The Ibex 35 'blue chips' according to Expansión

The Spanish finance newspaper Expansión reviewed in its Monday’s edition some of the Ibex 35’s ‘blue chips’. The leading companies of the index have fallen 25% on average since early 2007, more than their European counterparts. Investment advisers claim many big funds have removed them from their portfolios due ​​to the peripheral tensions, but their managers have not taken into account that Spain’s ‘blue chips’ stand out against their competitors because of their fundamentals and more efficient business model.


“Deutsche Telekom and Telefónica have invested in their overseas expansion and the specialisation of their different business areas, but their success has been different. Telefónica has managed to be much more efficient, thanks to its commitment to Latin America […] The Spanish company has expanded its presence in key countries and won the game. The EBITDA generation capacity, and low debt levels are points in its favor, along with the dividend yield of about 11.32%.”


“Although Santander is difficult to compare with any other European entity, the commercial segment of BNP Paribas and Santander is similar and both are institutions that are too big to fail, according to the FSB in Europe. Experts believe that the two banks are still quite dependent on their countries of origin, but Santander has made a greater effort to change this, becoming more flexible.”


“The European counterpart that BBVA can be compared to is Deutsche Bank, analysts said. The exposure to debt of peripheral countries is high in both entities, but the Spanish bank has a low Greek bond portfolio, that places it in a better position compared to French and German entities. Furthermore, BBVA will have a core capital of 10.7% in 2012, compared to the 10.1% of the German entity. Another factor in favour of BBVA is its presence in Mexico, a country that contributes 33% to its results.”


“The all time highs of Italy’s and Spain’s risk premiums hinder the financing of companies in both countries, but it has a greater impact on Enel, Iberdrola’s main competitor in Europe, due to its indebtedness. The company became the most indebted utility company in Europe after buying Endesa four years ago […] The Italian company stands out compared to Iberdrola thanks its price and dividend yield (8.8%), but it will review it and have to deal with the fall in consumption in Italy. Iberdrola’s expansion in Latin America will allow it to better navigate through the crisis.”


“Repsol’s exploitation ability is only comparable to Italy’s Eni in Europe. The Spanish company has stood out in recent months for the progress in Latin America. This has placed in the background uncertainties, such as the refinancing of the debt of Sacyr that is associated with the 20% that it holds in Repsol. Repsol is also known for other aspects: its upside potential is of 15.6% according to FactSet, its financial position is one of the most healthy in Europe and its shareholder returns are high […] Experts believe that the Italian company could suffer due to the situation in Libya.”


“Inditex and H & M are trading at high prices because they have managed to weather the crisis in recent years. Price/performance ratio of the two groups is 21 times. This is greater than that of the listed companies that belong to the same sector. Inditex owes its degree of growth to a successful international expansion and the ability to maintain sales without much advertising costs. With the development of new online shops, the company will continue to grow, which can not be guaranteed for H & M.”

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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