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NEINOR HOMES: 9M’19 RESULTS (ANÁLISIS BANCO SABADELL)

3Q'19 vs. 3Q'18 Results
Sales: € 80.2 M (+4.0%);
EBITDA: € 16.7 M (+165.1%);
Net Profit: € 12.8 M (+412.0%);
9M'19 vs. 9M'18 Results
Sales: € 242.0 M (+55.1%);
EBITDA: € 44.3 M (+415.1%);
Net Profit: € 25.2 M (€ -5.7 M in 9M'18);
Has released 9M’19 results in line in pre sales and deliveries that should create confidence in the delivery of the low end of the target range for the year.
Deliveries in the period came in at 379 units, which is equivalent to 47% of the deliveries expected for the full year (1,300, at the low end of the range). When analysing this data, it must be taken into account that in 2019 deliveries tend to concentrate towards the 4Q. We believe that the figure is in line with our estimates for the full year. HOME claims that it has already certified the end of construction on 100% of the units to be delivered in 2019 (the 1,300 units previously mentioned), of which 1,000 are already being delivered (including the 572 already delivered) and another 300 are pending the first occupation licence. We do not rule out that some units are not delivered until 2020 due to delays in formalising the delivery due to the new Mortgage Law (in some locations, this is delaying the notarial process by a few weeks). We do not think this is very important if it occurs in the end.
Regarding pre-sales, these have amounted to 339 units, which is satisfactory. With this, the percentage of covered deliveries for the expected deliveries of 2019/2020/2021 is 95% / 60% / 35% respectively. The data gives positive visibility to the business plan.
With a gross developer margin of 31% (good data, which is better than the 29% seen until June), EBITDA came in at 44 M euros, equivalent to 56% of our year-round estimate, meaning that the company is on track to meet or even beat its target of € 70 M. The company considers that the HPA for the period has been + 5% and the cost inflation +5% / + 6%.
During the period, legacy assets worth € 13 M and land worth € 11 M have been sold at 1.8x book value. The net profit came in at € 25 M. BUY. Target Price: € 13.86/sh (upside 20.42%)