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MELIÁ HOTELS: 3Q’20 RESULTS AND T.P. CUT (ANÁLISIS BANCO SABADELL)

3Q'20 vs. 3Q'19 Results
Sales: € 109.4 M (-78.8% vs. -81.0% BS(e) and -77.4% consensus);
EBITDA: € -27.6 M (€ 156.1 M in 9M'19 vs. € -35.7 M BS(e) and € -36.5 M consensus);
Net Profit: € -111.1 M (€ 62.2 M in 9M'19 vs. € -118.1 M BS(e) and € -73.9 M consensus);
9M'20 vs. 9M'19 Results
Sales: € 431.4 M (-68.9% vs. -69.9% BS(e) and -68.5% consensus);
EBITDA: € -99.0 M (€ 373.0 M in 9M'19 vs. € -107.1 M BS(e) and € -107.9 M consensus);
Net Profit: € -469.8 M (€ 105.7 M in 9M'19 vs. € -476.8 M BS(e) and € -432.6 M consensus);

Results came in above expectations thanks to a slightly less negative performance of revenues. In any case, we still see negative EBITDA figures and a cash burn rate of €-34 M/month in 3Q’20.
As for its outlook, the company stated it is confident that the worst of the crisis is over although with many challenges ahead in the 4Q’20 due to the measures adopted as a result of Covid-19, especially in Europe. It forecasts that the resort segment will recovery earlier than the urban segment (which was to be expected) and confirms that almost all its hotels in Mexico and the Dominican Republic will open by early December, although the snag comes in the reduction of flights and the lack of visibility. No quantitative guidance was given (expected).
Net debt (including leasings) totalled € 2.42 Bn (vs. € 2.32 Bn as of the 1H’20 and € 2.02 Bn as of YE2019). The company highlights, however, that its liquidity position as of the end of September stood at € 442 M, with debt maturities totalling € 15 M in 2020, € 198 M in 2021 and € 147 M in 2022, which gives it a small buffer.
Thus, we believe that these results do not mean a game change and we cut our estimates and T.P. (to € 3.50/sh.; -12.5%; see details below). The limited upside, the lack of operating visibility and the lack of an imminent driver lead us to maintain our SELL recommendation. SELL. Target Price: € 3.50/sh (upside 7.03%)