EUR 100.00 For Business Accounts Only

APPLUS: 9M’19 RESULTS (ANÁLISIS BANCO SABADELL)

3Q'19 vs. 3Q'18 Results
Sales: € 454.1 M (+5.0% vs. +5.9% BS(e) and +5.7% consensus);
EBIT: € 50.3 M (+11.5% vs. +13.7% BS(e) and +14.6% consensus);
9M'19 vs. 9M'18 Results
Sales: € 1.33 Bn (+6.8% vs. +7.1% BS(e) and +7.0% consensus);
EBIT: € 148.5 M (+16.6% vs. +17.3% BS(e) and +17.7% consensus);
The results came in as expected. Sales grew +5.0% in the 3Q’19 (+4.8% organic vs. +5.2% BS(e)), which leaves organic growth of +6% as of 9M’19, in line with the company’s guidance. We underscore the good performance of all of the divisions, with acceleration in Energy & Industry (+4.8% in the 3Q’19 vs. +3.5% as of 9M’19) and IDIADA (+12.7% in the 3Q’19 vs. +12.1% as of 9M’19), and the slight drops in Motor (+3.2% in the 3Q’19 vs. +4.2% in 9M’19) and Labs (+9.5% vs. +12.4% as of 9M’19). 3Q’19 EBIT came in at € 50.3 M (+11.5%), with a margin of 11.2% (10.7% excluding the IFRS16 impact, meaning a rise of 50bps vs. 3Q’19). The company reiterates its 2019 guidance: organic growth in revenues of ~5% at constant exchange rates (vs. +5.2% BS(e) and +5.6% consensus), with margin improvement of at least 30bps (vs. 30bps BS(e) and consensus).

Following the poor recent share price performance (-12% in absolute terms and -16% vs. IBEX in the past 3 months), the impact of these results could be positive although its decreasing annual performance reduces its appeal. Notwithstanding, these results are good and maintain a healthy organic growth pattern in sales that enables margin expansion. We reiterate BUY, T.P. € 14.60/sh. (+29.09% upside).