Fraport has announced FY20 results which were better than our expectations mainly due to higher cost savings, but it has provided a conservative outlook for FY21. Due to the ongoing expansion projects that cannot be entirely delayed, Fraport saw capex of €1.1bn which is expected to remain at this high level at least until 2024 (until the termination of Frankfurt T3’s construction work). The group has not proposed any dividend for FY20.
Companies: Fraport AG
Traffic at its international airports improved significantly better than at Frankfurt airport, yet the 9M revenue is down by 54%. Provisions of €280m dragged down EBITDA significantly, which in turn brought down net income to €-515m. Fraport has sufficient cost-saving initiatives in place and liquidity to survive the pandemic.
Following today’s result, we will revise our earnings downwards, resulting in a slight drop in the target price.
Fraport has announced H1 results which were better than consensus expectations. Management expects significant traffic reduction going forward, with traffic still remaining 15-20% below the 2019 level by 2022. Hence, it has announced various opex- and capex-reducing measures to adjust to the new outlook.
Fraport released its Q1 results with profits in the negative domain for the first time in a decade. As expected, traffic in April was down by 97%. The company has taken major steps to reduce expenses and has limited the cash burn to ~€150m/month which makes the group capable enough to survive for more than a year based on its current revenues, current financial position and without any government aid.
Before COVID-19 started to spread, management expected the passenger number in Frankfurt to remain unchanged but rising numbers (mid single-digits) at the Brazilian and Greek airports as well as in Lima. This picture has changed and it now sees a considerably negative impact from the virus. It sees a negative EBITDA impact of €10-14 for every passenger lost in Frankfurt. Assuming the passenger number will fall by 10% (or c. 7m), Aviation EBITDA will be down by €70-98m).
February was a catastrophe for Xi’an where Fraport holds a 24.5% minority stake. The passenger number there fell by 88% to 464k. Now that the USA is prohibiting passengers from Europe (excluding the UK) to enter its shores for one month, this will take its toll from now on, hopefully for only one month.
COVID-19 has a much harsher impact on ticket demand than anticipated only one or two weeks ago. Management has now decided, as demand to almost all destinations has collapsed, to reduce the number of flights by up to 50% in the coming weeks. This will obviously also have an impact on Fraport’s passenger number, at least in Frankfurt.
At a glance, the number of passengers in Frankfurt and most of Fraport’s other airports have not been under pressure, with the exception of Xi’an. Frankfurt’s cargo volume fell by 8.6% to 149k as worldtrade continues to be under pressure.
While the passenger number continued rising through to October 2019, it fell in both of the last two months. Simultaneously, the cargo volume fell throughout the entire year and the rate of decline accelerated as of late. This has also taken its toll on the number of flight movements and the maximum take-off weight (MTOW).
Frankfurt Rhein-Main had shown positive growth in each of this year’s months, except for November. The number fell to 5.07m in the last month which brought the ytd number to 65.7m, an increase of 1.7%. Our current projections are based on an increase of 2.0%, which seems too optimistic.
Frankfurt Rhein-Main is one important profit contributor to Fraport’s consolidated accounts and External Services is the other. In fact, Fraport’s stakes in Lima, Greek and Brazilian airports are contributing even higher earnings than the Aviation division. However, one has to include Retail & Properties as well.
The growth rate in passenger numbers moderated somewhat from H1 to Q3 at nearly all of Fraport’s airports and so have revenue and profits. However, we had anticipated this trend and the group’s final 9M profit numbers surpassed our projections.
Passenger growth has continued moderating in Frankfurt, primarily on domestic destinations. In addition, Fraport’s other full-consolidated airports in both Greece and Brazil experienced falls while Lima did well in September. On the other hand, Antalya achieved very strong volume growth indeed.
Frankfurt is the company’s single most important airport investment and the passenger number increased by 1.7% to 6.92m in the last month which brought the ytd number to 47.5m, an increase of 2.5%.
Growth in the passenger number moderated last month at nearly all of Fraport’s fully-consolidated airports, whereas it continued to be strong at the airports the company consolidates at-equity. The number of passengers flying within Europe was actually down in Frankfurt (-0.3%) but those flying to intercontinental destinations was up (+2.5%). The continuing rise in intercontinental passengers is positive for the airport’s retail business.
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The group has released a positive trading update with strong trading seen recently in the US along with signs of recovery in Europe and Australia. It is quite unusual for this conservative company to boost its guidance at this fairly early stage in the year, with raised guidance for FY21 leading us to increase our adjusted EPS by 15%. The shares trade on a discount to peers and offer a premium yield. We lift our price target from 435p to 520p, up 20% and offering decent upside to current levels.
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AFC Energy hosted a virtual Capital Markets Event yesterday attended by over 750 participants.
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AFC Energy hosted its maiden Capital Markets Event yesterday, giving an excellent summary of its progress in the last year and its prospects. The company is making good progress in commercialising its EV charging product alongside ABB and should be ready for market in 2022. We believe the long-term prospects for the company remain exciting.
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CRU has announced the sale of its Haydock property which it had retained following the sale of Coral Mouldings. It needs to spend £650k replacing the roof and the property will then be sold for £3.5m which should generate a book profit of £350k. The proceeds should be received by the end of 3Q 2021. We forecast cash balances as at April 2022 will be c.£12m, or £8m net of lease liabilities and other borrowings. NAV should be c.17.5p.
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Companies: CRH Plc
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