NEINOR HOMES: 1Q’20 RESULTS AND CHANGE OF T.P. TO UNDER REVISION (ANÃLISIS BANCO SABADELL)
1Q'20 vs. 1Q'19 ResultsSales: € 50.5 M (-16.7%);
EBITDA: € 7.9 M (+9.7%);
Net Profit: € 3.9 M (+69.6%);
At yesterday’s market close, the company released 1Q’20 Results with a -17% drop in revenues as a result of the -12% decline in home development revenues (on lower home deliveries). The gross margin in home development fell -2pp to 28% although EBITDA grew +10% thanks to higher margins in Servicing and lower Legacy asset sales (with a zero or even negative contribution margin).
Pre-sales totalled 353 units over the period (300 units adjusted for cancellations), and thus, the pre-sales/deliveries coverage improves +5pp vs. Dec’19: 2020-75%/2021-45%/2022-25% (as of Dec’19 2020-70%/2021-40%/2022-20%).
We play down the relevance of the drop in deliveries, as it is due to a timing effect throughout the year compared with the past (it should be offset by more deliveries in the rest of quarters). The pre-sales figure, adjusted for cancellations, is below the level we estimate it needs to meet our short and medium-term expectations (around 300 units vs. 500-550 units on a quarterly basis), although this is not a surprise, as March was hit by the health crisis. Pre-sales totalled 64 units in April.
We place our T.P. Under Revision (€ 13.86/sh. previously), in view of the new situation after Covid-19 (€ 13.86/sh. previously). Although we do not see momentum in the short and medium-term, we reiterate our BUY recommendation as the share price already factors in a sufficiently adverse scenario. In our scenario of V-shaped recovery, our T.P. would stand at levels of 10-11x. BUY. Target Price: Under Revision.
Neinor Homes SA, formerly Neinor Homes SLU, is a Spain-based company engaged in the real estate sector. The Company focuses on the design, construction and promotion of residential properties. It develops housing projects in various Spanish cities, such as Malaga, Madrid, Barcelona, Cordoba, Vizcaya, Alicante, Almeria and Gerona.
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