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FLUIDRA: 1H’20 RESULTS (ANÁLISIS BANCO SABADELL)

2Q’20 vs. 2Q’19 Results:
Sales: € 455.5 M (+3.5% vs. +0.9% BS(e) and -5.2% consensus);
EBITDA: € 118.0 M (+20.0% vs. +2.3% BS(e) and -1.0% consensus).
1H’20 vs. 1H’19 Results:
Sales: € 771.3 M (+2.4% vs. +0.9% BS(e) and -2.7% consensus);
EBITDA: € 169.4 M (+18.8% vs. +6.6% BS(e) and +4.3% consensus).
The results were better than expected in adjusted terms, especially the optimistic outlook, although no specifics were given. FDR states that it has seen excellent trends in the business after lockdown measures were lifted, especially in the US and the Rest of Europe (excluding southern Europe, which has fallen -6%). We highlight that in 2Q’20 FDR recovered lost sales from 1Q’20, and therefore the impact on margins is evident, given that it reached 21.9% vs. our estimate (and the consensus) of ~20%. The synergies being generated have a positive impact on NFD, which fell -13% vs. 1H’19 to € 738 M (including leasings) vs. our annual estimate of the figure remaining flat (here working capital will have a strong effect, and we attribute the solid performance to the reduction of the seasonal model in charging period).
However, we are surprised by the fact that the company has not resumed or given a new 2020 guidance, which leads us to believe that there is still uncertainty. We do not expect it to do so at the conference call to be held at 12:00 (CET), as it has not given any indication in the presentation sent.
We expect, without a doubt, a positive market reaction, as these results beat expectations, but aside from this positive market reaction, we believe that this good news is more than priced in at the current trading levels. If we assumed in our estimates the margins released today by FDR, our T.P. would yield additional upside of between +10%/+15%, and would stand at € 10.00/10.30/sh., which still does not yield enough upside. We recall that FDR has outperformed the IBEX by +20% since February’s highs, which means that it has only fallen by -6% in absolute terms thus far this year. Considering the stock’s trading levels, we believe that we might see downward pressure on the share price shortly due to the possible departure of Rhone Capital (38% of the share capital from the shareholding, as its lock-up period expired recently. SELL. T.P. € 8.96/sh. (31.81% upside).