VIDRALA: A HALF-FULL BOTTLE (ANÁLISIS BANCO SABADELL)
We see the bottle half full. BUY.We initiate coverage on VID with a BUY recommendation and T.P. of € 108.60/sh. (+21% upside). Although the stock’s total return has been +422% over the past decade (with a CAGR of +11% in EPS), we think it still has an appealing growth story at a reasonable price thanks to the current interest rate levels and the bright outlook for the industry, which is much more disciplined today than it was 10 years ago. We expect a CAGR’20-25e of +2.3% in sales and +5.4% in EPS thanks to improved efficiencies stemming from higher utilisation levels. The stock is trading at 10.7x EV/EBITDA’20e, with a premium vs. its sector (9.4x) and historical average (8.3x) that we feel is justified by its higher margin, thanks to interest rates and a +4pp improvement to ROCE vs. its historical average.
Vidrala SA is a Spain-based company principally engaged in the glass industry. The Company operates through two segments: Spain and European Union. The Company's activities include the production, distribution and sale of glass bottles and containers used in the food and beverages industries. The Company conducts its own research and development (R&D) operations. It operates production plants and melting furnaces located in such countries, as Portugal, France, Belgium and Italy. The Company owns such subsidiaries as Crisnova Vidrio SA, Inverbeira Sociedad de Promocion de Empresas SA, Gallo Vidro SA, Castellar Vidrio SA, Corsico Vetro SRL, MD Verre SA, Omega Immobiliere et Financiere SA, Investverre SA and CD Verre SA.
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