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TÉCNICAS REUNIDAS: FY2020 RESULTS (ANÁLISIS BANCO SABADELL)

4Q'20 vs. 4Q'19 Results
Sales: € 712.1 M (-44.0% vs. -42.2% BS(e) and -42.4% consensus);
EBITDA: € 17.8 M (-52.0% vs. -70.1% BS(e));
EBIT: € 8.1 M (-67.6% vs. -57.6% BS(e) and -61.6% consensus);
Net Profit: € 3.7 M (€ -33.3 M in FY2019 vs. € 4.7 M BS(e) and € 10.7 M consensus);
FY2020 vs. FY2019 Results
Sales: € 3.521 Bn (-25.1% vs. -24.6% BS(e) and -24.6% consensus);
EBITDA: € 84.7 M (-23.1% vs. -29.2% BS(e));
EBIT: € 41.5 M (-39.1% vs. -35.5% BS(e) and -37.0% consensus);
Net Profit: € 11.0 M (€ -9.2 M in FY2019 vs. € 12.0 M BS(e) and € 18.0 M consensus);

4Q’20 results far above expectations in margins (2.5% EBITDA vs. 1.5% BS(e) and the consensus) and in net cash, which came in at € 197 M (29% market cap/+77% vs. 9M’20) vs. € 102 M BS(e) and € 77 M consensus. Excluding net one-offs on the operating level (€ 64 M), TRE has obtained € 10.48 M of EBIT (3% margin). On the negative side, costs stemming from Covid-19 totalled € 58 M, and restructuring costs amounted to € 16 M (most of these costs were accounted in 9M’20). On the positive side, we highlight the € 10 M in capital gains from divestitures.

Order intake came in as expected (€ 2.1 Bn FX-adjusted as of the end of the year) with the backlog totalling € 8.34 Bn (2.4x sales), also in line with expectations.
For 2021, TRE has given a guidance of € 3.5 Bn in sales (-20% vs. BS(e) and -12% consensus), with adjusted EBIT of 3% (vs. 2.16% BS(e) and 2.52% consensus). In absolute terms, TRE aims at € 105 M of EBIT’21, which stands +10% above our estimate and +7% above that of the consensus).

All things being equal, the cash data would have a +15% impact on our valuation of € 12.46/sh. up to € 14.40/sh. (+15% upside), and thus we maintain our BUY recommendation and place our T.P. Under Revision. Despite the fact that the stock has risen +12% vs. the IBEX over the past 3 months, we think there is still room for improvement, and these results should be well received. Our longer-term estimates (2023) already assume sales of € 3.9 Bn (-3% vs. consensus) with an EBITDA margin of 3.7% / EBIT of 3.1% (in line with the consensus), and thus in principle we would see no reason to change our estimates, and the change in the valuation would be limited to the positive impact from cash. Note that the sensitivity to margins is quite high: ±25bps of EBITDA/EBIT means ±7% on the valuation. There will be a conference call at 13:00 (CET). BUY. T.P. Under Revision.