Ibersol: Looking towards a brighter 2019E
In this report we maintain our BUY rating on Ibersol but lower our FV from Eur13.2/sh to Eur11.2/sh, which still gives an attractive 39% upside to our FV. Ibersol is scheduled to announce its FY results next week and it should be a weak quarter due to the devaluation of the Kwanza and the restructuring of the Spanish activity likely offsetting the improvement in the activity in Portugal. Our estimates for 2018E EBITDA go down by 8% and by 8.3% for 2019E on the back of the devaluation of the Angolan currency, pressure on the Spanish activity and cost pressures on staff and rentals. Despite this cut in our estimates and FV, we continue to see Ibersol’s valuation as attractive with a 19E P/E below 10x and EV/EBITDA for 2019E at 5.4x and in its main business (Portugal) its revenues keep growing above 10%. Free cash flow wise, we expect an improvement after the investments to adapt the new airport concessions to its definitive concepts and the capex for new store openings in Portugal comes down. We expect growth to resume post 2018E and see margin upside risk if the Angolan activity recovers and new stores have a good performance.Ibersol SGPS SA. Ibersol SGPS SA is a Portugal-based company primarily engaged in the operation of restaurants. It is active in Portugal and Spain. The Company divides its activities into six business areas: Restaurants and Delivery; Counters; Travel; Coffee Kiosks; Catering, and Concessions. In the Restaurants and Delivery area, it is involved in the operation of restaurant chains under brand names of Pizza Hut, Pasta Caffe and Pizza Movil. In the Counters area, it operates restaurant chains under banners KFC, O Kilo, Burger King and Pans, as well as The Eat-Out Group brand names. The Travel business sector includes the provision of foodservices on highways and airports. The Coffee Kiosks sector consists of coffee retailers under the brand name Delta. In the Catering sector, it is active in the preparation of meals. The Concessions sector includes the management of concessions for provision of foodservices in number of spots in Portugal, such as Serralves Museum and Casa da Musica, among others.
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