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GLOBAL DOMINION: 4Q’20 RESULTS (ANÁLISIS BANCO SABADELL)

4Q'20 vs. 4Q'19 Results
Sales: € 297.2 M (+1.6% vs. +3.3% BS(e) and +3.5% consensus);
EBITDA: € 31.8 M (-0.6% vs. -3.6% BS(e) and -6.2% consensus);
EBIT: € 18.2 M (-8.5% vs. -11.4% BS(e) and -22.4% consensus);
Net Profit: € 8.4 M (-42.1% vs. -36.2% BS(e) and -43.8% consensus);
FY2020 vs. FY2019 Results
Sales: € 911.0 M (-3.8% vs. -3.7% BS(e) and -3.4% consensus);
EBITDA: € 80.0 M (-22.9% vs. -25.6% BS(e) and -25.9% consensus);
EBIT: € 31.6 M (-44.3% vs. -47.1% BS(e) and -49.1% consensus);
Net Profit: € 12.5 M (-68.1% vs. -70.1% BS(e) and -70.8% consensus);

Better 4Q’20 Results on the operating level and below in cash. 4Q EBITDA fell less than expected (-1% vs. -9.7% BS(e) and -10.5% consensus) thanks to clearly higher margins (10.7% vs. 9.7% BS(e) and 9.5% consensus) despite € 4 M of negative one-offs on the quarter that offset lower sales (+1.5% vs. +2.8% consensus). In any event, we welcome the +5% organic growth seen in the 4Q (in line with the guidance of its strategic plan), which means full recovery of pre Covid-19 levels. No surprises in Net Profit, which evidenced the operating performance (€ 8.4 M vs. € 7.6 M BS(e) and € 7.4 M consensus).
However, net cash performed slightly worse than expected, totalling € 87 M vs. € 102 M BS(e), -23% in FY2020 (€ 26 M), which we believe could be explained by the impact of one-off factors. We expect further details at the conference call to be held at 15:00 (CET).
Looking at this year, the company has confirmed that it expects Net Profit’21 to be higher than 2019 (€ 33 M vs. € 29 M BS(e) and € 34 M consensus) and it still expects a 1-year delay (until 2023 vs. 2024 BS(e)) in achieving the targets set out in the strategic plan (doubling recurring Net Profit’18 to €~64 M).
In short, the 4Q’20 results are robust, showing very rapid recovery in the business. These results are being well received (+1% vs. IBEX) despite the fact that cash performance was weaker. In any event, we welcome the fact the company has reiterated its long-term targets, and we expect a gradual rerating of the stock as it begins to achieve the long-term targets. The share price has climbed +3% YtD (+1% vs. IBEX). The company will hold a conference call at 16:00 (CET), where we expect further details on its business performance at the beginning of the year and the search of a partner for its renewable division. BUY. T.P. € 4.90/sh. (+26.29% upside).