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OHL: 3Q’20 RESULTS (ANÁLISIS BANCO SABADELL)

3Q'20 vs. 3Q'19 Results
Sales: € 720.1 M (-5.1% vs. +5.3% BS(e));
EBITDA: € 33.4 M (+92.0% vs. +16.3% BS(e));
EBIT: € 7.6 M (+7.0% vs. +23.1% BS(e));
Net Profit: € -75.7 M (€ 4.9 M in 9M'19 vs. € -12.93 M BS(e));
9M'20 vs. 9M'19 Results
Sales: € 2.07 Bn (-2.3% vs. +1.4% BS(e));
EBITDA: € 53.5 M (+33.4% vs. +0.6% BS(e));
EBIT: € 0.3 M (-92.5% vs. -64.0% BS(e));
Net Profit: € -114.2 M (€ -10.4 M in 9M'19 vs. € -51.43 M BS(e));

The company’s 3Q’20 results came in above expectations on the operating level but below in cash. The quarter’s EBITDA came in better than expected (€ 33.4 M vs. € 20 M BS(e)) despite lower sales (-5.1% vs. +5.3% BS(e)) thanks to much higher margins (4.6% vs. 2.5% BS(e) and vs. 0.9% in 2Q’20), especially in the Construction division (5.6% vs. 2.6% BS(e); +230bps vs. 3Q’19 and +550bps vs. 2Q’20). The drop in Net Profit was, however, bigger than expected (€-75 M vs. €-12.9 M BS(e)) due mainly to a -€-35.8 M reduction in the recoverable value of Pacadar’s debt (to € 98 M vs. our estimate of € 75 M; ~60% chance of collecting this payment) and a €-15.6 M impairment from the investment in Canalejas (-10% of the asset; in line with the -12% cut to our valuation due to Covid-19), without an impact on cash levels.
Performance in NFD was worse than expected. Thus, debt levels increased by €-54 M (+35%) on the quarter (vs. €-30 M BS(e); €-261 M as of 9M’20) to € 206 M (~2.6% NFD/EBITDA vs. € 182 M BS(e)), despite the collections of Canalejas’ subordinated debt and part of Mayakobá’s for a total amount of €~30 M.
With all this in mind, the 3Q’20 results were better than expected on the operating level, but weaker in terms of cash, along with the asset impairments (no surprise), justifying the initial reaction (-4% vs. IBEX). In any event, we think these 3Q’20 results should fade into the background in view of the imminent signing of the refinancing agreement on the company’s bonds (€ 593 M; 81% of debt), which in our opinion has led to the stock’s +29% increase over the past 6 sessions (+18% vs. IBEX). At 11:00 there will be a conference call where we expect the company to shed some light on the sale of its real estate assets, the collection of pending debt payments (Pacadar and Mayakobá) and the business outlook for the coming quarters. SELL. T.P. € 0.60/sh. (-22.07% potential).