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IBERDROLA: 9M’19 RESULTS (ANÁLISIS BANCO SABADELL)

3Q'19 vs. 3Q'18 Results
EBITDA: € 2.509 Bn (+9.9% vs. +6.9% BS(e) and +7.6% consensus);
EBIT: € 1.498 Bn (+14.4% vs. +9.2% BS(e));
Net Profit: € 872.3 M (+28.2% vs. +21.3% BS(e) and +21.5% consensus);
9M'19 vs. 9M'18 Results
EBITDA: € 7.499 Bn (+11.6% vs. +10.6% BS(e) and +10.8% consensus);
EBIT: € 4.489 Bn (+17.0% vs. +15.2% BS(e));
Net Profit: € 2.517 Bn (+20.4% vs. +18.1% BS(e) and +18.2% consensus);

The 9M’19 results came in above expectations due partially to EBITDA (+1% vs. our estimate) and especially to financials (-3.5% vs. our estimate), which, in our view, would be due to fluctuations in the exchange rate. On the positive side we stress the positive performance of the liberalised business (20% of EBITDA), which grew above our estimate (+37% vs. +32%), which comes mainly from Spain. Networks (54%) was in line (+8%) and Renewables (+26%) came in below expectations (-4% vs. -2% expected).
As expected, the NFD data was positive, coming in at levels of € 35.25 Bn, vs. € 36.33 Bn as of 1H’19, with the reduction being due to the sale in August of 40% of the East Anglia One offshore project for £ 1.75 Bn. Of this amount, we estimate that some £ 1.1 Bn would have already been received (€ 1.25 Bn). The cost of debt came in as expected (3.41%).
The Board yesterday decided to implement the optional dividend programme for the interim dividend’19 that IBE expects to stand at least at € 0.167/sh. (+11%; 1.8% yield) vs. our annual estimate of € 0.40/sh. (+15%; 44% yield) and 0.38 consensus. IBE will release the final details with the amount and deadlines in November’19. Investors could choose to receive rights and turn them into shares; to transfer 100% or part of the rights on the market/to the company at a fixed price and convert the rest in shares or to collect the dividend in cash
We expect a positive market reaction on these results, especially after its negative recent performance (-6% vs. IBEX in the past month). BUY, T.P. € 10.50/sh. (+14.75%).