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NATURGY: 1Q’21 RESULTS (ANÁLISIS BANCO SABADELL)

1Q'21 vs. 1Q'20 Results:
EBITDA: € 982.0 M (+4.0% vs. -3.3% BS(e) and +1.3% consensus);
Net Profit: € 383.0 M (+92.5% vs. +30.2% BS(e) and +42.2% consensus);

The results beat expectations in both EBITDA and reported Net Profit, although they include many one-offs (€ -47 M vs. € -158 M in 1Q’20, due to restructuring and transformation costs) that make a comparison quite difficult. On the recurring level, 1Q’21 EBITDA came in -2% below last year (to € 1.03 Bn), as the improvement in demand and energy prices, with a positive impact on Networks and Commercialisation, has been tainted by the negative impact from the LatAm business (currency depreciation, € -46 M). On the bottom line, the better Net Profit than expected is due to the lower amortisations (-8.2%) and to the agreement with UFG (with a positive effect of € 65 M). Underlying Net Profit grew only +3.5% vs. 1Q’20 (to € 323 M).
NFD was in line with expectations, standing at € 13.597 Bn (vs. € 13.612 Bn in 4Q’20), meaning 3.8x NFD/EBITDA (without considering the € 2.57 Bn from the sale of CGE electricity). The financial cost rose +2.5%, and the average cost of debt stands at 2.4% vs. 2.5% in 4Q’20. Capex reached € 196 M on the quarter.
Beyond these results, the real highlight and catalyst for the share price will continue to lie in the government’s decision on IFM’s partial takeover bid especially following today’s press news suggesting that it could be authorised after the elections to be held on the 4th of May. If this were to be confirmed, and awaiting the announcement of the conditions to be imposed by the government (where one of the key factors will be whether it forces the company to remain listed; if the takeover bid goes through it would keep less than 10% of the free float), the share price should converge to the takeover bid price. At current prices, the upside vs. that level (€ 22.37 ex dividend) is +4.6%. In weighted terms including pro rating (the TOB is addressed to 22.7%) it would be +2.6% if Criteria (24% NTGY) does not accept the bid and +1.1% if it does. In today’s conference call for 1Q’21 results (12:00) the company could provide more visibility. SELL. T.P. Under Revision.