TALGO: 9M’20 RESULTS (ANÁLISIS BANCO SABADELL)
3Q'20 vs. 3Q'19 ResultsSales: € 122.8 M (+14.0% vs. +5.1% BS(e) and +7.5% consensus);
EBITDA: € 7.9 M (-64.4% vs. -71.2% BS(e) and -65.8% consensus);
EBIT: € 7.5 M (-55.4% vs. € -1.0 M BS(e) and -89.9% consensus);
Net Profit: € -0.6 M (€ 11.4 M in 9M'19 vs. € -3.1 M BS(e) and € 0.2 M consensus).
9M'20 vs. 9M'19 Results
Sales: € 339.4 M (+23.2% vs. +19.7% BS(e) and +20.7% consensus);
EBITDA: € 22.6 M (-56.7% vs. -59.6% BS(e) and -57.3% consensus);
EBIT: € 9.3 M (-77.8% vs. -98.1% BS(e) and -91.6% consensus);
Net Profit: € -6.3 M (€ 26.2 M in 9M'19 vs. € -8.8 M BS(e) and € -5.5 M consensus).
At yesterday’s closing bell, the company released its 3Q’20 results, which continued to show an impact from Covid-19 (in Maintenance activity). Sales came in above expectations (+6% vs. BS(e) and +8% vs. consensus), whereas EBITDA was very much in line with the consensus’ estimate and slightly above ours (€ 7.9 M vs. € 6.4 M BS(e) and € 7.6 M consensus). We recall that the company does not provide balance sheet data in its 9M results.
Thus, sales increased by +14% vs. 3Q’19 (+23% as of 9M’20) to € 123 M (vs. € 104 M in 2Q’20 and € 155 M BS(e) pre Covid-19), impacted by Covid-19 mainly in Maintenance activity (no breakdown of data provided). This impact is amplified on the EBITDA level, as the fall in activity causes a lower absorption of fixed costs (and possible cost overruns), bringing the quarter’s adjusted EBITDA to only € 7.9 M (vs. € 6.4 M BS(e) and € 7.6 M consensus; -64% vs. 3Q’19), with a margin of 6.4% (vs. 6.4% BS(e) and 6.6% consensus). As of 9M’20, adjusted EBITDA totalled € 23 M (-57% vs. 9M’19; 6.7% margin). The quarter’s adjusted Net Profit came in at -0.6 M (vs. €-3.5 M BS(e) and € 0.8 M consensus).
Following this set of results, and bearing in mind how the pandemic is playing out globally, we will have to cut our EBITDA estimate’20 by at least -35% (to € 34 M vs. € 47 M consensus), assuming activity levels in 4Q in line with 3Q. Thus, even assuming for 2021 and 2022 the same Maintenance activity as in 2020 (-60% vs. before Covid-19), which in our view is an overly pessimistic scenario, the negative impact on our valuation would not exceed -11%, which would still yield upside higher than +45%.
Thus, although this set of results might lead to estimate downgrades, bearing in mind that this was already expected and that the results came in slightly above expectations, we would expect a neutral share price reaction, especially after the stock has underperformed the IBEX by -20% since February’s pre Covid-19 highs. Conference call at 12:00 (CET). BUY. T.P. € 5.88/sh. (+66.10% upside).
Talgo is engaged in designing, manufacturing, repairing and maintaining the railway rolling stock, as well as the manufacturing, assembling, repairing and maintaining the engines, machinery and parts of the railway systems. Co. has an industrial presence in seven countries: Spain, Germany, Kazakhstan, Uzbekistan, Russia, Saudi Arabia and U.S.A. Co. has an active fleet in Europe, Asia and North America that comprises of 94 high-speed trains and more than 1,400 Talgo tilting passenger cars. Also, Co. purchases, redesigns, constructs, leases and sells all types of real estate.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.