Our analysis: Sapec disclosed satisfactory 1H05 results, given the difficult context (severe drought) that prevailed in the Iberian peninsula.
At EUR 21.0m, consolidated EBITDA grew 26% and Ebit stabilised at EUR 11.23m (down 1.3%). Thanks to capital gains for a total amount of EUR 4.45m (vs. 0.29m in 1H04), the bottom line was boosted to EUR 7.85m, up 102% y-o-y. Before one-off items, EPS stood at EUR 2.83, up 3.5% y-o-y.
In Spain & Portugal, the sales and profits of the agrochemicals and micronutrients activities were strongly affected by the negative climatic conditions. Outside Spain, the micronutrients sales grew by a strong 34% (developments in Latin America) and margin improved vs. 1H04.
In chemicals distribution BU, higher sales prices compensated for lower volumes and margins improved somewhat y-o-y.
The agro-feedstuffs BU performed quite well despite lower sales (-25% y-o-y due to the drop of imported feedstuffs prices, while volumes sold stabilised). The gross profit and the EBITDA decreased somewhat but this was more than compensated by the positive effect of a lower NWC on the financial charges.
At the energy BU, higher sale prices have offset the impact of a 26% drop in production (impact of the drought on the hydroelectric power stations). Sales and margins improved substantially in 1H05.
The logistic & port handling activities were below expectation, both in term of volumes and margins. Management incriminated poor economic conditions.
As guidance for 2H05, management expects sustained activity in the agro feedstuffs BU; a better activity for the Spanish agrochemicals activity thanks to less severe climatic conditions; a still strong sales development of micronutrients abroad; some capital gain on the disposal of some non-operational real estate. All in all, Sapec bank on an improvement of the 2005 EBITDA versus FY04 and on a higher net profit.
Our conclusion. We have fine-tuned our estimates following these results. EPS05 now stands at EUR 4.62 (vs. EUR 4.87 previously). Valuation models suggest a fair value in the range of EUR 110.22 to EUR 118.60 per share (EUR 114.41 on average). Assuming a small cap discount of 15%, the target market capitalisation stands at EUR 132m or at EUR 97.25 per share. Rating maintained at “accumulate”.
Target price: EUR 97.00 |
