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CIE AUTOMOTIVE: FY2020 RESULTS AND T.P. INCREASE (ANÁLISIS BANCO SABADELL)

4Q'20 vs. 4Q'19 Results
Sales: € 882.5 M (+3.6% vs. -4.7% BS(e) and -5.3% consensus);
EBITDA: € 146.9 M (+7.3% vs. -2.1% BS(e) and -3.6% consensus);
EBIT: € 103.9 M (+9.5% vs. -4.1% BS(e) and -4.1% consensus);
Net Profit: € 67.2 M (+6.2% vs. -11.5% BS(e) and -10.0% consensus).
FY2020 vs. FY2019 Results
Sales: € 2.883 Bn (-16.7% vs. -18.8% BS(e) and -18.9% consensus);
EBITDA: € 431.0 M (-27.5% vs. -29.7% BS(e) and -30.0% consensus);
EBIT: € 283.0 M (-33.7% vs. -36.8% BS(e) and -36.8% consensus);
Net Profit: € 185.0 M (-35.7% vs. -39.5% BS(e) and -39.2% consensus).

FY2020 Results came in better than expected in EBITDA (+3.1% vs BS(e) and +3.6% vs. consensus) and NFD (€ 1.595 Bn vs. 1.656 BS(e) and 1.693 consensus) thanks to the better working capital performance, although adjusted for factoring (that saw an increase), the difference would be just a € 41 M improvement.
Sales came in above expectations, falling by -17% vs. FY2019 (-19% BS(e) and consensus; +3.6% in 4Q’20). As in previous results releases, the company does not report organic and inorganic growth separately, and only provides the data of the drop in the global market (-21% in the markets where the company operates), although we believe that inorganic growth would have played an important role. According to our estimates for inorganic growth (+5% vs. FY2019 BS(e)), organic growth would have dropped by -19%, slightly above the market. The EBITDA margin came in at 15%, slightly above expectations (14.9% BS(e) and 14.8% consensus), falling by -220bps vs. FY2019 and -100bps vs. the company’s pro forma FY2019 data incl. the acquisitions for the full year (16%). We would like to highlight that the quarter’s margin (16.7%) would already stand above pre Covid-19 levels (16.1% in 4Q’19). Thus, EBITDA fell by -27% vs. FY2019 (-30% BS(e) and consensus) to € 431 M. Overall, there have not been many differences by regions in terms of growth vs our estimates, except for China (~15% of sales), which grew by +34% vs. +25% BS(e)).
Net debt came in at € 1.595 M euros (3.7x NFD/EBITDA) vs €1.522 Bn in December’19, and better than expected (€ 1.656 BS(e) and 1.693 consensus) although partially benefiting from an increase of € +20 M in factoring in FY2020. In this regard, the company announced it has € 1.497 Bn of liquidity reserves (€ 1.218 Bn as of 9M’20). The group reiterated the waiver of financial covenants (although it failed to specify the levels) until 30/06/21.
Lastly, the company announced its 2021 guidance, where we stress (i) sales in line with the current market forecasts (in line with our estimate), (ii) >17% EBITDA margin (vs. 16.8% BS(e) and 16.5% consensus) and (iii) ~2.5x NFD/EBITDA (vs. 2.8x BS(e) and 2.9x consensus).
In short, results above expectations at all levels and positive 2021 guidance, and thus, we expect a positive market reaction (+3.5% at the moment vs. 0.8% IBEX). In the light of these results and the 2021 guidance, we raise our T.P. by +4% up to € 25.60/sh. (~+11% upside vs. current levels). CIE has climbed +1% vs. IBEX YtD and +92% from March’s lows, now yielding limited upside. Conference call at 15:30 (CET). SELL. T.P. € 25.60/sh. (upside +15.10%).