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AMADEUS: 1Q’20 RESULTS AND CHANGE OF T.P. TO UNDER REVISION (ANÁLISIS BANCO SABADELL)

1Q'20 vs. 1Q'19 Results:
Sales: € 1.021 Bn (-27.5% vs. -26.7% BS(e) and -28.4% consensus);
EBITDA: € 349.4 M (-41.8% vs. -44.8% BS(e) and -48.3% consensus);
Net Profit: € 141.8 M (-57.7% vs. -67.8% BS(e) and -69.0% consensus).

The company’s 1Q’20 results were in line with expectations in sales, but better in EBITDA thanks to the higher margin (34.2% vs. 32% BS(e) and 30.7% consensus), aided by a sales mix with a higher weight in IT Solutions. By divisions, revenues in Distribution (57% of sales) fell more than expected (-46% vs. -37% BS(e)) with a -48% drop in air bookings through travel agencies, higher than in the GDS segment (-46.4%). This was offset by better revenues in IT Solutions, which fell very slightly (-1.1% vs. -11% BS(e)), despite the fact that PB (passengers boarded) fell -12% (-15.7% organic). In this segment AMS highlights the solid performance of the Hotel business, which despite the impact from Covid-19 has seen double-digit growth in several business lines.
After a positive market reaction initially, due to EBITDA coming in above expectations, the share price is falling -3% vs. Ibex 35 as a result of the doubts weighing on the sector and despite its poor performance since market highs on 19 Feb, when the impact from Covid-19 began to be felt. Since then, the stock has fallen -13% vs. Ibex 35, -5% vs. Stoxx 600 Leisure & Travel, but has risen by +26% vs. Sabre, its closest peer.
We place our T.P. Under Revision. Adapting our scenario of V-shaped recovery given the impact from Covid-19 (two quarters of deep recession, moderate recovery in the third quarter, strong in the fourth quarter and very strong in 2021 with momentum that would even extend to 2022) to the latest indications unveiled by IATA on 14/04 (forecasting a -48% drop in air traffic in 2020 vs. -38% previously), we would cut our EBITDA’20 by -21% (-56% vs. levels prior to Covid-19). In the long-term, the revision of EBIT’20/24e would be limited to -5%, with a low impact on T.P. (around -6%), leaving it at ~ € 51.00/sh. (+30% upside). In our negative scenario of moderate U-shaped recovery (two quarters of deep recession followed by modest growth in 3Q and 4Q and strong recovery the next year and the second one; recovery in 18-24 months), we would cut our estimates by another -20%, bringing our T.P. to € 44.00/sh. (still with +12% upside). Given the low visibility regarding recovery in the air travel and tourism sector in the short term, we will set our T.P. in the middle of both scenarios, which would be around € 48/sh. (+22% upside). BUY. T.P. Under Revision (previously € 54/sh.).