EUR 100.00 For Business Accounts Only

FERROVIAL: 3Q’19 RESULTS AND T.P. INCREASE (ANÁLISIS BANCO SABADELL)

3Q'19 vs. 3Q'18 Results
Sales: € 1.689 Bn (-46.9% vs. -53.3% BS(e) and -51.6% consensus);
EBITDA: € 149.0 M (-32.9% vs. -42.5% BS(e) and -42.3% consensus);
EBIT: € 94.0 M (-39.0% vs. -47.5% BS(e) and -30.5% consensus);
Net Profit: € -98.0 M (€ 131.0 M in 9M'18 vs. € 164.7 M BS(e) and € 164.0 M consensus);
9M'19 vs. 9M'18 Results
Sales: € 4.292 Bn (-52.9% vs. -55.2% BS(e) and -54.6% consensus);
EBITDA: € 33.0 M (-90.4% vs. -96.6% BS(e) and -96.5% consensus);
EBIT: € -117.0 M (€ 102.0 M in 9M'18 vs. € -130.13 M BS(e) and € -104.0 M consensus);
Net Profit: € -104.0 M (€ 59.0 M in 9M'18 vs. € 158.7 M BS(e) and € 158.0 M consensus);

At yesterday’s closing bell Ferrovial released better 3Q’19 results than expected on the operating level (-32.9% EBITDA vs. -42.5% BS(e) and -42.3% consensus), but below in Net Profit due to a € 170 M correction (one-off with no impact on cash) in the valuation of the Services division, as well as higher taxes. EBITDA on the quarter beat expectations (€ 149 M vs. € 128 M consensus and BS(e)) due to stronger sales (-47% vs. 3Q’18 vs. -53% expected), with margins very much in line with expectations (8.8% vs. 8.6% BS(e)). By divisions, Toll Roads (75% of the T.P.) once again beat expectations (+35% in EBITDA vs. +29% consensus), whereas Construction was adjusted to the guidance given by the company for 2H’19 (€ 0 M EBIT).
On the positive side we highlight the net cash position ex-infra, which improved on the quarter to € 662 M (€ +180 M vs. 1H’19; €~900 M expected by YE2019), with strong performance in working capital, which generated € 191 M (vs. € -588 M burned in 1H’19).
Despite the fact that the 3Q’19 results of the 407 ETR and Heathrow were already released (jointly more than 61% of the T.P.) and the stock’s excellent performance (+38% vs. IBEX on the year), we think the solid performance in working capital could lead to a positive reaction on the market.
Although we slightly cut our 2020-21 estimates (-2% in EBITDA and -4% in Net Profit) in order to reflect the slower recovery in Construction (3% T.P.), the better performance in Toll Roads (75% T.P.) that is passed on to the valuation, especially through investees, and the roll over lead us to raise our T.P. +8% to € 29.70/sh. (+13% upside). We reiterate our BUY recommendation.