ACERINOX: 1Q’20 RESULTS & T.P. CUT (ANÃLISIS BANCO SABADELL)
1Q'20 vs. 1Q'19 ResultsSales: € 1.159 Bn (-3.6% vs. -3.0% expected and -3.6% expected by the market consensus);
EBITDA: € 85.0 M (-5.6% vs. -3.6% expected and +4.4% expected by the market consensus);
Net Profit: € 28.0 M (-15.2% vs. -7.3% expected and +3.0% expected by the market consensus);
Results in line with our expectations but worse than those expected by the consensus in EBITDA. However, we stress that these results are marked by inventory adjustment at net realisable value of € 16 M, excluding this factor, the figures would be above expectations.
Following these results we cut our EBITDA estimates’20e by 50% and -29,5% in 2020/22e (ex VDM) and our T.P., underscoring the impact from Covid-19 and VDM’s consolidation (see further details in this report). Our valuation in a V-shaped recovery scenario would stand at € 8.70/sh. and given the strong impact from the pandemic on the company’s business, we believe that assuming an intermediate level with the valuation in our most negative scenario of U-shaped recovery is a cautious exercise (around € 6.50/sh.). Thus, we set our T.P. at € 7.60/sh., yielding +24% upside, and maintain our BUY recommendation.
Acerinox is the parent company of a group engaged in the manufacture and sale of flat and long stainless steel products, and stainless steel wires. Co.'s major products include slabs, billets, black coils, plates, hot-rolled coils, hot-rolled sheets, flat bars, hot-rolled re-bars, hot-rolled black bars, engraved sheets, cold-rolled coils, cold-rolled sheets and circles. Co. also provides long stainless steel products, such as wire rods, angles, hot rolled flat bars, hot rolled re-bars, reinforced bars in coils, cold rolled re-bars, hot rolled black bars, cold drawn bars, and smooth turned bars. In addition, Co. offers wires, welding wire bars, and bars for electrodes.
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