Foros de la Plataforma por una Vivienda Digna

[netodyssey]

Spanish property groups on rocky ground

By Dave Shellock

Published: April 24 2007 11:21 | Last updated: April 24 2007 22:31

Sharp falls for Spanish property stocks provided one of the day’s big talking points as investors fretted that the country’s real estate boom was near to imploding.

The sector has surged in recent years in line with big increases in Spanish home prices. But data last week showed that prices in the year to March grew at their slowest rate since 1998.

Real estate company Astroc extended its recent slide by another 9.5 per cent to €15.95, amid concerns that some of its leading shareholders might sell their stakes. That took the stock’s fall over the past week to 65 per cent.

Colonial fell 12.6 per cent to €55.75 and Grupo Inmocaral shed 11.3 per cent to €4.33. Construction and banking stocks also came under pressure, with Sacyr Vallehermoso falling 8.2 per cent to €40.80 and Banco de Sabadell off 5.1 per cent to €33.25.

Those losses helped drive down the Ibex 35 index by 2.7 per cent, compared with a 0.9 per cent drop for the FTSE Eurofirst 300 index to 1,564.08.

Akzo Nobel shares touched a record high on Tuesday as investors welcomed quarterly figures from the Dutch chemicals company.

“This is a very strong set of results, which we believe will force analysts to raise estimates,” said Martin Dunwoodie at ING, as he maintained a “buy” recommendation on the stock.

Akzo confirmed that it would spend €1.6bn buying back about 10 per cent of its own shares, starting May 3.

Akzo shares ended at €59, up 3.2 per cent, after earlier touching €60.23.

Chemicals put in the day’s best sectoral performance, with Bayer gaining 1 per cent to €49.58 after Goldman Sachs added the stock to its “conviction buy” list.

“Bayer trades at a large discount to the chemical sector on all valuation multiples, despite 46 per cent of its estimated 2007 sales arising from healthcare and 18 per cent from crop science, a defensive sub-sector that we view favourably,” said Richard Logan, analyst.

“Bayer’s defensive properties leave it well placed to withstand an expected downturn in the chemical sector.”

Strong first-quarter results helped Luxottica rise 1.3 per cent to €24.91. Net profits rose 20 per cent and the luxury eyewear group also confirmed its guidance for 2007.

Alcatel-Lucent experienced volatile trading after the Franco-US telecommunications equipment group warned of a bigger-than-forecast drop in its first-quarter sales.

“While investors may have been braced for a tough start to 2007, the sheer scale of Alcatel-Lucent’s second sales warning in three months ought to unnerve even the most avid of supporters,” said Per Lindberg, analyst at Dresdner Kleinwort. “We repeat ‘sell’ with fair price at €8.”

However, UBS kept its “buy” rating on the stock with a €13 price target. “There are both upside and downside risks with regard to the Alcatel-Lucent merger,” said Jeffrey Schlesinger, an analyst.

“We continue to believe that the risk/reward proposition on the upside in cost savings versus the potential downside in revenue growth is favourable.”

Alcatel shares fell as low as €9 before rallying to end 3.4 per cent higher at €9.62.

Infineon climbed 1.9 per cent to €11.54 on talk that Seagate Technology of the US might be weighing up a bid for the German group’s Qimonda memory chip unit.

STMicroelectronics, its Franco-Italian rival, gained 2.2 per cent to €15.10 as investors awaited first-quarter sales figures due later in the day. Danone, the French food group, fell 2.9 per cent to €120.60 after its first-quarter sales fell short of analysts’ expectations.

Copyright The Financial Times Limited 2007

http://www.ft.com/cms/s/8107c6de-f24d-11db-a454-000b5df10621.html