EUR 100.00 For Business Accounts Only

CELLNEX: FY2020 RESULTS (ANÁLISIS BANCO SABADELL)

4Q'20 vs. 4Q'19 Results
Sales: € 459.0 M (+62.8% vs. +62.8% expected and +59.9% expected by the market consensus);
EBITDA: € 344.0 M (+83.0% vs. +76.1% expected and +77.1% expected by the market consensus);
Net Profit: € -49.0 M (€ 3.0 M in FY2019);
FY2020 vs. FY2019 Results
Sales: € 1.608 Bn (+55.4% vs. +55.4% expected and +54.6% expected by the market consensus);
EBITDA: € 1.182 Bn (+72.3% vs. +70.4% expected and +70.7% expected by the market consensus);
Net Profit: € -133.0 M (€ -9.0 M in FY2019 );
Following the initial reading, we stress the battery of positive news at the presentation: (i) Results above expectations in EBITDA, (ii) new acquisition in Poland at appealing multiples and (iii) short and medium-term guidance with strong organic growth (>+5%). Following the recent poor share price performance (-25.5% since Nov’20 highs and -13.4% in 2021), we expect the positive market reaction to continue over time as the company has answered the uncertainties with a new acquisition and with very attractive organic growth (>5%). We reiterate our BUY recommendation.
Results came in slightly above expectations in EBITDA. 2020 sales grew +55%, driven by the tower business and EBITDA totalled € 1.182 Bn (+72%) with a 75% margin (vs. 68% in 2019). RLFCF’20 came in at € 610 M (+75%).
The company provides new short-term and medium-term guidance. Guidance’21: It forecasts between € 1.81 Bn and € 1.85 Bn of EBITDA (vs. € 1.68 Bn BS(e)) and between € 905 M and € 925 M of RLFCF (around +50% vs. € 827 M BS(e)), which means organic growth of >+5%. This guidance stands above our estimates because it includes Poland for three months more, as well as higher organic growth. Guidance’25: between € 3.3 Bn and € 3.5 Bn of EBITDA (vs. € 2.99 Bn BS(e)), between € 2 Bn and € 2.2 Bn of RLFCF (vs. € 1.71 Bn BS(e)) and >+5% growth in PoPs. The guidance’25 also stands above our estimates, as it assumes higher organic growth rates, the latest acquisition in Poland (see more details below) and a new efficiencies and synergies plan totalling between € 90 M and € 100 M in OPEX and leases.
The company has announced another deal: an agreement to acquire 99.99% of Polkomtel Infrastruktura (Cyfrowy Polsat), which has ~7,000 sites (5.8% of CLNX’s total) with a tenancy ratio of 1.2x (vs. CLNX) and BTS of an additional 1,500 sites through 2030, as well as a backhaul network of 11,300 km of fibre and active infrastructure. The contract has an initial duration of 25 years, with 15-year renewals (all-or-nothing clause). The initial amount is € 1.6 Bn (plus € 600 M of growth CAPEX that includes the BTS and the improvement to the active infrastructure). The contribution in year 1 will be € 280 M of sales, € 190 M of EBITDA (IFRS 16) and € 80 M of RLFCF. In 2030 the company expects € 445 M of sales, € 330 M of EBITDA (IFRS 16) and € 150 M of RLFCF. The implied multiple for the deal is 6.6x EV/EBITDA (IFRS 16; run rate 2030) and 8x in year 1, far below the latest acquisitions made (11.8x on average in the deals since 2020) and the company’s own trading ratios (~19x in 2021). This deal is different, as it includes active equipment, which would be behind the lower acquisition multiples. BUY. Target Price: € 59.70/sh (upside 40.01%).