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

1Q'20 vs. 1Q'19 Results:
Sales: € 223.4 M (-13.2% vs. -12.2% BS(e));
EBITDA: € 35.9 M (-20.4% vs. -35.9% BS(e));
Net Profit: € 21.7 M (-24.4% vs. -35.2% BS(e));

The results came in above our estimates, mainly in EBITDA, thanks to the better cost control. 1Q’20 Sales came in at € 223.4 M (-13.2% vs. -12.2% BS(e)), with Audiovisual falling -12.5% (vs. -11.6% BS(e)) and a -20.3% drop in Radio (vs. -18.9% BS(e)). 1Q’20 OPEX fell -11.7% (vs. -9.3% BS(e)) to € 187.5 M, leaving 1Q’20 EBITDA at € 35.9 M (-20.4% vs. -35.9% BS(e)) and a margin of 16% (vs. 12.8% BS(e) and 15.6% in 1Q’19).
The market could show a positive reaction to these results, given the better costs performance than expected, allowing the company to absorb more of the deterioration on the top line stemming from the advertising market. However, and given the strong impact from Covid-19 on the advertising market (with an expected drop of -12% in the 1Q’20 and worse figures in April that could reach around -50%), we will cut our estimates that assumed a -3% deterioration in 2020, whereas the drop could stand at around -10%. Although we believe that costs could absorb part of this deterioration, we do not believe this will be enough to avoid significant drops in profitability, and thus we maintain a cautious stance on the stock. We place our T.P. Under Revision. The share price performance since 19/02 (market highs since Covid-19) has been negative, -23% (vs. -30% IBEX and -35.2% TL5), and the drop over the past year is -50% (vs. 26.2% IBEX and -53% TL5). We expect further visibility at the company’s conference call to be held at 13:00 (CET). SELL.