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/ 1) Thought provoking chart #1,546 - Aena''s opex problem? / 2) U.S. and China Suspend Tit-for-Tat Port Fees By One Year 3) Trump claims a win-win as China-US trade tariffs are also reduced 4) Air cargo demand up 2.9% in September, seventh straight month of growth 5) Lufthansa reports slightly stronger-than-expected Q3 earnings 6) 3.6% Air passenger growth in September 7) American Airlines, United CEOs to attend White House event 8) Virgin ''on track'' to launch cross-channel rail service in 2030 9) Hyperscalers accelerate capex 10) The Canary Islands Parliament expresses its rejection of Aena''s fee increase, demanding a voice and vote from the company 11) Motiva plans to announce sale of airports this year / 1) Thought provoking chart #1,546 - Aena''s opex problem? YoY % change in air traffic vs. YoY % change in opex / Source: BNP Paribas based on Aena''s and Bloomberg''s data Yesterday, Aena (=) reported Q325 results that were broadly in-line; link here for our First Take. On the earnings call and in discussions with clients, the focus was on the outlook for DORA 3. But in our view, a key negative surprise was operating expenses in Spain. Opex rose 9 % YoY in the quarter, accelerating from a 5% increase in H1, and outpaced traffic growth of 3%. We identified no major one-offs. The main drivers of cost inflation were staff, maintenance, security and VIP services. Our COTD shows that, after adjusting for inflation, Q3 opex growth exceeded traffic growth for the first time in three years. Although unexpected, Opex in Spain had already been rising at or above traffic growth before the pandemic, driven by increased hiring and the repricing of previously favourable third-party contracts. As the company prepares for DORA 3 and traffic growth normalises to 2-3 % pa, there is a risk that opex will continue to outpace traffic, compressing margins. While attention remains on DORA 3 negotiations, we recall that Opex inflation was a...
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Vinci reported mixed Q3 results Last week, Vinci reported revenue of EUR19.4bn, 2.5% ahead of our expectations. However, it was a low-quality beat driven by a strong Contracting business, while revenue for the more valuable Airports division was weaker than we had expected. For our First Take, see here. And the press reports that taxation may increase in France and the UK According to Le Figaro, today the French parliament has agreed to raise, in 2026, the surtax on large corporates with revenue above EUR3bn from 20.6% to 35.3% (vs. 41.2% in 2025). The Budget is not approved yet, but to reflect the increased risk of higher corporate tax, we increase our effective tax rate assumption for Vinci from c.30% to c.32% in 2026 (vs. 33.5% in 2025). This has a c.3% impact on FY26e EPS. Separately, the Financial Times reported a potential significant increase, up to 4 times, of the business rate tax for UK airports. We assume a negative impact of GBP40m (vs. up to GBP140m in the worst-case scenario) from 2026 for Vinci''s Gatwick airport. We adjust estimates accordingly. TP cut by 2% to EUR136. Outperform rating re-iterated We cut FY25e Net income by 1%, FY26e by 5% and FY27e by 1%. The main reason for the large cut in 2026 is the higher surtax in France. We also adjust our estimates at the divisional level. We cut estimates for Vinci Airports following disappointing Q3 revenue figures, lower consensus estimates for OMA in Mexico, a lower EBITDA margin assumption for the contract to operate the new Techo airport in Cambodia (which replaced Phnom Penh in September) and higher business tax expense for Gatwick from 2026. However, we increase slightly our revenue estimates for all three Contracting business (ie. Vinci Energies, Cobra and Vinci Construction) following better-than-expected Q3 results. Finally, we increase by EUR0.4bn our assumption for working capital inflow in 2025e. Net net, our TP for Vinci shares and Vinci ADR drop by c.2%, mainly due to a...
Vinci VINCI SA
What happened? Vinci released Q3 results, which are mixed, in our view. Revenue of EUR19.4bn was +2.5% ahead of our expectations and probably 1-2% above Street''s expectations. However, it''s a low-quality beat driven by a strong Contracting business, while Airports revenue was much weaker than expected. In conclusion, given the higher valuation multiple of Vinci''s Airports versus Contracting, we expect the stock flat to small down against the market tomorrow. BNPP Exane View: In more detail: In Q3, Vinci Autoroutes traffic was +0.3% and revenue +2.3% YoY which is slightly lower than the +2.8% YoY reported by Eiffage''s APRR due to lower traffic. Revenue was broadly in-line with our expectations. Vinci Airports'' traffic had already been released at +4.2% YoY (+3% YoY for the fully-consolidated airports). Disappointingly, revenue came at EUR1,457m, only +0.8% YoY due to negative effects from FX and unit revenue. We had expected a growth of c.6% YoY. Contracting revenue in Q3 was better than we had expected, at EUR15.6bn, +5.5% YoY. In more detail: . Energies: +6.2% YoY (+2.8% like-for-like): a small acceleration vs. H125 despite comments in pre-close calls that the market could be slowing down. France was surprisingly strong during the quarter. . Cobra IS: +12% YoY (+11% like-for-like): a small acceleration vs. H125 and similar to our expectations. . Construction: +3.8% YoY (+2.9% like-for-like): a large acceleration vs. H125, in particular in France, which seems to be sustainable in the next few quarters as new large civil works projects are ramping up in France. Contracting order intake in Q3 was EUR15.0bn (+3.4% YoY), which is solid but slightly below the EUR16.1bn average over the past four quarters. By segment, intake in Construction was strong, up 12% YoY, while Energy was only +2% YoY and Cobra down 19% YoY. Contracting orderbook remains healthy at EUR70.6bn but was slightly down versus EUR71.4bn at end-Q2. Net debt at end-Q3 was EUR21....
/ 1) Thought provoking chart #1,538 - De Minimis: the ball is in Europe''s court / 2) Container spot rate decline easing - but demand lull looms 3) Tariffs cause some China imports to crash 44% in September 4) Airlines Climb On Delta Results Despite Airport Delays During Shutdown 5) Lufthansa Pilots Union Says Pension Talks to Continue Next Week 6) France''s Political Stability has a price but alternative could be higher / 1) Thought provoking chart #1,538 - De Minimis: the ball is in Europe''s court China low-value e-commerce exports by air (Tonnes), by air, May-July 2024 vs. May-July 2025 / Share of China low-value e-commerce exports by air (Tonnes), by destination, May-July 2024 vs. May-July 2025 / Source: BNP Paribas Exane estimates based on Aevean data Six weeks have passed since the US removed its De Minimis exemption for all imports regardless of country of origin. Because of the reporting lag in most industry datasets, it is still too early to properly assess what the impact has been on air cargo volumes overall. However, the exemption for goods imported from China and Hong Kong was removed back in May and, given the majority of De Minimis shipments originate from China (80% of US and EU De Minimis shipments), this impact is arguably more significant from a market perspective. In the three months to July - i.e. the three-month window immediately after the removal of the De Minimis exemption, which occurred on 02-May - air cargo volumes from Asia to North America dropped -5.5% YoY. Yet the market overall was up +3.5%. The US'' decision to remove its De Minimis exemption for Chinese goods has clearly not stemmed the flow of low-value goods out of China. As shown in the first chart above, low-value Chinese e-commerce exports transported by Air - the type of volume that has come to dominate De Minimis shipments - have continued to grow, up +12% YoY in the three months to July. With China-US volumes down -46% over this...
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The European infrastructure companies reporting season kicks off on 16 October (Ferrovial''s 407 ETR), and we do not expect significant surprises. Out of the nine companies discussed in this report, we expect two to beat (Fraport, ADP) and only one to disappoint (Ferrovial). Airport traffic, road traffic and contracting activity should not disappoint (except marginally for Energy Services). Q3: ADP and Fraport could beat, Ferrovial could miss, Zurich Airport could raise guidance We expect ADP, which only reports revenue for Q3, to beat Bloomberg consensus by 2%, driven by both the Paris and International divisions. We see Fraport beating on EBITDA by 4%, driven by the Aviation and International segments. FCF should be solid. French names Vinci and Eiffage should report broadly in line results. However, shares may suffer in the short term as the political risk in France remains elevated and organic growth in the Energy divisions may be softening. We believe Ferrovial may miss Q3 EBITDA by up to 8% as expectations seem high for the US managed lanes and Construction divisions. This should be partially offset by a solid print for the 407 ETR. For Hochtief we are 11% below consensus on net income, although this might be due to unreliable consensus figures. Lastly, we are broadly in line with consensus for Aena and ACS. We do not expect any company to change guidance, though there is a possibility in our view that Zurich Airport may raise its FY guidance on 12 November. No changes to our ratings: Eiffage and ADP remain our top picks We update our estimates and TPs marginally for several stocks in our coverage, but our ratings and investment theses are unchanged. On a 12-month view, our top picks are: Eiffage (42% upside, good company at a deep discount to fundamentals albeit there is no obvious short-term positive catalyst) and ADP (26% upside, key positive catalyst should be the publication of the regulatory proposal for Paris airports, possibly this...
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/ 1) Thought provoking chart #1,533 - Hochtief''s data centre exposure / 2) Passenger Demand Grows 4.6% in August 3) Air Cargo Resilience Continues: August Demand Up 4.1% 4) Growing appetite for AI technology feeds into air cargo demand 5) EasyJet Upgraded to BBB+ by SandP 6) Majority of Lufthansa pilots vote in favour of strike 7) China announces ''tit-for-tat'' retaliation as USTR port fees loom 8) FedEx, UPS peak season surcharges could drive shippers to competitors 9) The Catalan Government defends that the governance of El Prat Airport can be ''improved'' 10) Aena will add 70,000 square meters to Terminal 1 of Barcelona Airport as part of the expansion 11) Eiffage has been awarded the contract for three substations worth more than EUR1.5 billion 12) The Albertos detail to the CNMV their stake in ACS, valued at EUR420 million 13) Abertis''s long-term issuer default rating was affirmed by Fitch at BBB / 1) Thought provoking chart #1,533 - Hochtief''s data centre exposure BNPPE estimated data centre construction revenue and backlog for Hochtief and ACS (% of total for H1 2025) / Source: BNP Paribas estimates The AI and datacentre theme should benefit Hochtief/ ACS for many years. The datacentre sector is booming, and the long-term outlook is bright; hyperscalers look set to double capex by 2026 and with further increases in following years. Hochtief builds datacentres and can capture part of this growth. On top of this, ACS (which owns 80% of Hochtief) is investing in developing datacentres, which could provide further growth. After a strong Q3, we raise our FY25/FY26 EPS estimates 3-6% for ACS and Hochtief. However, we are only slightly ahead of consensus for the next two years (1-4% on FY26 adj. net income) and upside risk seems low. We have limited disclosure on the economics of Hochtief''s datacentres business. We estimate that Data Centre represents 14% of group revenue and c.15-20% of net income. In other words, data centres is only a...
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Ahead of Q3 results, we have adjusted our estimates based on recent industry trends. We cut our EPS by 2% for FY25 and FY26 as we make small downwards revisions to revenue for the French toll roads and Energy divisions and increase minorities. Our TP is unchanged despite the small EPS cuts. That is because we now use a slightly higher multiple to value Vinci Energies and Cobra IS'' core business (with the multiple increasing from 13.2x to 13.4x due to comps re-rating). Our Outperform rating is unchanged. Looking at Q3 results (23 October, only revenue reported), we expect Vinci to report EUR19.02bn of revenue, of which Autoroutes EUR1.98bn, Airports EUR1.54bn, Construction EUR8.26bn, Energy EUR5.21bn and Cobra EUR1.75bn. We do not have reliable consensus data for Q3. However, for the FY25, we model EUR73.88bn revenue for Vinci, which is in-line with Bloomberg consensus. Also, we do not expect management to change its FY guidance. As such, we would not expect significant surprises at the Q3 results.
What happened? The French Prime Minister Bayrou resigned yesterday after failing the confidence vote. BNPP Exane View: Most likely political scenario is ''more of the same'' In our view, the most likely scenario is that the Les Republicans (right wing), centre and Socialist parties reach a compromise on a new Prime Minister that President Macron should propose this week. The parties agree on a 2026 budget with a less aggressive reduction of the budget deficit. Policies shift to higher taxes, especially on wealthy individuals, and less cuts to public spend. The stock market returns to the ''Running it Hot'' playbook. For more detail, see our today''s Strategy team report here. We do not see big risks to earnings for Vinci, Eiffage and Groupe ADP Taxes could increase a bit (e.g. higher corporate rate tax, higher tax rate on long-distance infrastructure concessions). Yet, the financial impact on Vinci and Eiffage may be limited in our view. We estimate that a 1% increase in corporate tax rate (e.g. from 25.8% to 26.8% in 2026) would lead to FY26 EPS down by c.1% for Vinci and c.1.5% for Eiffage. Vinci and Eiffage''s share prices have already dropped around 10% since the start of this new politics-led sell off. Also, Figure 1 shows that consensus is already expecting that corporate rate tax in 2026 won''t return to 2024 levels. Investor sentiment is unlikely to change in the very short-term.... Overwhelmingly, clients who we spoke to over the past three months preferred to avoid France-exposed stocks due to the expected political turmoil. We would not expect sentiment to turn positive in the next few weeks, given the risks of early elections and uncertainties on taxation. ...but this could be a buying opportunity, taking a long-term view. We wrote at the beginning of the year that while few things in life are certain, some things can be relied on. French political volatility every few years - check. Investor appetite for anything French slumps - check....
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What happened? Vinci''s top management held a sell-side breakfast meeting this morning in London. The overall tone of the discussion was neutral, in our view. Following the meeting, we would not expect consensus estimates to change materially. BNPP Exane View: Our key conclusions from the meeting are: French politics: the bigger risk is higher tax while short-term revenue is secured due to the healthy backlog. Tollroads . French tollroad concessions: . Risk of higher capex in the last years of the concessions is limited. The capex deal secured for the Escota network is reasonable. . The most likely scenario for the future French concessions is that they will be re-tendered to the private sector. However, nothing is certain. . New US managed lanes tenders may not be that attractive at the current prices given the high level of construction risk Airports: . Discussions on the new Lisbon airport are ongoing. The potential size of the investment might be between EUR5-10bn to be carried out after 2030. In our view, this investment could generate high value for Vinci. . The UK government is likely to approve the expansion of the Gatwick airport (around GBP2bn of capex, to be spent in the next few years). We have a positive view of this potential investment. . It might be a quiet year for Vinci on the MandA front Contracting . Construction/ Energy: stable outlook. Construction activity in France may be subdued in 2026 due to the municipal elections. Renewables: confirmed target to develop 1.5GW/ year although Vinci is flexible. Very roughly speaking, that target would equate to EUR1bn / year in capex.
We make only minor adjustments to our estimates and target price following Vinci''s H1 results, which were broadly in line with our expectations. Our investment thesis remains unchanged, and we reiterate our Outperform rating. We also initiate coverage of Vinci ADR at O/P with USD40.5 TP. H1 results were broadly in line with our expectations Cobra reported operating income from ordinary activities slightly above our expectations and we increase our FY25 estimate by 2%. We also cut group financial expenses as Vinci''s average cost of debt dropped in H1. These positive revisions are partially offset by a 1% cut to FY25 operating income of Vinci Airports due to a slightly lower profitability than we expected. We also cut our estimates for Vinci Construction for FY26 post the municipal elections in France. Net net, our EPS increases by 1% for 2025 and by 3% for 2026. Our estimates remain marginally ahead of consensus Our new EPS estimates are 4% above consensus for FY25 and 3% above for FY26. The main drivers are our more positive stance on the profitability of Cobra and Vinci Highways. TP increases by c.1% to EUR140. Our investment thesis is unchanged Vinci is a quality company with strong management, high ROIC and solid growth prospects. The H1 results validate our positive stance on the Contracting business, with strong growth posted for Cobra and Vinci Energies. Vinci Airports are also growing strongly thanks to their tilt towards leisure traffic and low-cost airlines. The conclusions from the French government''s summit on Transport support our view that the French tollroad concessions are likely to be re-tendered, which would be small positive news. Clearly, in the short term, political noise in France around the 2026 budget discussions is unhelpful for Vinci''s shares. However, we would view any weakness as an opportunity to buy.
What happened? Vinci reported H1 results. BNPP Exane View: The results were solid. Operating income from ordinary activity was 2% above Bloomberg consensus, driven by Concessions and Energies. Net income was 1% below. Order intake in Contracting in Q2 was flat YoY although the book-to-bill remains healthy. The FY25 guidance was unchanged. In conclusion, we expect the stock to be flat to small up against the market tomorrow. All divisions were broadly in-line with our expectations. However, the results were slightly better than Bloomberg consensus expected for Concessions, Vinci Energies and Cobra IS at the Operating Income level. In more detail, by division: Vinci Autoroutes: traffic in H1 was +2.2% YoY, with stronger Light Vehicle traffic. Revenue was +2.3% YoY which is slightly below the +3.5% reported by Eiffage''s APRR/AREA. This is surprising, as we would have expected easier comps for Vinci. Vinci Airports: traffic in H1 had already been released at +6.5% YoY. Revenue was +11% YoY (+7.8% YoY like-for-like), with Q2 similarly strong to Q1. EBITDA margin improved marginally by 20bps versus H124, also helped by the consolidation of Edinburgh airport from June 2024. Vinci Energies: revenue in H1 was +5.2 YoY (+2.4% like-for-like). Operating income from ordinary activities was +2% versus consensus, driven by better margins than expected. Order intake was stable, +1% YoY which might be a concern. However, the orderbook is still up 10% YoY and the intake in H1 was 1.15x the revenue for the same period, which points to further growth. Vinci Cobra IS: revenue in H1 was +8.9 YoY (+9.7% like-for-like), with the strong growth driven by EPC contracts. Operating income from ordinary activities was +2% versus consensus, driven by higher revenue than expected. Order intake was down 26% YoY although it accelerated in Q2. Intake in H1 was 1.11x the revenue for the period. Vinci Construction: revenue in H1 was -0.7% YoY (-2.8% like-for-like). Operating income...
What happened? We have spoken to Vinci, which is due to report H1 2025 numbers on 31 July. We highlight that there has been no change to full-year guidance. As a result of the call, we would not expect consensus to move materially, although consensus estimates seem well supported. BNPP Exane View: H1 2025: current Bloomberg consensus shows revenue at EUR35.0bn (BNPPE EUR34.7bn) and Operating Income at EUR4.0bn (BNPPE EUR4.1bn). We would expect consensus to remain broadly unchanged, although the underlying business trends seem positive. In more detail by division, consensus expectations seem broadly reasonable for Energies, Construction and Cobra. There might be small upside risk in our view for Airports, for which consensus expects a deceleration of growth in Q2 whereas the positive trends in Q1 are likely continuing in Q2. There might also be some upside risk in Other concessions given that the Stade de France provides an easy comp. On the flip side, there might be a small downside risk for Autoroutes for which consensus expects revenue up 2.8% YoY. In our view, traffic should be up 1.3-1.4% YoY and tariffs c.+1% YoY on average. Net net, consensus estimates for Vinci''s Operating Income seem reasonable, with some small upside risk. FY 2025: current Bloomberg consensus shows Operating Income at EUR9.40bn (BNPPE EUR9.55bn) and Net Income at EUR4.9bn, -5% YoY (BNPPE EUR5.0bn). The company reiterated the guidance that Net income should rise before factoring the corporate tax increase in France (i.e. in our view, this implies reported Net Income should be down YoY). We would expect a small upside risk to consensus estimates, as business trends remains positive in particular for Airports, Energies and Cobra.
We view Vinci as a quality company with strong management, high ROIC and solid growth prospects. We retain our positive stance on the Contracting business and turn more positive on French tollroad traffic, while Lisbon and Gatwick airport expansions should add further value. Despite +25% YTD performance, we still see 14% upside to our new EUR139 TP and 3% upside to cons. Reiterate O/P. Highway to success We turn more positive on French Tollroads and raise our traffic estimates to 1.0-1.1% YoY for 2026-36 (up from 0%). Negative demographic trends and higher road transport costs should be offset by GDP growth and the rising retirement age in France and neighbouring countries. We maintain our positive view of the Contracting business - particularly Vinci Energy, which benefits from long-term trends in electrification and energy sovereignty in the EU. Cleared for take-off Vinci''s most valuable airport assets are ANA Portugal and Gatwick, accounting for c60% of Airports equity value. Vinci is progressing well with plans to build a new airport in Alcochete, near Lisbon, which could significantly increase the value of Lisbon Airport if approved. Meanwhile, Gatwick''s expansion is close to approval, with recent CAA tariff approval being a positive indicator. Both projects are expected to add substantial value to Vinci. We raise our valuations of both assets. We raise our TP to EUR139 (from EUR127), and reiterate Vinci at Outperform Our operating income stays largely unchanged and is now 3% above cons. for FY25 and FY26, with similar EPS upside despite already reflecting a permanent tax hike in France (which cons. may not be fully factoring in). Our SOTP-based TP rises 9% to EUR139, mainly from rolling valuation forward to FY26 and a higher Airports valuation (+EUR2/share). Vinci''s shares appear cheap relative to history/peers and in absolute terms. Our TP suggests 14% upside, even with zero terminal value for key French concessions expiring within 10 years....
We have adjusted our estimates post Q1 results. We do not consider the changes to be material; our rating is unchanged.
The recent macro uncertainty has not changed our positive stance on the sector, although we would refrain from North American exposure for now. Groupe ADP is our top pick, followed by Eiffage; we remain Underperform on Ferrovial as well as Getlink (not discussed in this report). We update our estimates and assess the downside risk of a US recession We update our numbers based on BNPP''s latest economic forecasts and latest trends in the sector. We reduce our traffic estimates in North America but retain our estimates for Europe. We remain positive on the Transport Infrastructure sector The sector continues to provide good value relative to the Stoxx 600 index. In an uncertain economic environment, we prefer stocks with upside to our TP, upside to consensus, and downside protection in case of a US recession. In our view, most of our coverage offers good protection, in particular Aena and Zurich Airport if US enters a recession. Only Ferrovial has significant downside risk. Groupe ADP is our top pick, followed by Eiffage ADP offers deep value. Current share price implies Paris airports are trading on only 8x FY25 EV/EBITDA. We are above cons (FY25 EPS +1%, FY26 EPS +10%) and are less concerned about the LT capex outlook than the Street. Catalysts: H1 results and presentation of capex plan, possibly in Q4. Eiffage offers good value (its div. yield is c.50% below hist. trading avg) and decent downside protection, though we are broadly in line with cons on earnings. Maintain O/P on Fraport and Vinci. Ferrovial remains a key Underperform Ferrovial is expensive relative to its peers (P/E 35x versus 14x on FY26 cons. est.) and we see significant downside risk in case of a US recession. The Schedule 22 payment for the 407 ETR may be higher than the Street expects and could also amplify the financial impact of a recession. We sit below consensus (FY25 EPS -16%, FY26 EPS -20%). Catalysts: 407 ETR and Ferrovial''s Q1 results.
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What happened? Vinci is due to report Q1 results on 24 April (only revenue, backlog and net debt). We review consensus estimates and conclude that they seem reasonable. BNPP Exane View Bloomberg consensus for Q1 is based on few analysts. As such, we will focus on FY25 consensus to assess whether expectations for Q1 might be reasonable. FY25 consensus revenue is EUR73.84bn, +3.1 YoY%. We review below in detail consensus estimates for each division. Given that FY revenue consensus is broadly fair, Q1 revenue estimates might also be broadly fair. Autoroutes; traffic in Jan and Feb was +5.6% YoY. March is a clean month but March 2024 is a tough comp due to the timing of Easter. Looking ahead, we could expect modest traffic growth given 1) June 2024 is an easy comp; 2) the Olympics in 2024 didn''t benefit traffic much (i.e Q3 is not a tough comp). Tolls are up 0.77% since 1 Feb 2025. Consensus expects FY revenue of EUR6.7bn (+2.0% YoY). This seems reasonable. Airports; air traffic in Jan and Feb for the consolidated airport was c.+4% YoY like-for-like but c.+10% YoY on reported figures thanks mainly to the full consolidation of Edinburgh. This positive scope effect should continue until July. As such, 4-5% YoY traffic growth for 2025 seems reasonable. Average revenue per passenger should increase at least in-line with inflation. In conclusion, consensus expects FY revenue of EUR4.9bn (+8.2% YoY), which seems reasonable. Highways and Other concessions: Highways reported EUR0.4bn revenue in 2024. We would expect some growth due to tariffs and traffic increase and the consolidation of the Denver motorway (roughly additional EUR30m) and the BR040 in Brasil. Other concessions reported 0.15bn revenue in 2024. We could expect significant growth as the Stade de France didn''t generate much revenue in 2024 (vs. c.80m in 2022). In conclusion, consensus expects EUR0.6bn revenue, but there might be upside risk of EUR0.1-0.2bn to revenue with relatively high...
What happened? The Paris criminal court has found Marine Le Pen, the leader of the far-right party Rassemblement National (RN), - along with eight RN European deputies - guilty of embezzlement. As a result, Marine Le Pen faces immediate sanctions, including a five-year electoral ineligibility. BNPP Exane View: Our economists think that this news raises several uncertainties about France''s political landscape. The RN party could be tempted to destabilise the government even though there are reasons to believe it may not be in their best interests. Could this keep investors away from French stocks? Potentially. However, in our view, this news may be positive for some French infrastructure stocks. Marine Le Pen has been vocal about the need to nationalise the French tollroads and was firmly against the privatisation of Paris airports. In contrast, Jordan Bardella, the President of RN and, possibly, the new front-runner of the party, has been less vocal on these subjects. A reduction in the likelihood that Le Pen becoming the French president could lower the risks of political noise around French tollroads. As such, this new could be positive for Vinci, Eiffage and, to a less extent, ACS/ Hochtief, which have a stake in Abertis. It might be tempting to think that this news increases the chances that Groupe ADP is privatised. However, we think the possibility of a privatisation remains tiny over the next couple of years. Finally, this news should not have a significant impact on Getlink, which was not directly affected by discussion on nationalisation or toll cuts previously.
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The final decision on the airport expansion is a key moment for Gatwick and Vinci By 27-February, the UK government is expected to make a decision on Gatwick Airport''s proposal to increase capacity to 75m pax p.a. (from the pre-Covid peak of 47m) by bringing the existing northern taxiway into routine use. Our analysis suggests this is an important moment for Gatwick''s future profitability, with downside risk if the proposal is rejected but upside if granted. With the Labour government backing airport expansions to boost growth, a favourable outcome appears likely. Five years ago, we warned that Gatwick''s tariffs may come under pressure In our 2019 Intelligent Infrastructure report Harder miles ahead, we argued that Vinci''s acquisition of Gatwick was expensive and that tariffs could decline following the expiration of the regulatory period in 2021. Following the slump in traffic caused by the pandemic, this did not materialise, with tariffs increasing broadly in-line with RPI during the regulatory period spanning April 2021 to March 2025. This scenario could play out in 2025 if expansion is not granted, though this appears unlikely For the forthcoming regulatory period from April 2025 to March 2029, Gatwick has proposed tariff increases of CPI minus 0-1%, but if the expansion is not granted, our analysis suggests tariffs could drop significantly. This is primarily because Gatwick''s returns are well ahead of the level considered reasonable by the CAA, which has stated that while it is broadly in favour of Gatwick''s proposal, ''it would be appropriate to revisit the headline price reductions'' if the expansion doesn''t go ahead. Valuation: our TP rises by EUR1 to reflect reduced Gatwick risk and updated traffic estimates Fortunately, we believe Gatwick expansion is highly likely to go ahead. The UK government has recently signalled support, with the likelihood of fewer Court challenges compared with the potential expansion of Heathrow. Accordingly, we...
Upgrading to Outperform from Neutral; TP raised from EUR120 to EUR121 (21% upside) In conjunction with our report EIFFAGE / VINCI: France is France. But value is value., we upgrade Vinci to Outperform with our revised EUR121 TP providing 21% upside. While we continue to see greater upside for Eiffage (of +61%), the favourable risk-reward profile justifies an Outperform rating. Our EPS forecasts are trimmed to include potential French surtaxes. We agree Energies is (joint) best-in-class, but struggle to match management''s exuberance Our deep dive into Vinci''s Energies and Construction operations provides granular analysis of its growth outlook, ROIC and FCF profile. There are no negative surprises, with the analysis confirming what investors already believe - that in both areas, Vinci ranks alongside the best-in-class players. For Vinci Energies, our EUR16bn valuation fails to match the EUR20-25bn that management itself believes this business is worth (see CMD slides 90-95). Ultimately, our analysis suggests Vinci Energies should trade on a similar 12-m fwd EV/EBIT multiple to SPIE (currently 10.8x) - which seems consistent with how the Street values it. Vinci''s EUR20bn+ valuation is consistent with the 13x EV/EBIT fair value used by our SPIE analyst Laurent Gelebart however, suggesting upside risk. Vinci Construction is under-appreciated; second only to Veidekke in terms of quality While Vinci Construction has a weaker growth profile than Energies, it has consistently generated stable margins, attractive ROIC and robust FCF. While deserving of a discount to best-in-class Veidekke''s 10.1x EV/EBIT, the 8.8x that we apply equates to a very respectable c.6% FCF yield. Valuation: our SOTP is tried and tested in terms of assessing fair value, as 2024 underlined As referenced in our March-2024 INTELLIGENT INFRASTRUCTURE report, our SOTP has historically proven reliable in terms of estimating the share price that Vinci trades up to. Our new analysis of...
French political turbulence is a fact of life, with attractive entry points equally reliable. While few things in life are certain, some things can be relied on. French political turbulence every few years - check. Investor appetite for anything French slumps - check. Vinci/Eiffage sell off - check. Valuations become unreasonably low (though nobody cares) - check. We have witnessed this cycle multiple times, with each providing an attractive entry point into the Transport sector''s most resilient stocks. We believe this time will prove no different, indeed our deep dive analysis into Vinci/Eiffage''s Contracting operations further bolsters our confidence. We upgrade Vinci to Outperform from Neutral, while reiterating our Outperform rating on Eiffage. Life too short for a Contracting deep dive? Good news - we''ve done the work for you. Part of the problem with Vinci/Eiffage is their diversification. While objectively valuing a French Tollroad is easy, many investors do not have the time or inclination to carry out a detailed analysis of Contracting operations, preferring to slap on a low multiple and move on. The good news is we''ve done the work for you (and even better, the conclusions are simple). Valuing Energies operations in-line with SPIE seems reasonable, despite the company''s more upbeat valuation. We believe Vinci''s Construction operations should be valued at a discount to Veidekke, and Eiffage Construction at a discount to Vinci. Street EBIT expectations seem fine. Yet, if one combines these estimates with reasonable multiples, implied valuations for Concession assets make little sense, in our view. Even if the French Tollroads see zero traffic growth, valuations look unreasonably cheap. We assume zero traffic growth for the French Tollroads. Not just for 2025, but until the concessions end. Yet, even in this cautious scenario, we expect FCF generation to remain highly attractive. While many investors consider the short-duration cash...
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Lower rates are unlikely to provide outperformance, but a bias towards lower quality could In last year''s Intelligent Infrastructure we explained why the sector''s ''bond proxy'' reputation was false. 2023 underlined this view, with the sector outperforming despite further rate hikes. Yet we are still asked whether rate cuts would disproportionately benefit the space (evidently, our answer is No). We continue to expect the sector to lag, but see an inverse relationship between investors'' perception of ''quality'' and the outlook for returns. We downgrade two of the sector''s most-loved names to Neutral (Vinci and Aena) while upgrading two of the least-loved to Outperform (Groupe ADP and Fraport). We initiate on another unloved name with O/P - Hochtief - while reiterating Neutral on ACS. Of the Tollroads and Tunnels stocks, Eiffage is our last remaining Outperform Our cautious views on Ferrovial and Getlink are well-known (though not always well understood), with new analysis underlining this stance. For Ferrovial we believe FCF will disappoint - a risk given we believe the stock is pricing in stronger growth than even large US Tech stocks. Our deep dive into Eurotunnel traffic drivers shines light on why Shuttle volumes have been so weak, but no light at the end of the tunnel in this respect. For Vinci we have done our best to find hidden value, but simply found it is priced in. This leaves Eiffage as the last Tollroad that we believe provides good value - ironically because investors seem to appreciate its GET investments even less than we do. Among the Airports, Fraport is our top pick followed by ADP, with Aena least preferred We remain cautious on the long-term outlook for the European airport sector. However, valuations appear undemanding. We prefer Fraport and Groupe ADP. The Street largely unloves them, but our deep dive into long-term traffic outlook in Europe, airport tariffs and commercial activities suggests upside on all fronts. Fraport is our...
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The Transport sector should cut emissions by 78% by 2040 On Tuesday, the European Commission (EC) set, for the first time, the emission targets for 2040. The EC recommended that the EU cut emissions by 90% in 2040 versus 1990 levels. For the Transport sector, the target is to cut emissions by 73% versus 1990 levels (or 78% versus 2015 levels), with an acceleration in cuts between 2030 and 2040. In more detail, emissions are targeted to drop by 86% versus 2015 levels for Road transport, 79% for Maritime, 75% for Rail, and only 28% for Aviation. Next step, the target needs to be approved by the EU parliament. The target is hard, but not impossible In our view, it will be hard to decarbonise the Heavy Vehicles and Aviation sub-sectors. For this reason, our analysis suggests emissions may fall short of the EU target. However, the delta is not too large - nor do we pretend our estimates have scientific accuracy. Certainly, the target for the sector as a whole is not impossible. The key reason for our constructive stance is the accelerating penetration of electric vehicles along with a further mandatory switch from fossil fuels to sustainable fuels - the EC has just increased the blend requirements for Sustainable Aviation Fuel from 2040 - and more stringent emission requirements for diesel-powered trucks. More regulation, more costs and a very tough target by 2050 The new target for 2040 is a positive signal on the path to decarbonise the Transport sector. If the target is achieved, the sector may not be the ''problem child'' of Europe anymore. But costs are likely to increase. And reaching net zero by 2050 remains very tough, with time very much of the essence. We discussed the implications in detail in our recent report TRANSPORT and INFRASTRUCTURE: ESG: Problem child or problem solver? The time is now.
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Vinci has reported remarkably good Q3 results, with all business segments showing strong performances, except for Vinci Immobilier. Vinci’s operations are maintaining robust momentum, evident in the double-digit growth in order intake during the Q3, which increases the order book to almost 14 months of average business activity. Vinci has upgraded its FCF guidance to at least €4.5bn thanks to an improvement in WC.
With the success of Fit-for-55 and 2050 Transport targets intertwined, time is of the essence In our previous ESG report from Sept-2021, we explained why Transport has been Europe''s problem child to-date, being the only sector to see net emissions rise over the past three decades. The tide is now turning, with our analysis suggesting the EU''s Fit-for-55 target of a 16% reduction in the sector''s emissions by 2030 are attainable. The EU''s corresponding 2050 target of a 92% reduction is much tougher however, with time very much of the essence. If the Transport sector can achieve its targets, Fit for 55 may succeed too. If not, failure appears inevitable. With the path to decarbonisation clear for Cars/Vans, Trucking and Aviation hold the key With Road transport accounting for 76% of emissions within the Fit-for-55 scope, decarbonisation will be key. While the pathway for Cars and Vans is clear this is not true for Heavy vehicles; problematic given Trucks account for c.40% (and rising) of Road emissions. This is not due to technology but rather the availability of charging infrastructure, which is especially problematic for Heavy vehicles given the need to re-charge mid-journey. Reducing Aviation emissions is also important, but much remains to be proven on the availability of sustainable aviation fuels, with only so much the Airlines can do - all of which underlines the importance of decarbonising Trucking. If 2050 targets are to be hit, everybody needs to play their part - investors included For 2050 targets to be achieved, everybody will need to play their part. Yet during the marketing of our Sept-2021 ESG report one observation stood out - that other than ESG specialists who are paid to care, we sensed that for most investors, the primary ESG consideration was box-ticking. The awkward reality is that this apathy translates into corporate behaviour, which can result in lip service prevailing over meaningful action and being seen to do the...
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Vinci delivered a strong set of H1 2023 results, with revenue and EBIT slightly exceeding the consensus expectations. Net income stood at €2.1bn, up by 13% on a reported basis despite higher financial costs. Given a sharp traffic recovery in concessions and a higher business level in the contracting activities, Vinci re-iterated its full year guidance which is already reflected in our estimates.
Vinci released impressive Q1 results, with all business segments performing well except for Vinci Immobilier. Sales amounted to €15 billion, reflecting a year-on-year increase of 17% and like-for-like growth of 14%. The order book also rose by 10%, equivalent to almost 14 months of average business activity. With the strong and sustainable order book, Vinci confirmed its FY23 guidance.
Our view remains unchanged that the Infra sector will struggle to outperform in the 2020s In our previous Intelligent Infrastructure reports from Sep-2020 and Mar-2022 we argued the European Infra sector''s similarities to a bond proxy during the 2010s were largely coincidental. If there was any remaining doubt in this respect, the past year surely ended the debate. Bond proxies devalue when rates rise. The European Infra space did the opposite, outperforming the MSCI Europe ex-Financials by 22% during a year that saw the largest base rate hikes since the 1990s. For obvious reasons this is good news rather than bad. But our view remains that the sector will struggle to outperform the broader European stock market during the current decade, as has been the case so far (since January 2020, each of our stocks has lagged despite last year''s outperformance). But some stocks will outperform, with the ability to grow revenues with inflation set to be key Given our Strategy team''s expectation that both inflation and rates will remain elevated, the ability of Infra assets to grow revenues with inflation has grown in importance. We see significant differences across the sector in this respect, which is the single main determinant of our stock selection process. Of the Tollroads and Tunnels, Vinci/Eiffage screen best with Ferrovial/Getlink least preferred While the French Tollroads are well protected in this respect with CPI-linked tolls (we reiterate Outperform on Vinci/Eiffage), our analysis suggests Canada''s 407 ETR may not see any toll increases for years, while investor positivity towards the US Managed Lanes will be eroded. While Ferrovial (-) has the most North American exposure, this is also now relevant for ACS given its acquisition of the SH-288, leading us to downgrade to Neutral. With pressures on Eurotunnel revenues set to continue and capex likely to rise, we reiterate Underperform on Getlink. Among the Airports, we remain cautious with...
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Vinci has published results ahead of expectations, with revenues up 25%, due to external factors such as the effect of changes in the scope of consolidation (+12.5%) and favorable exchange rates (+1.5%). Thanks to its sound financial management, the group registered a record level of FCF allowing the dividend per share to be increased to €4.00. However, for FY23, the group has adopted a conservative outlook.
Reiterating Outperform; TP unchanged at EUR121 Following the surge in Vinci shares over the last 4 months (+29% from the October trough), we have recently been asked by several investors whether this upward trend can continue. Our answer is yes, for three main reasons; (i) the likelihood of robust H2 results; (ii) remaining upside to our conservative SOTP-based valuation; and (iii) the likelihood of a FY22 dividend that screens well on a low-3% yield. Investors should also be cognisant that Vinci is nearing fair value however, with another 10-15% upside representing ''job done''. Reason #1: FY22 Free Cash Flow could exceed guidance While investors are generally relaxed on the outlook for H2 2022 profitability, there are some nerves on FCF, for which Vinci has guided for EUR4.5bn. In this respect we estimate FCF exc. w/c movements of EUR5.1bn, the highest on record by some distance (+35% vs. EUR3.8bn in 2019). A w/c outflow of EUR0.6bn is certainly possible, but would require a deterioration of DSO and/or DPO. Our analysis suggests upside risk to guidance, with BNPPE at EUR4.9bn - see Figure 1. Reason #2: our conservative SOTP valuation continues to provide good upside In our SOTP, we continue to value Contracting operations conservatively, applying a 10% discount versus peers, including some peers which are arguably of a lower quality. Our EUR121 target price provides 16% upside nonetheless. Reason #3: a 3% dividend yield ''cross-check'' gives EUR127/share While the basis for our TP remains a detailed SOTP, we continue to cross-check our valuation against the metric on which Vinci most consistently trades - a low-3% dividend yield (average 3.4%; see Figure 2). With our analysis suggesting a FY22 dividend of EUR3.8 based on a c50% payout, this equates to EUR127/share. Importantly, given that Vinci talked about progressively raising the payout ratio from 50% pre-pandemic, risk to our DPS estimate could be to the upside.
New investigation, old case On 9 November 2022, a French judge placed Vinci under formal investigation over allegations it violated the rights of migrant workers in Qatar. This is not a new story. Allegations against Vinci started in 2015, when the NGO Sherpa filed its first compliant with a French Court, which later dismissed the case. We dig deeper to assess the impact of the new development. Vinci has not been proven guilty After the first failed attempt, Sherpa filed a new complaint in 2018. Four years later, a judge this time has decided to move the case forward. Next, we understand there will be a ''QandA'' phase in which the judge will question all parties. After that, the judge may start a formal Court trial. Qatar: a challenging environment for migrant workers Qatar has been a focus area for NGOs for years over poor working conditions of immigrant workers. The main problems were Qatar''s ''Kafala'' system of sponsorship-based employment and muddy recruitment practices in South Asian countries. In our view, the problems went well beyond Vinci. We retain our ''Average'' ESG rating for Vinci In our ESG sector note TRANSPORT and INFRASTRUCTURE: ESG: Europe''s problem child, we rated Vinci ''Average'' on ESG metrics. Despite the negative newsflow, we reiterate our rating. At the time of the alleged wrongdoing, Qatar was a difficult place reputationally to do business. We believe that Vinci was caught up in a bigger issue that was ultimately driven by poor labour practices in the whole country and progress has subsequently been made. Shares may face some selling pressure in a distant ''worst-case'' scenario There may be some selling pressure if the trial goes ahead, Vinci is found guilty, and ESG funds decide to sell their shares. However, this ''worst-case'' scenario may take years to unfold.
Vinci’s 9M figures were better than expected. Revenues were up by 26%, with international revenue up by almost 50%. A strong recovery at airports and a buoyant activity level across the other businesses were supported by two external drivers: 1/ the scope effect from Cobra IS integration and 2/ favourable FX due to the increased geographical footprint. The orderbook remained at an all time high of €57.4bn, up 26% yoy and, stripping out Cobra IS, it was still up 2%.
Vinci published excellent H1 22 results. Revenue and EBIT were above consensus by 4% and 16% respectively. The net income stood at €1.9bn, up by three times yoy on a reported basis. Given a sharp traffic recovery in concessions and higher business level in the contracting activities, Vinci re-iterated its full year guidance of net profit above the 2019 level. Following these results, we will upgrade our estimates, which will have a positive impact on our target price.
Vinci published strong Q1 figures, supported by the traffic recovery in airports and the integration of Cobra IS. Sales stood at €12.8bn, up 26% yoy and 12% lfl. The order book was up by 20% (including Cobra IS), representing more than 15 months of Vinci Construction’s and 10 months of Vinci Energies’ average business activity. Given the current geopolitical instability, Vinci has decided not to raise its FY22 guidance despite the robust performance in this quarter.
Vinci has announced its FY21 results with revenue and EBITDA just 3% above our estimates but net income significantly higher than our expectations (+10%), standing at €2.6bn. Concessions was up by 20.7%, Energies up by 10.5% and Construction up by 13.5%. Free cash flow stood at a record high level of €5.3bn, and a dividend of €2.9/share was announced. Following these results, we have revised our estimates, resulting in a slight increase in the target price.
Vinci published better than expected 9M results, with revenues above our expectations, especially in the Autoroute segment. Revenues from its contracting business have already surpassed the 2019 level, and the company has guided that we can expect something similar for margins too. We have slightly revised our numbers upwards and re-iterate our Buy recommendation.
Vinci published better than expected H1 21 results, with the Construction and Energies business in line with H1 19’s and also traffic on motorways catching up with the 2019 level in July. Traffic at VINCI Airports continued to suffer, with traffic at Gatwick airport down by 96% vs H1 19. For the full year, management expects revenues and margins to exceed the 2019 level for the contracting business, but has not provided any guidance for its concession assets.
Vinci published better than expected Q1 results, with sales above market expectations. Its energy business showed resilience and the construction business saw a positive trend on top of a weak comparison base, especially in France (last two weeks in Q1 20 were subjected to complete lockdown). Its autoroute segment delivered a surprising result, thanks to an exceptional change in traffic trends. Vinci has reiterated its guidance for 2021.
Vinci has announced its FY20 results with revenues 2% above our expectations, but with EBITDA and EBIT largely in line. Concessions was down by 33.5%, while Contracting was down by 5.9% lfl. Vinci Airports reported EBITDA that was better than what we expect for AdP and Fraport, confirming our view that Vinci owns safer Airports. Additionally, Vinci is shifting its investment focus from airports to the energy business. The group has announced a FY20 dividend of €2.04/share and has not provided any guidance for FY21.
