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GLOBAL DOMINION: 4Q’19 RESULTS (ANÁLISIS BANCO SABADELL)

4Q'19 vs. 4Q'18 Results:
Sales: € 292.4 M (+16.4% vs. +11.0% BS(e) and +13.4% consensus);
EBITDA: € 32.0 M (+25.5% vs. +31.8% BS(e) and +24.1% consensus);
EBIT: € 19.9 M (+4.2% vs. +11.5% BS(e) and +6.5% consensus);
Net Profit: € 14.5 M (+33.0% vs. +16.5% BS(e) and +34.4% consensus);
FY2019 vs. FY2018 Results:
Sales: € 947.0 M (+14.0% vs. +12.3% BS(e) and +13.1% consensus);
EBITDA: € 103.7 M (+43.2% vs. +45.5% BS(e) and +42.7% consensus);
EBIT: € 56.7 M (+17.1% vs. +20.0% BS(e) and +18.1% consensus);
Net Profit: € 39.2 M (+44.1% vs. +37.5% BS(e) and +44.7% consensus);

The 4Q’19 results were very much in line with expectations, and slightly better in Net Profit. EBITDA grew +26% on the quarter (vs. +24% consensus and +27% BS(e)), fuelled by better sales (+16.4% vs. +11.0% BS(e) and +13.4% consensus), which offset slightly lower EBITDA margins (10.9% vs. 11.1% consensus). We especially highlight the +11.5% organic sales growth, leaving the accumulated figure at +8.5% on the year, far above its +7% guidance and the +5% included in its 2019-22 plan. The solid operating performance carried on to Net Profit, which grew +33% on the quarter, leaving DOM well-positioned to meet its target of doubling its recurring Net Profit’19 in 2022 to € 64 M.
On the cash level, the company ended the quarter with a net cash position of € 113 M, in line with our estimate (€ 115 M BS(e)) and the guidance of more than € 110 M. This is a slight improvement upon 2018 (€ 106 M), and includes among other effects a € -9 M drop in working capital (vs. € -32 M in 1H’19) and the payment of €~25 M relating to M&A moves.
Furthermore, we welcome the announcement of its share buyback programme for up to € 35 M (~5% of the share capital, 8.5 M shares) with a maximum duration of one year, aimed at cancelling these shares. We believe it is an appropriate use of cash bearing in mind it is trading at a -38% discount to our T.P. and this should underpin the share price. Taking into account the maximum limit of 25% of shares it can acquire on a daily basis, it would need 113 trading days to complete the programme.
In summary, good 4Q’19 Results that were largely unveiled by the company and leave DOM well-positioned to meet the targets set in its strategic plan. We do not foresee a significant impact from these results on the share price although bearing in mind the poor performance from the past 3 months (-5.8% vs. IBEX and -30% from 1-year highs), we foresee a positive reaction. Conference call today at 15:30 (CET). BUY, T.P. € 5.70/sh. (+63.3% upside).