
26.1
-1.7
71.6%
22.4
0.1
17.2
39.7
-11.2
28.5
2Q15F
58.1
25.7
32.3
0.0
40.5
18.0
23.0
-0.5
69.7%
21.5
0.5
-9.6
12.4
-3.5
8.9
Dev
1%
-2%
6%
ns
4%
-2%
14%
ns
2pp
4%
-80%
ns
ns
ns
ns
Cementos Portland
2Q15
( mn)
Sales
167
EBITDA
31
margin
18.6%
Depreciation
-17
Provisions and others
0
EBIT
15
margin
9.0%
Net Financial Results
-26
EBT
-11
Net profit
-10
Source: CPV and BPI (F, Dev.)
2Q14
149
34
22.8%
-18
1
17
11.4%
-24
-7
-7
yoy
13%
-8%
-4.2pp
-10%
n.s.
-11%
-2.4pp
n.s.
n.s.
n.s.
2Q15F
170
37
21.7%
-15
0
22
12.8%
-23
-1
-1
Dev.
-1%
-16%
-3.2pp
9%
n.s.
-31%
-3.8pp
11%
741%
643%
1H15
289
37
12.9%
-33
1
5
1.8%
-50
-45
-40
1H14
259.9
49.5
19.0%
-37
3
16
6.0%
-49
-34
-31
yoy
11%
-24%
-6.1pp
-11%
n.s.
-67%
-4.2pp
n.s.
n.s.
n.s.
1H15F
291
43
14.8%
-31
0
12
4.1%
-48
-36
-31
Dev.
-1%
-13%
-1.9pp
4%
n.s.
-56%
-2.3pp
5%
26%
29%
Preparing the capital increase: Cementos Portland AGM already approved a Eur 200mn capital (announced in March)
at Eur 6.5/sh with preferential subscription rights for existing shareholders to reinforce the current fragile capital structure
of the company. FCC, the main shareholder with 77.9%, already announced that will support the capital increase. The Eur
200mn will be used to repay the Eur 120mn subordinated loan made by FCC and the remaining Eur 80mn will be used to
repay outstanding debt. After this rights issue Cem. Portland ND/EBITDA15F should drop from 12.6x to 10.7x. Our
current FV of Cem. Portland stands at Eur 8.17/sh (Eur 7.35/sh including 10% small cap discount) with an implicit c.Eur
114/ton valuation. The main valuation driver for this story is the recovery of cement consumption in Spain (36% of FY14
revenues and 65% of installed capacity).
Revenues Breakdown by unit
( mn)
2Q15 2Q14
Spain
55
53
International
112
96
o.w.
US
62
48
Tunisia
22
21
UK
10
8
Others
18
19
Total
167
149
Source: CPV, BPI Equity Research
yoy
4%
17%
2Q15F
57
112
Dev.
-4%
0%
1H15
101
189
1H14
96
164
yoy
5%
15%
1H15F
103
188
Dev.
-2%
0%
28%
8%
24%
-3%
13%
63
21
10
19
170
-2%
5%
7%
-3%
-1%
99
42
19
29
289
78
43
14
28
260
26%
-3%
32%
4%
11%
100
41
18
30
291
-1%
3%
4%
-2%
-1%
figures previously advanced (c. Eur2.0bn), raising the companys YTD order intake to Eur3.7bn. We are estimating a
Eur4.25bn order intake for TRE in FY15.
Bruno Silva, CFA / Flora Trindade, CFA / Filipe Leite, CFA / Jos Rito / Bruno Bessa
BACK TO INDEX
FINANCIALS
Santander: Cutting estimates following 2Q15 release
(YE16 Price Target cut from 7.20 to 6.80; Neutral recommendation maintained)
- 2Q15 missed expectations: Excluding the 835mn gain from the reversal of a tax provision in Brazil, Santander
posted a 2Q15 NP of 1.7bn (+18%; flat qoq), coming below consensus on higher than expected tax rate and minorities.
NII (+12% yoy; +3% qoq) came slightly ahead of expectations despite the weak momentum in Spain (-3% qoq). During
the earnings presentation, management conveyed a cautious outlook for NII in Spain as the liabilities re-pricing effect is
done and loan volumes post a bleak performance. NPL net new entries declined 35% qoq driving the NPL ratio down to
4.64%, with asset quality improving throughout the group (except in Brazil and Mexico). The fully loaded CET1 ratio stood
at 9.8%, on track to meet the 10% targeted ratio at YE15.
- Trimming estimates and valuation: Following 2Q15 earnings, we cut bottom-line estimates by c. 5%, with Spain and
the US as the main drivers. We expect an adj. EPS CAGR14-18F of 8% and a ROTE of 11.5% by 2017, below the banks
12%-14% guidance. Despite the cut in estimates, the Spanish unit is paramount as it accounts for 39% of the expect
earnings growth in 2014-18. Our estimates stand 2% below consensus for the 2015-17 period. We reach a YE16 Price
Target of 6.80 (-6% vs the previous 7.20).
- Challenges ahead: Although asset quality improvements in Spain may offer positive surprises, top-line evolution comes
as a concern. The UK is a source of steady earnings stream but the current low CoR levels limit the upside. Brazil is a
revenant growth driver over the LT but the impact on asset quality from the countrys economy downturn comes a threat
to earnings in the ST. Despite the groups decent capital position, regulation also takes its toll on the P&L as the bank
guided towards 1bn of regulatory costs over the next 3 years. SAN is trading at 1.22 PTBV16 for a ROTE17-18 of c.
11.5%. We maintain a Neutral stance on the stock.
Link to report: https://www.bpiequity.bpi.pt/others/PDF.aspx?id=80241
Bottom line beat driven by trading and capital gains: Popular posted a 2Q15 NP of 97mn (+48% yoy; +6% qoq),
coming 6% and 3% above consensus and BPIF, respectively. Higher than expected trading gains and the 69.5mn
capital gain from the sale of lending and property assets servicing in were the main reasons behind the better than
expected bottom-line. NII (-3% yoy; flat qoq) came in line with expectations. Fees came 3% below expectations (-13%
yoy; flat qoq). Provisions were higher than expected as the bank took advantage of the good trading figures and the
capital gains to boost NPL coverage. There were also positive news on the asset quality as the bank booked 378mn
of net NPL recoveries in the quarter with NPLs down 2% qoq.
Neutral set of earnings, we do not expect meaning estimates. Although some fine-tuning is required to incorporate
the extraordinary capital gains and higher provisions, we do not expect meaningful changes in our estimates, while
consensus may move down: 1H15 earnings accounted for 50% of our estimate for the FY15 and for 44% of
consensus. Popular is trading at a PBV16 of 0.69x and PTBV16 of 0.84x, for a 7.7% ROTE17.
NII roughly in line: NII (-3% yoy LfL; flat qoq) came roughly in line with expectations. NIM was up 2bps qoq and
customer spread stood flat qoq. Average loans yields declined 13bps qoq. The avg retail funding cost was down
13bps qoq with term deposits new production at 0.47% in the 2Q (vs. a back book cost of 1.19%). The bonds portfolio
average yield declined 2bps qoq, while interbank and wholesale funding costs were down 9bps and 12bps qoq,
respectively.
FL CT1 ratio at 10.57%: phased-in CT1 ratio stood at 12.45% from 12.40% in the previous quarter. Fully loaded CT1
ratio stood at 10.57%, from 10.54% in March. RWAs were 1% up qoq.
Asset quality was a source of positive news: NPL ratio stood at 13.97% from 13.32% in previous quarter.
However, the rise in the ratio was driven by a 7% qoq decline in the denominator, as opposed to rising NPLs. NPLs
were down 2% qoq driven by the net NPL recoveries of 378mn in the quarter (from net NPL recoveries of 372mn in
1Q15). NPL coverage rose to 44% from 43% in 1Q15. Provisions (+3% qoq) came 11% above our estimates as the
bank opted to allocate the capital gains booked in the quarter to accelerate provisions and increase coverage levels.
Costs were down 6% yoy (flat qoq), coming 1% below our estimates but in line with consensus. Administrative
expenses were down 15% yoy (-3% qoq) and staff costs (+1% yoy; +2% qoq). C/I stood at 48%.
Link to report:
https://www.bpiequity.bpi.pt/others/PDF.aspx?id=80250
Consolidated Revenues up 6% yoy; 4% and 2% below our estimates and consensus : with the exception of Clearing, all BME
Divisions performed worse than our expectations. Major deviations came from the Information and IT & Consulting Divisions. In both
Divisions we were expecting growth on top of the 2Q14 performance but performance came in line with 1Q15. Overall, 2Q15
Consolidated Revenues rose 6% yoy to 88.3mn and stood 4% and 2% below our estimates and consensus, respectively.
Opex under control: despite the impact of BMEs adaptation to the Clearing and Settlement infrastructure reform, opex rose 4%
yoy but came 9% and 2% below our estimates and consensus. Main deviation to our figures stood at the Information Division,
where we expected a stronger commercial effort.
EBITDA 2% lower than our estimates: BMEs 2Q15 EBITDA rose 7% yoy to 62.5mn, standing 2% below both our estimate
(63.9mn) and consensus (63.6mn), respectively. 2Q15 EBITDA margin (70.8%) improved by 0.6 p.p. yoy and came 1.4 p.p.
above our estimate.
1H15 Net Cash position at 334mn: BMEs Net Cash position decreased 18mn in 2Q15 as the company paid a 74mn dividend
(0.89 complementary DPS relative to FY14 results) in May. The company announced a 1 st interim DPS of 0.40 relative to FY15
results, in line with previous years.
BME Clearing authorised to operate in Equity and Interest Rate Derivatives: the Spanish market regulator (CNMV) authorised
BME Clearing to operate in the Equity and Interest Rate Derivatives segments. This concludes yet another step within Spain
Clearing and Settlement infrastructure reform. It also paves the way for BME to initiate conversations with the CNMV to potentially
distribute any freed capital to its shareholders in an extraordinary dividend following the application of the minimum capital
requirements to all its platforms. We expect this issue to be focussed on todays conference call at 12.00am GMT.
Fees were flat qoq (+8% yoy) with AuM related commissions and insurance and pension plan fees driving the increase
(+15% qoq and +10% qoq respectively), while credit related fees are experienced a meagre 6% fall yoy.
Volumes: Total gross loans to customers stood flat qoq. On B/S customer resources increased 1% qoq with time
deposits falling 5% and sight deposits increasing 8% in the same period. Off-B/S clients resources were up 1% qoq with
mutual funds increasing 1% qoq. LTD decreased to 109% vs. 111% in March (107% excluding BB SAU).
Provisions on the quarter amounted to Eur 691mn (+4% qoq, -8% yoy). CoR came down to 88bps in the 2Q15, from
91bps during the previous quarter and 124bps a year before. NPL ratio stood decreased qoq to 9.0% from 9.7% in 1Q15
while the bank resume the net NPL recovery trend experienced during 2014. NPL coverage stood flat qoq at 54%.
Capital: (1) Fully loaded CT1 ratio stood flat qoq at 11.5% (2) Phased-in CT1 ratio stood at 12.8% (from 12.1% in March).
RWAs were down 4% qoq.
RE exposure: Loans to RE developers amounted to Eur 11.6bn (with a 51% coverage) representing 6% of the total loan
book. Foreclosed RE assets amounted to Eur 16.3bn (5% of total assets) and have a 57% coverage.
Carlos Peixoto
BACK TO INDEX
No major changes in underlying business dynamics: the short term outlook for Viscofan remains supported by
growing global demand, a relatively benign raw materials environment, endogenous operational improvements and
currency tailwinds. Viscofan stated that it could surpass its FY15 earnings guidance (204-206mn EBITDA vs. our
216mnF, 215mn cons.) on the back of FX (eg. 1.20 EURUSD assumption vs. 1.12 average YTD). Still, raw materials
(potentially impacted by concurrent demand from other industries) and increased competition (on rising industry capacity)
could challenge the business landscape, as recently flagged by Shenguans profit warning in China.
Viscofan trades at 12.0x EV/EBITDA15F, at a 45% premium to its historical average, above its peer Devro (11.0x) and
close to our YE16 PT of 56.90. Inorganic growth/market consolidation could be positive catalysts ahead but rich
valuation levels are always more vulnerable to potential negative developments or expectation disappointments that
could arise from the evolution of input costs, market share, pricing power or FX (particularly the USD).
Link to our note on Viscofan 2Q15 results: https://www.bpiequity.bpi.pt/others/PDF.aspx?id=80122
Sales up 2%, EBITDA down 15%: 2Q15 sales rose 2.2% yoy to 21.6mn (1% above expected) driven by growing
exports (51% of revenues), which offset a 0.8% decline in domestic market. EBITDA fell 15% yoy to 7.1mn (15% below
est.) on a margin erosion of 6.8pps to 33.0%. Net profit increased 5% to 6.7mn (8% above est.) helped by financial
results/FX gains. At the B/S, net cash rose 4% qoq to 122mn (in line with forecasted) with the EBITDA miss being
compensated by better working capital.
Sluggish domestic market and poorer than expected mix: we stay concerned with the domestic sales evolution,
apparently not capturing the ongoing recovery in private consumption in Spain (sign of increased competition?). Margins,
on the other hand, continue hampered by raw material costs and an increased weight of wholesale, young and white
wines in the sales-mix. Although the 2H of each year is traditionally stronger than 1H, our current FY15 EBITDA estimate
of 31mn (35.3% margin) is at risk. Barn de Ley has a solid business model and a very sound B/S (with net cash
representing 30% of market cap), but earnings momentum is faltering and the stock does not look cheap, trading at 8.2x
EV/EBITDA15F (pre-earnings revision) with no upside to our YE16 PT of 92.80 (incl. a 10% liquidity discount).
HEALTHCARE
Rovi: highlights from 2Q15 results conference call
(Reduce; PT Eur 16.40)
Rovi 2Q15 results was mainly focussed on enoxaparins biosimilar potential approval process albeit with little details
coming out due to the confidentiality of the issue and on the agreement announced yesterday with Merus to distribute and
manufacture Sintrom.
Enoxaparin process: several questions on this theme, namely what type of objections and questions did EMA raise and
whem would Rovi be filing for registry in the US. However, given the confidentiality of the registry processes both in
Europe and in the US, Rovi did not advance much. Rovi is currently preparing the response to EMA list of questions but
did not give a timeframe for delivering it. We recall that whenever EMA raises questions the timeline of the process stops,
thus delaying it a bit further. Additionally, Rovi stated that it expects enoxaparin biosimilar players already in the US
market to enter the European market while defending its competitive advantage due to its vertical integration. In our
estimates we expect Rovi to start comemrcialisation of enoxaparin in Europe in 2017 and the US market in 2018. In
Europe we expect Rovi to directly commercialise the product and reach a 15% market share while in the US we expect
Rovi to reach an agreement with a US partner and receive royalties for the sale of the product, which we expect to reach
a 10% market share.
Agreement with Merus: it can be divided into two separate parts (1) Rovi will provide Merus with manufacturing and
packaging services of Sintrom for 5 years to supply Portugal and Spain. Sintrom is a product indicated for the treatment
and prophylaxis of thromboembolic disorders. Rovi expects to produce 7-8mn units of Sintrom/year. Rovi expects to
receive authorisation from the Spanish Agency of Medicines and Health Products (AEMPS) to start manufacturing
Sintrom in 2H16; and (2) Rovi will provide Merus logistics and distribution services of Sintrom in Spain. The contract is for
1 year, renewable each year. Sintrom currently sells c.Eur 12mn in Spain while EBITDA margin should stand at c.10%,
since the agreement only implies logistics services. We still have to include this new agreement in our estimates.
IDR did not provide a guidance for the FY15 as still sees some challenges and uncertainties in some contracts. The
lack of visibility for the 2H difficult the exercise of setting up a base to make the bridge to 2018 targets and reduces
confidence on the company ability to meet them. Despite not providing any guidance, the company said it expect margins
to improve materially for the 2H and positive CF generation. Moreover, the company anticipates a strong 2H for Spain
with the probability of being awarded the elections and 3 to 4 projects in Security & Defence and in Transport & Traffic.
The company also advanced that Argentina elections (already awarded) plus Spain elections (still not awarded) should
contribute with Eur 45mn revenues in the 2H. For Latam is where the company sees bigger risks and expect a clear
slowdown in the region.
Indra 2Q15 Results
2Q15
BPI
Dev.
Consensus
Dev.
Revenues
706.7
717.3
-1.5%
715.9
-1,3%
Rec. EBIT
-28.2
11.4
n.s.
5.8
n.s.
Rec. EBIT mg
-4.0%
1.6%
n.s.
0.8%
n.s.
Net Income
-416.1
-319.5
30.2%
-309.6
34.4%
2Q15
BPI
Dev.
26,6
21,2
5,4
26,6
Circulation
13,2
Advertising
9,2
Others
4,2
22,8
3,7
3,8
-0,1
14,1%
2Q14
27,3
22,2
5,1
27,3
13,2
10,9
3,3
23,4
4,0
4,0
0,0
14,5%
Chg
-3%
-5%
5%
-3%
0%
-16%
29%
-2%
-6%
-4%
n.s
-3%
26,4
21,3
5,1
26,4
13,0
10,0
3,3
22,7
3,7
3,5
0,1
13,9%
1%
-1%
7%
1%
1%
-8%
25%
1%
2%
8%
-164%
1%
0,7
3,0
0,7
3,2
-3%
-6%
0,7
2,9
0%
3%
11,3%
-1,2
-0,6
11,8%
-1,2
0,2
-4%
1%
n.s
11,1%
-0,7
-0,6
2%
58%
-13%
Net Profit
1,3
2,3
-44%
1,6
-17%
2Q15
2Q14
Chg
BPI
Dev.
58,8
1,1
30,4
27,4
54,4
0,8
26,3
27,3
8%
35%
16%
0%
57,6
1,2
27,6
28,8
2%
-11%
10%
-5%
3,7
0,0
1,3
2,4
2,8
0,0
2,0
0,7
31%
n.s
-37%
n.s
3,4
0,1
2,2
1,1
7%
n.s
-42%
123%
EBITDA Mg
6,2%
5,1%
1,1pp
5,9%
5%
-1,3
2,4
4,0%
-1,7
1,1
2,1%
0,3
-0,8
-0,3
-0,3
-0,4
-0,3
-21%
n.s
2,3pp
n.s
-1,3
2,1
3,6%
-0,4
-3%
14%
12%
n.s
n.s
n.s
-0,4
-0,5
n.s
-51%
1,5
0,2
n.s
0,8
93%
Venture Capital
Business Sol.
IMS
EBITDA
Venture Capital
Business Sol.
IMS
Taxes
Minorities
Net Income
Source: Novabase, BPI Equity Research (F)
Pedro Oliveira
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provide at the conference call (at 9.00am GMT) as well as on any details over Aer Lingus acquisition and developments
on new airline agreements (namely with Qatar Airways and LATAM).
Buy recommendation reinforced: we believe this set of results should be well received by the market, especially
considering that most of the 810mn operating improvement in FY15 was scheduled to take place in 2H15. On the other
hand, Q2 results reinforce our positive stance in IAGs investment case, supported on our belief that the earnings outlook
remains promising, mostly driven by the restructuring efforts undertaken across the group, the companys premium
market positioning and significant fuel savings. Aer Lingus integration (we expect further details on this matter to be
announced in the next Capital Markets Day, in November) and a deeper partnership with Qatar Airways or LATAM are
potential triggers ahead. In this sense, we reiterate our Buy recommendation for a YE16 Price Target of 11.15.
OTHERS
SONC: 2Q15 results unveil the sale of real estate assets
(E0.67 Price Target and Buy Recommendation maintained)
Broadly stable sales deeds in Troiaresort
Sonae Capital (SONC) released its 2Q15 results with sales rising by 3% yoy, 1% ahead of our estimates, supported by
better than expected performance of the Energy and Hotels arms, despite the poorer evolution of Sistavac. Troiaresort
delivered 8 sales deeds (vs. 8 BPI F), broadly in line with the 9 booked in 1Q15 and ahead of the 6 from 2Q14. The
company has registered 12 promissory purchase agreements and reservations. We are estimating 40 new sales deeds in
FY15, which we deem achievable at this stage.
Underlying EBITDA broadly in line
EBITDA (including provisions for guaranteed payment in Troiaresort) reached Eur9.6mn, against our Eur4.2mn forecasts
and Eur4.1mn in 2Q14. SONC sold Eur10mn non-core real estate assets (Duque de Loul) in 2Q15 booking c. Eur6mn
one-off gains which explain the deviation to our numbers. Excluding this one-off, EBITDA came broadly in line with our
forecasts, witnessing a mere -Eur0.6mn deviation due to a worse than expected performance of Sistavac.
SONC registered Eur3.1mn net profit against Eur2.4mn losses in 2Q14. SONC booked higher than expected D&P and
net financials (including results from equity accounted subsidiaries) but the positive impact from the sale of real estate
explains the deviation at the bottom line (Eur2.0mn net losses BPI F).
Duque de Loul and Imosede driving strong net debt reduction
Net debt stood at Eur201mn falling by Eur28mn (30% of the market cap) qoq. SONC benefited from a Eur10mn cash-in
from the sale of non-core real estate assets and Eur20.1mn related with the sale of a 13.5% stake in Imosede at market
prices. Excluding these one-offs, net debt increased by Eur2.1mn qoq to Eur231mn due to a seasonally weaker period in
terms of WK (net debt increased by Eur8mn qoq in 2Q14). We are forecasting net debt to decline by Eur9mn FY15 to
Eur226mn (ex-Duque de Loul and Imosede) and believe that the company is on track to meet our expectations.
Duque de Loul sold at a premium to C&W?
SONC did not provide visibility on whether Duque de Loul has been sold ahead of C&W valuation. Considering the
prime location of this asset we believe that it has been sold at some premium and recall that we are attributing a 15%
discount to C&W real estate valuation. Still, considering the small size of the deal (2% of our total EV) we expect no
material impact in our fair valuation.
Triggers being unveiled
One of SONCs main short term triggers has been unveiled with the company managing to start selling non-core real
estate assets at good prices during the quarter. This together with the continuous sale of Imosede (7.5%, Eur11.2mn still
pending) allowed a strong net debt reduction which we expect to trigger the stock price performance.
SONC accumulates a 44% YTD gain but the stock remains fundamentally cheap, trading at 0.4x PBV (ex-intangibles),
62% below the market NAV. The disposal of Duque de Loul signals the reactivation of the real estate market and could
potentially be the first step towards further deals. The sale of Norscut should also be a trigger this year. BUY.
Jos Rito / Manuel Coelho / Tiago Veiga Anjos, CFA / Bruno Bessa / Guilherme Sampaio, CFA
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Consumer Confidence in Portugal climbed to -19.0 in July from -20.0 in June, reaching the highest value since April 2002.
This increase in confidence reflects better perspectives regarding unemployment (9.4 in July vs. 12.4 in June) coupled
with improved households income (-10.0 in July vs. -10.4 in June) and economic situation (-9.7 vs. -10.1) expectations.
The Economic Climate Indicator also increased to 1.4 in July from 1.3 in June.
Greece: internal Syriza referendum on bailout while IMFs participation in bailout remains in
doubt
Yesterday in a Syriza Central Committee meeting, the partys leader and Prime-Minister, Mr. Alexis Tsipras, called an
internal referendum on the countrys new bailout agreement. This move follows Syryzas Left Platform faction demands to
abandon talks with international creditors and hold an ordinary party congress to determine Syrizas position. The vote
should take place in two days.
Meanwhile, the IMFs Board has been told in a staff presentation that Greece high debt levels and poor record of
implementing reforms disqualify it form a 3rd IMF bailout. This means that while IMF staff will participate in ongoing bailout
negotiations, the IMF should not decide whether to agree on a new program or not in the short-term. A final decision
could potentially take months and even slide to 2016. (Ekathimerini, FT)
US: initial jobless claims increased to 267k in the week ended July 26
The number of application for initial jobless benefits increased to 267k in the week ended July 26 (vs. 255k in the previous
week). Despite this increase, jobless claims figures remained at low historical levels.
TODAY, WE HIGHLIGHT
Government presents 2016 Budget Proposal and Current Account (May) in Spain; Unemployment Rate (June) and
Preliminary CPI (July) in Eurozone; Consumer Confidence - Michigan University (July) and Employment Cost (2Q15) in
the US.
Event
2Q15 Results
2Q15 Results
2Q15 Results
2Q15 Results
2Q15 Results
2Q15 Results
2Q15 Results
2Q15 Results
2Q15 Results
2Q15 Results
2Q15 Results
2Q15 Results
2Q15 Results
Investor day
ETR-407 3Q15 Results
3Q15 Results
3Q15 Results
3Q15 Results
3Q15 Results
3Q15 Results
3Q15 Results
3Q15 Results
3Q15 Results
3Q15 Results
3Q15 Results
DIVIDENDS
Date
31-Jul
31-Jul
31-Jul
31-Jul
31-Jul
31-Jul
3-Aug
5-Aug
19-Aug
26-Aug
28-Aug
31-Aug
16-Sep
23-24 Sep
22-Oct
27-Oct
28-Oct
28-Oct
28-Oct
29-Oct
29-Oct
29-Oct
29-Oct
30-Oct
30-Oct
Com pany
Ebro Foods
Amadeus
Melia Hotels
Ebro Foods
Inditex
Viscofan
Ebro Foods
GDPS
0.17
0.36
0.04
0.17
0.26
0.48
0.15
Ex-dividend Date
29-Jul
30-Jul
10-Aug
2-Oct
3-Nov
17-Dec
22-Dec
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