Banc Sabadell | IAG results in Q119 in line with expectations in EBIT and better in financing post tax profits: Sales: 5.318 Bn€ (+5.9%); EBIT: 135 M€ (-51.8%); post tax profits: 70 M€ (-66%). Sales evolved slightly below expectations (-0.7% vs BS expected) affected by unitary passenger income after currency change which fell -1.4% (vs -1% BS expected). Thus was compensated by unitary non-fuel costs which fell -0.6% at constant exchange rates (vs 0% BS expected). This poor income performance contributes a certain negative trend.
The company maintains its guidance for 2019 which maintains the same operational profit as 2018 facing exceptional departures and constant exchange rates, which once adjusted for IFRS supposes a figure of 3.485 Bn€ (vs 3.553 Bn€ BS expected and 3.436 Bn€ consensus). They expect to achieve this with a flat unitary income at constant exchange rate (vs improved contribution in February) and falling unitary non-fuel costs (vs flat announced in February). In all, the absolute figure which the company sees itself reaching is the same, even if how it reaches it seems to us to bring a certain negative trend (we see healthier a better income situation).
All in all, IAG continues to fulfill expectations and, even if we believe that the worse trend we commented on is not favourable, we believe that the company´s information does not accord with its current share price, which is discounting an operational profit (including IFRS) of ~2.855 Bn€, some 18% below the company´s target for 2019. Thus after the recent poor performance (-25% in the last three months and -28% vs IBEX) we would see a favourable reaction justified to the guidance and maintain our view of the company. BUY. O.P. 8.30€/share (potential +46.28%).
