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APPLUS: 3Q’20 RESULTS (ANÁLISIS BANCO SABADELL)

3Q'20 vs. 3Q'19 Results:
Sales: € 406.2 M (-10.5% vs. -8.5% BS(e) and -8.4% consensus);
EBIT: € 40.9 M (-18.7% vs. -26.4% BS(e) and -26.4% consensus);
9M'20 vs. 9M'19 Results:
Sales: € 1.147 Bn (-13.7% vs. -13.0% BS(e) and -13.0% consensus);
EBIT: € 75.4 M (-49.2% vs. -51.9% BS(e) and -51.9% consensus);

The results were somewhat worse than expected in sales but better in EBIT, with strong cash generation. 3Q’20 sales fell -10.5% (and -8.2% organic), slightly below our estimates and those of the consensus (we expected -8.5%), with strong recovery in the Automotive division (+8.1% sales growth in 3Q’20) and an improvement in the rest of the businesses, although they remain in negative numbers, as expected (E&I -12.1%, Laboratories -4.5% and IDIADA -13.7%). The 3Q’20 EBIT came in better than expected, totalling € 40.9 M (-18.7% vs. 3Q'19 and vs. -26.4% BS(e) and consensus) with a 10.1% margin (vs. 11.1% in 3Q'19 and 8.9% BS(e)). The 9M’20 Operating CF reached € 182.2 M (+20.3% vs. 9M’19) thanks to the WC improvement and the management of customer collection. In the 4Q’20 we expect the recovery of sales to continue, led by Automotive and EBIT margins in line with the 3Q’20, which would mean a slight improvement vs. our estimates although with an irrelevant impact on valuation (< 2%).
We expect the results to be well received in a stock that has performed poorly in 2020 (-42.5% in absolute terms and -15% vs. IBEX), and that in the past week has underperformed the IBEX by -0.8%. BUY. T.P. € 9.80/sh. (upside +36.59%).