ACERINOX: 3Q’20 RESULTS AND T.P. INCREASE (ANÁLISIS BANCO SABADELL)
3Q'20 vs. 3Q'19 ResultsSales: € 1.12 Bn (-8.2% vs. +6.4% BS(e) and -5.7% consensus);
EBITDA: € 87.0 M (-15.5% vs. -13.6% BS(e) and -18.4% consensus);
Net Profit: € 28.0 M (-36.4% vs. -50.0% BS(e) and -45.5% consensus);
9M'20 vs. 9M'19 Results
Sales: € 3.451 Bn (-5.8% vs. -0.9% BS(e) and -4.9% consensus);
EBITDA: € 252.0 M (-12.8% vs. -12.1% BS(e) and -13.8% consensus);
Net Profit: € 30.0 M (-73.5% vs. -78.8% BS(e) and -77.0% consensus);
The company has released 3Q’20 results in line with our estimates on the EBITDA level, although better than those of the consensus and the company’s guidance, which pointed to EBITDA levels in 3Q’20 in line with those seen in 2Q’20 (€~80 M). This occurred thanks to the good performance of the stainless steel business, whose contribution increased by € 25 M vs. 2Q’20. This offsets the weakness seen in VDM, which contributes only € 2 M to EBITDA on the quarter vs. € 23 M in 2Q’20 and which ACX expects to recover in 4Q’20.
As for the outlook, the company claims that the reactivation of several sectors leads it to estimate that 4Q’20 EBITDA will be in line with 3Q’20 levels, with annual EBITDA totalling €~339 M (vs. € 317 M consensus). We believe that this factor justifies today’s positive share price reaction. Following this set of results, we revise our estimates and raise our T.P. to € 9.10/sh. (+3.5%; see details below). BUY.
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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