Information elaborated by GVC Gaesco BEKA

Prices of close of 13/10/2017


BANK SANTANDER. Last week, the address of the Spanish company presented an update of its strategy 2016-2018e, that is summed up in an objective for the ratio RoTE’18e that improvement at 11.5 % vs. 11 % previous. In addition, it was anticipated that shortly a new strategic plan will be presented.

Our impression is positive and we believe that the bank will not have problems in reaching these objectives. In relation to the acquisition of Banco Popular it was remarked that unexpected surprises were not found.

In Spain it is planned that Rotates the improves until 13 % and that in Portugal the 20 %is placed at, in both cases with improvement of efficiencies. For the side of Latam, will be still one of the catalysts principals of growth, with positive outlooks even taking into account potential risks.

Europe also evolves of good way to reach strategic objectives. However, the objective Rotates in UK for 2018e us seems low (9-10%). In the same meaning, SCF that it brought a Rotates of the 14.7% and the objective the 13 %is placed at.

We emphasise also, that it remains the payment of stock dividend although it is reiterated that the objective is that the payment is completely cash.

Lastly, the objective of generating capital is placed at +40pbs/year and that in 2018e the ratio FL extent Total Capital the 14.5 %.

With a theoretical assessment of EUR 7.1/acc., to prevailing prices of contribution, offers a potential of the +27.6 % and we reiterate our recommendation of Buying.


RED ELÉCTRICA DE ESPAÑA. The Spanish utility would be in negotiations for the purchase of Hispasat, if possibly Abertis or its new owner, decided the disinvestment in the asset.

Of the possible operation emphasise:

1) the company resumed a policy of diversification in 2014 with two addresses: (a) new businesses and (b) international presence; which is why the purchase of Hispasat would deepen in this diversification strategy.

2) recent assessments of the equity of the asset would place at it 0.91bnEUR with a c.'s debt 300mEUR (EV 1.2bnEUR). If we take into account that REE closed 1H17 with a net debt of 4.7bnEUR and considering that the financing would be made completely with additional debt, the ratio DN/EBITDA would happen of 3.3x 2016 to 3.5x 2017e being a feasible level for the utility and respecting the strategic objective (Max. 4.5x). In addition, the ratio FFO/DN would follow above 20 %.

3) another detail to be emphasised is that Hispasat and REE has a shareholder in common, the SEPI with about 20 % of REE and about 7.4 % of Hispasat.

4) when it comes to operational details Hispasat generates some income of 229mEUR and an EBITDA of 175mEUR with stable and visible evolution of growth. In terms of EV/EBITDA, the operation would approach 6.85x, lower than the contribution of REE (c 9.5x) and of last transactions where they are not strange digit lookalike's ratios.

Taking into account the previous thing, the transaction would seem us reasonable because of strategic cash position, operation and financial within the group. With an assessment of EUR 24/acc., to prevailing prices of contribution, offers a potential of the +31.3%. We reiterate our recommendation to buy.


MASMOVIL. The CEO of the company, Meinrad Spenger, granted an interview in press.

Between outstanding points that were discussed emphasise:

1) expect to exceed the guidance of recurring EBITDA of 200mEUR and you would be able to revise with an upward trend in the next results of the 3T17.

2) for the time being do not contemplate the allocation of dividend but they do not close the door in the future given that currently the company is focused on the organic growth with the extension its client base. In addition the CEO emphasised that do not expect to carry out new M&A in the medium term and that they do not reject to consider a certain compensation package to the shareholder in 2019e.

3) reduction of the ratio of leverage taking into account the conversion of bonds, although Providence holds currently about 18% of the capital, will not be able to transform in stock its convertible bond in the next two years.

4) although to there is the possibility of that the value entered Ibex 35, for the time being expect to continue quoting in the Continuous Market.

5) corporate investor and fund increase in its shareholders. Recently Fidelity declared about 3.4 % of the capital be the operator's institutional largest shareholder.

Therefore, positive news with regard to review of guidance of recurring EBITDA with an upward trend and increase of visibility after the step to the constant one. With a theoretical assessment of EUR 75/acc., to prevailing prices of contribution, offers a potential of the +16.8 % and we reiterate our recommendation of Accumulating.