MELIÃ HOTELS: FY2019 RESULTS (ANÃLISIS BANCO SABADELL)
4Q'19 vs. 4Q'18 Results:Sales: € 415.05 M (-0.5% vs. -10.5% BS(e) and +1.9% consensus);
EBITDA: € 104.9 M (-15.3% vs. -25.7% BS(e) and -28.1% consensus);
Net Profit: € 7.2 M (-83.0% vs. € -5.7 M BS(e) and € -2.4 M consensus);
FY2019 vs. FY2018 Results:
Sales: € 1.801 Bn (-1.7% vs. -3.9% BS(e) and -1.1% consensus);
EBITDA: € 477.9 M (-4.2% vs. -6.8% BS(e) and -7.4% consensus);
Net Profit: € 112.9 M (-23.8% vs. -32.5% BS(e) and -30.2% consensus).
The results beat expectations on the operating level and in Net Profit. EBITDA was aided by €~5 M of capital gains in 4Q’19, although excluding this, it would have come in slightly above expectations. This better performance would have led to lower costs than expected.
For 2020 the company is moderately optimistic, mentioning signs of recovery in the Dominican Republic (~20% EBITDA; thanks to the reactivation of US clients) and Mexico (~10% EBITDA; end of Sargazo). It also sees “a positive year in the main European cities†and stability in the Spanish resort business thanks to the Canary Islands. As for COVID-19, MEL has stated that some events are being cancelled, leading it to be “cautious in its forecastsâ€, and thus it has not given any specific guidance.
In summary, apparently the core business could start to improve in its main resort destinations (~65% of EBITDA), although the doubts surrounding the coronavirus reduce visibility significantly. In this regard, note that the share price has shed -14% in the past week (-6.5% vs. IBEX) and at these levels we assume it would be factoring in a recurring EBITDA -25% below that reported in 2019. This seems very negative as it means returning to an EBITDA level similar to that of 2014 despite the fact of having 14% more rooms, and we only see it consistent with a recession (that we do not foresee). Thus, these better-than-expected results should contribute to underpin the share price to some extent. BUY. T.P. € 8.70/sh. (+36.20% upside).
Melia Hotels International is the parent company of a group engaged in the acquisition, management and operation of hotels. Co. operates its hotel network in Germany, Argentina, Brazil, Bulgaria, Cabo Verde, Chile, China, Costa Rica, Croatia, Cuba, Egypt, Spain, United States, France, Greece, Netherlands, Indonesia, Italy, Luxembourg, Malaysia, Mexico, Panama, Peru, Portugal, Puerto Rico, United Kingdom, Dominican Republic, Singapore, Switzerland, Tunisia, Uruguay, Venezuela and Vietnam under the followings brandnames: Paradisus Resorts®, Melia Hotels & Resorts®, TRYP Hoteles® and Sol Hotels & Resorts®.
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