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REPSOL: FY2020 RESULTS (ANÁLISIS BANCO SABADELL)

FY2020 vs. FY2019 Results:
EBIT: € 1.193 Bn (-67.3% vs. -73.4% BS(e));
Net Profit: € 600.0 M (-70.3% vs. -85.8% BS(e) and -85.3% consensus);

The 4Q’20 results are seemingly better than expected, but this is due to one-offs. Removing this impact, the results would have been very much in line. We highlight the one-offs in Corporation (results from FX positions and derivatives on treasury stock positions) that brought this division’s Net Profit to € -12 M vs. € -139 M BS(e) and consensus. Upstream results were also slightly better than expected (€ 195 M of Net Profit vs. € 102 M expected), but this was due to lower amortisation rates, lower exploration costs (non cash) and lower taxes (tax benefits).
NFD reached € 3.04 Bn (vs. € 3.34 Bn in 9M’20), solid data if we bear in mind that the guidance was € 3.3 Bn (€ 4.19 Bn BS(e) and € 4.21 Bn consensus). As we have stated many times, the key to 2020 was not in profits, but rather in cash flow/balance sheet management (WC and CAPEX). Thus, and despite this solid data, we think this is a partly expected surprise, as the number was achieved at the expense of lowering working capital that should grow once again. Liquidity reached € 9.2 Bn vs. € 9.1 Bn in 9M’20.
REP has proposed a € 0.30/sh. final dividend’20 in cash, in line with expectations (-39% vs. 2019; 3.2% yield). DPS’20 € 0.6/sh. (-35%; 6.4% yield) and the approval of an own share buyback programme (from today to the 18th of May) to later cancel 40.49 M shares (2.65% capital), as expected.
We do not expect a relevant impact from these results on the share price. The market will pay closer attention to the comments on 2021-2022 that could be made at the conference call at 12:30 (CET), mainly on the recent strength of crude oil prices. After outperforming the IBEX by +20% over the past 3 months (meaning performance in line with the sector), our T.P. no longer has upside, but we maintain our BUY recommendation as we will raise our estimates to assume a higher recurring crude price than our current hypothesis of US$ 55/barrel. Every additional US$+1 would add +2.56% upside. Assuming the current price near US$ 64, our T.P. would rise above € 11.50/sh. (>20% upside). BUY. T.P. € 9.60/sh. (upside +1.52%).