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OHL: 4Q’19 RESULTS (ANÁLISIS BANCO SABADELL)

4Q'19 vs. 4Q'18 Results
Sales: € 840.0 M (-7.3% vs. -3.0% BS(e));
EBITDA: € 24.7 M (+30.0% vs. +26.6% BS(e));
Net Profit: € -117.4 M (€ -194.0 M in FY2018 vs. € 3.78 M BS(e));
FY2019 vs. FY2018 Results
Sales: € 2.96 Bn (+0.2% vs. +1.5% BS(e));
EBITDA: € 64.8 M (€ -448.5 M in FY2018 vs. € 64.15 M BS(e));
Net Profit: € -127.8 M (€ -1.529.8 M in FY2018 vs. € -6.62 M BS(e));

The 4Q’19 results came in as expected on the operating level but below in Net Profit and cash. EBITDA on the quarter came in at € 25 M (vs. € 24 M BS(e)), bringing the accumulated figure to €~65 M, allowing the company to meet its guidance of €>45 M, as expected. We would highlight the better performance in EBITDA margins, which increased by +60bps to 2.9% (vs. 2.7% BS(e)), offsetting the worse performance than expected in sales (-7.3% vs. -3.0% BS(e)). Net Profit came in slightly below expectations (€-117.4 M vs. € 3.8 M BS(e)), impacted by unexpected fair value adjustments totalling € 61 M (without impact on cash) in its main assets under development (Old War Office €-47.6 M, and Canalejas €-13 M).
Performance in net cash was also weaker than expected (with a net cash position of € 55 M vs. € 93 M BS(e)), despite recovery in working capital levels on the quarter (€ 171 M) due to a delay in collecting the payment from the sale of Mayakobá (some € 24 M pending) and the debt of its main shareholder (Grupo Villar Mir; 30.6% OHL) to Pacadar (€ 120 M).
Despite the recovery seen on the operating level, this set of results is being poorly received by the market (-1% vs. IBEX), which in our view would be due to the mark-to-market accounting of its assets under development (€-60 M; ~20% on their BV) and the uncertainties generated by the delay in collecting the payments from the Mayakobá and Pacadar transactions. There will be a conference call at 11:00, where we expect the management team to shed some light on the merger process with the Mexican company Caabsa. SELL. Target Price: € 0.95/sh (upside -7.72%)