The Spanish media company published its results for the first half and second quarter of 2019. The principle figures compared with the Bloomberg consensus are: Income 256.4 M€ (-7.9%) vs 253€ estimated; EBITDA 92.7 M€ (+0.8%) vs 87.3 M€ estimated; EBITDA margin 36.1% (vs previous 33.0%); EBIT 87.7 M€ (-1.2%) vs 84.3 M€ estimated; EBIT margin 34.2% (vs previous 31.9%); NAP 74.3 M€ (+3.1%) vs 65.9 M€ estimated and EPS 0.24€ (+9.0%) vs 0.18€ estimated.
Telefonica published its Q219 results. According to Bankinter market watchers, they are slightly better than expected: Income +0% to 12.142 Bn€ vs 11.981 Bn€ expected by the consensus. Operational profits -12% to 1.802 Bn€ vs 1.755 Bn€. Net profits -4.5% to 862 M€ vs 880 M€. Net debt 40.230 Bn€ vs 40 Bn€.
Morgan Stanley | We reviewed the European telecoms sector where we thought, confronted by an environment where there have been numerous profit warnings in the global technology sector (Ericsson, Hexagone, Netflix, Software AG, Tieto), together with our global recommendation downgrade from RV to UW, that the telecoms are well positioned to offer a better performance than seen in Q418.
The relatively poor performance continues. “So far this year, Spanish banks have been the worse performing subsegment in the universe of European banks we cover, with average fall of c.14% (total returns)”, analysts at Santander point out.
Stefan Scheuer (Allianz GI) | What will the Federal Reserve do? This is the question most asked by investors. In the US, the labour market remains in shape, households remain wiling to spend and inflation data has been better than expected.
Chris Iggo (AXA IM) | Sensible economic and monetary policies don’t necessarily go hand in hand with populism (see the recent sacking of the Turkish central bank head). In a world of more extreme policy agendas, a resort to manipulating currencies could be seen. No-one wants a strong currency now and the costs of devaluation are not really recognised in a low inflationary world. But attempting to override markets in setting the international price of currency is a difficult policy, especially if done unilaterally.
From 21 July the regulator (CNMV) will no longer require an expert report on the emission of bonds or structured products aimed at retail investors to ensure the accuracy of the associated brochure. The new European norm on brochures will come into effect on 21 July, so the need for this requirement, which CNMC decided to seek in 2005 for Spanish shares, will disappear.
Link Securities | The ratings agency Moody´s downgraded its rating outlook for the Spanish banking sector as a whole from “positive” to “stable”, as a consequence of the banks´ slowing reduction of non-performing loans (NPLs).
The agency expects fewer disinvestments in 2019 than registered in 2018, when banks accelerated the sanitisation of their balance sheets.
Chris Iggo (AXA IM) | Bonds have sold off a bit last week, but I believe that the bull market remains in place. Global monetary policy is about to be eased yet there are reasons to be relatively relaxed about the near-term growth outlook. The mini-bond sell-off will make yields a bit more attractive. However, yield does not equate to return unless you hold bonds to maturity and there remains scope for returns to be substantially higher than current yields, especially at the long-end of the maturity spectrum.
For the ratings agency, the reforms the Spanish regulator wants to carry out include a significant change in methodology which means less income for the companies in the sector in 2021-2026.