EUR 100.00 For Business Accounts Only

NEINOR HOMES: 3Q’20 RESULTS (ANÁLISIS BANCO SABADELL)

3Q'20 vs. 3Q'19 Results
Sales: € 96.0 M (+19.7% vs. +12.7% BS(e));
EBITDA: € 19.2 M (+15.0% vs. -10.2% BS(e));
Net Profit: € 14.9 M (+16.4% vs. -31.0% BS(e));
9months'20 vs. 9m'19 Results
Sales: € 197.0 M (-18.6% vs. -20.9% BS(e));
EBITDA: € 34.2 M (-22.8% vs. -32.3% BS(e));
Net Profit: € 21.9 M (-13.1% vs. -37.2% BS(e));

The company has released 3Q’20 results above our estimates on the P&L statement level, although below in net pre-sales. Revenues grew by +20% this quarter on a standalone basis (vs. +13% BS(e)), with EBITDA coming in at € 19 M (vs. € 15 M BS(e)) thanks to 263 units being delivered (vs. 246 units BS(e)). The developer margin stood at 26% (in line), whereas in Servicing, it came in at 59% (vs. 57% BS(e)). In cumulative terms, the 9M’20 figures are lower than last year’s, as deliveries tend to concentrate towards 4Q in 2020. In this regard, the company already has the CFO (work completion certificate) for 100% of its deliveries and the LPO (licence for first occupation) for 80%.
As for pre-sales, HOME has released good gross numbers, with 400 units sold in 3Q standalone, but due to cancellations, this figure is reduced to 305 net (vs. 340 BS(e)). The reason would be, in part, the cancellation of reservations of land plots that the company has decided to use for BtR. The percentage of deliveries covered in 2020/2021/2022 is 90%/56%/34%, which provides reasonable visibility into revenues in the medium term.
The company maintains its guidance for deliveries (1,700 units vs. 1,350 units BS(e)) and EBITDA (€>100 M vs. € 85 M BS(e)) for 2020. We believe that these numbers are more than satisfactory given the current market situation and following this set of results we will raise our estimates for the full year, as we believe they are now too conservative.
The stock is trading at pre-Covid-19 levels and has risen by +51% since March’s lows. BUY. Target Price: € 12.28/sh (upside 15.85%).