The European Commission has initiated proceedings against Spain for the limits it imposes on direct or indirect participation in Red Eléctrica (REE) and Enagás and for restricting voting rights. Brussels could take Spain to the European Court of Justice if the Spanish government’s response is not convincing and there could be a fine in the end.
SPANISH SMALL & MID CAPS REPORTS
Intermoney | For 2017, the forecasts for private consumption indicate that Spain’s advertising market will continue to grow. We reiterate our Buy recommendation for Artresmedia and maintain our Target Price of 13,0 euros/share with a potential upside of 24%.
Alfonso de Gregorio (Gesconsult) | We like Euskaltel because of its strong cash generation and good market positioning. In addition, there are the possibilities for inorganic growth and the good macroeconomic and industry outlook for the group’s business.
Alfonso de Gregorio (Gesconsult) | Talgo is a value investment. Its stock price its attractive and it has huge possibilities of winning new contracts which would really boost the company’s valuation. Amongst the risks facing the company, there is the scarcity of contracts in the period 2015-2016, which has generated a certain lack of confidence in the company’s ability to win new contracts.
José Benito | Since its stock market debut in April at 7,75 euros, Telepizza’s share price has dropped 39% compared with a 6.5% decline in the blue-chip Ibex 35 index over the same period. There are a lot of factors behind this relative negative performance, including the company’s overvaluation at the time of its listing or disappointment with its quarterly results.
Gesconsult | Grupo Iberpapel Gestión (IBG) is one of the key players in the printing and writing paper market in Spain. We like Iberpapel because of its high level of vertical integration and its healthy financial situation. It generates a lot of cash and has no debt.
Cie Automotive, the Spanish company which specialises in producing components for the automobile sector, registered a 25.5% rise in net profit to 123 million euros in the nine months to September from a year earlier. Link Securities has calculated a new valuation for the company which at current prices offers a potential upside for CIE’s shares of over 7%.
Barcelona-based on-line agency eDreams, is an investment opportunity, according to Bankinter analysts. They offer three reasons: it is trading at much cheaper multiples (more than half) than its peers. The range, applying reasonable multiples, is slightly higher than the current one but much lower than the sector. So it has significant potential.
Diego Salvador (Gesconsult) | N+1 is a financial institution focusing on two business areas: advising on mergers and acquisitions and the management of a venture capital firm. The company is developing a very successful franchise thanks to the purchase of “boutique” investment banks in the US, as well as in countries like Germany, Austria and Japan in the near future. We are confident that it can continue to expand their business inorganically with continued acquisitions in attractive countries like the US.
Alfonso de Gregorio (Gesconsult) | Europac is a company which is involved in all sectors related to the paper and packaging industry. It’s a highly cyclical company trading at a 10% discount versus the average for the sector, both in terms of PER and EV/EBITDA.