EUR 100.00 For Business Accounts Only

MEDIASET ESPAÑA: 9M’20 RESULTS (ANÁLISIS BANCO SABADELL)

3Q'20 vs. 3Q'19 Results
Sales: € 171.5 M (-3.8% vs. -2.1% BS(e) and -3.8% consensus);
EBITDA: € 50.5 M (+23.5% vs. +8.8% BS(e) and +0.2% consensus);
Net Profit: € 33.2 M (+12.2% vs. +4.4% BS(e) and -7.4% consensus);
9M'20 vs. 9M'19 Results
Sales: € 546.6 M (-17.3% vs. -16.8% BS(e) and -17.3% consensus);
EBITDA: € 150.1 M (-26.4% vs. -29.3% BS(e) and -31.0% consensus);
Net Profit: € 103.2 M (-34.3% vs. -35.7% BS(e) and -38.0% consensus);

The results came in above expectations in EBITDA thanks to improved cost control (OPEX 3Q’20 -11.9%). Sales fell by -3.8% in 3Q’20 (vs. -2.1% BS(e)), with sales in Own Media coming at € 157.7 M (-6.6%) and sales in Third-party Media rising by +145.8% (to € 5.5 M, including as from July the revenues from Be a Lion, the acquisition of which was announced in September 2020), and with Other revenues increasing by +8.2% (+72.8% as of 9M’20 to € 76.4 M, nearing the company’s target of € 100 M in 2020). 3Q’20 EBITDA grew +23.3% to € 50.5 M, with the margin coming in at 29.4% (vs. 23% in 3Q’19), and EBITDA as of 9M’20 totalling € 150.1 M (-26.4%), with a margin of 27.5% (vs. 30.9% in 9M’19 and vs. 24% BS(e) for 2020). FCF as of 9M’20 stood at € 119.8 M (-48.3% vs. 9M’19 and € 32 M in 3Q’20, a -31.2% drop vs. 2Q’19), leaving a net cash position of € 25.1 M (2.9% of market cap).
Following the poor share price performance in 2020 (-53% in absolute terms and -20.5% vs. IBEX), we expect a positive reaction to these results that beat expectations in cost cutting and allow the group to increase margins even against an adverse advertising backdrop. Furthermore, the better market performance in October (suggesting flat for TL5) could also encourage optimism. We reiterate our BUY recommendation as the measures for cash protection, cost/cutting and diversification are offsetting the effects from the drop in the advertising market, allowing the company to generate appealing FCF (Yield > 17%). BUY. T.P. € 4.70/sh. (upside +75.50%).