WOOD Flash – AD Plastik: 3Q20 results – improving profitability, but outlook remains very uncertain
Yesterday (28 October), AD Plastik reported its 3Q20 numbers. The company posted 3Q20 net income of HRK 6.5m (-6% yoy) on EBITDA of HRK 33.2m (+10% yoy) and revenues of HRK 292.9m (-23% yoy), beating our estimates by a small margin. Despite the tough conditions in the automotive market and the double-digit sales drop this quarter, AD Plastik managed to grow its EBITDA in 3Q20, mainly on cost cuts. In line with our expectations, the bottom line came in positive, boosted by the strong EBITDA, tax deferrals, a memorandum on debt and solid results at EAPS. Overall, the results look strong, with the EBITDA margin reaching 11.3% in 3Q20, but the sales outlook remains very uncertain, with the second wave of the pandemic threatening demand and, in the worst case, also production. That said, we believe the company is on track to reach our FY20E numbers. We remain HOLDers of AD Plastik, with a price target (PT) of HRK 147/share.
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