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We update our views on ACS''s construction businesses following today''s initiation on Hochtief. After a strong recovery from the Covid years, we also revisit our valuation of Abertis. Our ACS TP increases significantly. We update our views on Hochtief and Dragados We initiate today on Hochtief - HOCHTIEF: More than you think. In our view, it is a good construction company that has improved significantly in the past few years. We dig deeper into Dragados and find that its performance is similar to its European peers. As such, we increase the valuation multiple from 6.0x to 7.0x EV/FY24 EBIT, which is in line with peers'' mid-cycle multiple. Abertis can keep paying dividends for longer Over the past four years, Abertis has been able to refinance its debt, increase revenue and extend the maturity of its portfolio of assets. We expect it to pay EUR0.6bn p.a. in dividends until 2032 (previously 2025), also taking into account the recent EUR1.3bn equity injection from shareholders. As such, we increase our DDM-based valuation to EUR4.1bn (from EUR2.8bn). Yet, we note that on our standard DCF-based valuation methodology, the equity value of Abertis would be limited. Reiterating Neutral, target price raised from EUR26 to EUR38 We mark-to-market the value of ACS''s 78.5% stake in Hochtief (EUR6.4bn); this change alone accounts for an additional EUR10/share compared to our previous TP. Our new TP also incorporates the increased value of Dragados to EUR1.7bn based on higher multiple and earnings (additional EUR2/share) and of ACS''s stake in Abertis, as discussed above. Finally, we value the remaining 43% stake in the SH288 tollroad at EUR1.2bn (before the debt at the SPV level), assuming this asset will be sold soon. Our estimate for ACS''s FY24 Net Income is in line with consensus. With limited upside on our SOTP and stub valuation, we reiterate Neutral. Also see INTELLIGENT INFRASTRUCTURE: Quality isn''t always good value published today.
ACS Actividades de Constrccn y Srvcos ACS Actividades de Construccion y Servicios SA
ACS delivered robust third-quarter results, experiencing growth across all the business segments. The strong EBITDA performance was propelled by the concession business and the Construction margin is now stabilizing following a shift in the risk profile. The company’s outlook appears positive, supported by a robust order book and a noteworthy 27% increase in order intake amidst an inflationary environment. ACS’s resilient performance makes it a good bet for those looking for a defensive name.
ACS reported strong results with a 10.5% increase in revenue and a 14.5% increase in EBITDA, driven by a traffic recovery for Abertis and the full consolidation of SH-288. The construction business was stable, with a 10-bps increase in the margin. As these results were in line with expectations, there will be no changes to our model.
ACS reported strong results with an 17.1% increase in revenue and a 15.6% increase in EBITDA, driven by Abertis’ traffic recovery and the full consolidation of SH-288. However, the construction margin declined due to changes in the business mix, leading to a 10 bps decrease in ACS’s margin. As these results were in line with expectations, there will be no changes to our model.
ACS reported strong FY22 results, with revenues up 8% and EBITDA in line with our estimates. This strong performance was supported by the increased stake in Hochtief and the recovery in traffic in Abertis. After strategic investments and shareholder compensation, net cash amounted to €224 million, reflecting the strong balance sheet of a company that sees further growth potential in developed countries.
ACS announced a good set of results, backed by higher sales, a growing backlog and a stable margin in the Construction and Services segments, as well as a higher contribution from Abertis despite negative perimeter and FX effects. ACS’ balance sheet remains the strongest in the sector although the market continues to await more clarity on the group’s future capital allocation strategy/moves.
ACS announced a good set of results, but yet again disappointed the market by not shedding enough light on its re-allocation plan. Nonetheless, it saw a recovery across all the divisions with an EBIT margin improvement. The good performance was supported in particular by a positive contribution from Abertis’ traffic recovery, Hochtief’s margin improvement and a recovery in the Services segment to its pre-pandemic level.
Since ACS finalized the sale of its Industrial Services business to Vinci, the market has been awaiting the golden goal – a capital allocation strike that would leave its fans (shareholders) mesmerized. We believe that overtime is now over and ACS, led by its president Mr. Florentino Pérez Rodriguez, has entered money-time, when each penalty kick (decision) made by ACS is either met with applause or boos.
ACS saw a sharp recovery in its earnings margins, due to the recovery of motorways traffic. Net income was distorted due to a capital gain of ~€3.6bn from the sale of the ACS IS business to Vinci. ACS has net cash position of €2bn (gross cash position of €4-5bn), and the group has yet to announce how it intends to allocate its cash going forward.
ACS announced a good set of results, backed by a positive contribution from Abertis’ traffic recovery, and the Hochtief and Services businesses’ margin improvements. The group expects the Vinci-ACS deal to close by the end of this year, but has not given any additional information on reinvestment strategies in the short term.
ACS registered a drop of 10.5% in sales and 40.3% in net income, but the figures are unimportant because they have been polluted by extraordinary events, mostly related to CIMIC. Its net debt rose from €54m to €1.8bn due to high financial investments and capex. ACS will receive €5.2bn in cash from the sale of its assets to Vinci and may use a significant chunk of the proceeds to co-invest in renewables with Vinci.
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