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MELIÁ HOTELS: 1H’20 RESULTS (ANÁLISIS BANCO SABADELL)

2Q'20 vs. 2Q'19 Results
Sales: € 26.2 M (-94.5% vs. -94.2% expected and -90.3% expected by the market consensus);
EBITDA: € -85.5 M (€ 123.8 M in 1H'19 vs. € -73.0 M expected and € -77.1 M expected by the market consensus);
Net Profit: € -278.8 M (€ 32.0 M in 1H'19 vs. € -159.0 M expected and € -142.1 M expected by the market consensus);
1H'20 vs. 1H'19 Results
Sales: € 319.2 M (-63.3% vs. -63.1% expected and -61.0% expected by the market consensus);
EBITDA: € -71.4 M (€ 216.9 M in 1H'19 vs. € -58.9 M expected and € -63.0 M expected by the market consensus);
Net Profit: € -358.7 M (€ 43.5 M in 1H'19 vs. € -238.9 M expected and € -222.0 M expected by the market consensus);

Results worse than expected in EBITDA, which came in at € -71 M in the 1H’20 (vs. € -59 M BS(e) and € -63 M consensus). On a quarterly basis, the difference is even greater, with € -86 M of EBITDA (vs. € -73 M BS(e) and -77 M consensus). The worse performance is explained by weaker-than-expected revenues. The bottom line of the P&L statement is marked by an asset impairment worth € 148 M as a result of Covid-19 and linked to owned real estate assets and lease contracts. This explains the significant difference vs. Net Profit expectations.
As for its prospects, the company’s comments are not overly revealing, outlining that the opening of hotels is not subject to demand. However, it stated that it has started to open hotels in Mexico, in the Dominican Republic hotels will start to be opened in the 4Q’20 and in EMEA it expects the business demand to reactivate from September. At the end of June, MEL had 91 hotels open, 28% of the total.
The results underscore the lack of activity in the sector in the last few months, however, we believe that the worst factor is the lack of visibility that remains very low. Thus, we maintain a cautious stance on the share price, waiting for lower trading levels to consider taking positions. SELL. Target Price: € 4.00/sh (upside 14.48%)