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CAF: FY2019 RESULTS (ANÁLISIS BANCO SABADELL)

4Q'19 vs. 4Q'18 Results:
Sales: € 735.0 M (+8.7% vs. +10.1% BS(e) and +7.8% consensus);
EBITDA: € 73.0 M (+11.6% vs. +7.0% BS(e) and +8.6% consensus);
EBIT: € 52.0 M (+33.3% vs. +28.2% BS(e) and +33.3% consensus);
Net Profit: € 24.0 M (+100.0% vs. +83.3% BS(e) and +91.7% consensus).
FY2019 vs. FY2018 Results:
Sales: € 2.598 Bn (+26.9% vs. +27.3% BS(e) and +26.6% consensus);
EBITDA: € 244.0 M (+21.2% vs. +19.7% BS(e) and +20.2% consensus);
EBIT: € 163.0 M (+13.2% vs. +11.8% BS(e) and +13.2% consensus);
Net Profit: € 63.0 M (+46.5% vs. +41.9% BS(e) and +44.2% consensus).
At the closing bell the company released FY2019 results that were in line with our estimates and those of the consensus, and slightly better in NFD. Sales grew +27% vs. 2018, in line with expectations, due to Solaris (25% of CAF’s sales), which beat our estimate by +8.6%, and to the rolling stock business, which was -3% worse. In the post-results conference call the company announced that it expects sales growth in all the business lines for 2020 (no more details given; +8% BS(e) and +9% consensus).
The adjusted EBITDA margin was once again very much in line with expectations, reaching 9.4% (vs. 9.3% BS(e) and 9.2% consensus; 9.9% on the quarter and 9.8% in 2018), showing a slight improvement on the quarter vs. 3Q’19 (+70bps). In this case, Solaris would have had a worse margin than expected on the quarter (6.2% vs. 8.5% BS8e)), whereas the rolling stock business would have beaten our estimate by +80bps to 10.5% (vs. 10.3% in 2018 BS(e)). Adjusted Net Profit was slightly above expectations (+47% vs. 2018; +42% BS(e) and +44% consensus), due largely to the margins being slightly better than expected on the operating level (+10bps vs. BS(e) and +20bps vs. consensus).
On the cash generation side, the results are slightly better than expected, with NFD reaching € 434 M (vs. € 443 M BS(e) and € 456 M consensus).
Awarded contracts were in line with expectations, totaling € 4.07 Bn on the year (vs. € 2.9 Bn in all of 2018; 1.6x BtB), leaving the backlog at € 9.45 Bn (+22% vs. 2018; 3.5x sales). During the conference call the company announced that it expects the backlog to end 2020 stable vs. 2019, meaning 1x BtB (in line with our estimate).
In short, the results were robust, but very much in line with expectations, and thus we would expect a neutral reaction from the market, especially when the stock has outperformed the IBEX by +2% so far this year. BUY. T.P. € 47.89/sh. (upside +21.70%).