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MEDIASET ESPAÑA: 1Q’20 RESULTS AND CHANGE OF T.P. TO UNDER REVISION (ANÁLISIS BANCO SABADELL)

1Q'20 vs. 1Q'19 Results
Sales: € 229.8 M (+1.6% vs. -0.7% expected and -4.6% expected by the market consensus);
EBITDA: € 67.3 M (-4.3% vs. -8.1% expected and -14.5% expected by the market consensus);
EBIT: € 61.8 M (-7.2% vs. -8.7% expected and -16.1% expected by the market consensus);
Net Profit: € 48.9 M (-7.9% vs. -7.7% expected and -16.9% expected by the market consensus);

Results came in above expectations in both sales and EBITDA. 1Q’20 Sales grew +1.6% (vs -0.7% BS(e) and -4.6% consensus) thanks to the contribution of other revenues (+192.1% up to € 35.4 M vs. € 31 M BS(e)) that offset the -9.1% drop (vs -9.5% BS(e)) in net advertising revenues (-8.9% in own formats). The 1Q’20 OPEX grew +4.4% to € 162.5 M (vs. € 160 M BS(e)), leaving EBITDA at € 67.3 M (-4.3% vs. -8.2% BS(e)) and a 29.3% margin (vs. 31.1% in 1Q'19).
The market could show a positive reaction to these results, as the better sales performance is evidenced in EBITDA. However, and given the strong impact from Covid-19 on the advertising market (with an expected drop of -12% in the 1Q’20 and worse figures in April that could reach around -50%), we will cut our estimates that assumed a -3% deterioration in 2020 while the drop could stand at around -10%. Although we believe that costs could absorb part of this deterioration, we do not believe this will be sufficient to avoid significant drops in profitability, and thus we maintain a cautious stance on the stock. We place our T.P. Under Revision. The share price performance since 19/02 (market highs since Covid-19) has been negative, -35% (vs. -30% IBEX and -23% A3M), showing a strong correction in the past year (-53% vs. 26.2% IBEX and -50% A3M). We expect further visibility at the company’s conference call to be held at 10:30 (CET).