Atlantia reported its full-year results, with net loss attributed to the owners of €1.2bn, much below our expectations mainly due to higher impairment costs. Atlantia is still awaiting an acceptable offer from CDP or any other bidder for ASPI, in the absence of which it may proceed with the demerger plan. It intends to use the proceeds generated from the former to deleverage, expand its Telepass business and conduct strategic M&As. It proposed no dividend for FY20.
Companies: Atlantia (ATL:BIT)Atlantia S.p.A (ATL:MIL)
Atlantia published results that were in line with our expectations. Its net debt has risen by €1.7bn, but Atlantia does not have any liquidity issues due to Abertis’ dividend payment and the partial sale of Telepass. The group is still negotiating with the grantor and, additionally, has asked CDP to come up with a better offer by the end of this month, but, overall, Atlantia looks confident that it will soon have an agreement on the revised financial plan and the addendum.
Companies: Atlantia S.p.A
Atlantia’s H1 results came in below the consensus. As expected, traffic saw a significant drop in the concessions. The management reiterated its top line and cash flow post-capex outlook as announced during the FY19 report, but now expects traffic to be down by a respective 15% and 65% for motorways and airports. We had anticipated details of the agreement to accompany these results but the parties have yet to reach an agreement, hence skepticism prevails.
After two years of conflict between Atlantia and the Italian government over the Genoa bridge incident, the two parties finally have a handshake agreement. Given how bitter the negotiations were turning in the last few days, this definitely comes as good news. We have made quick adjustments to our NAV-based valuation which has had a limited impact on the target price.
Atlantia published Q1 results in line with our expectations. Motorway traffic was down by 20% in Italy and by 10-13% in other major countries. Passenger traffic was down by 33% at Rome airport. For the full year, the group expects autoroute traffic to be down by 30% and airport traffic to be down by 50% (as stated during the FY19 results). Regarding ASPI, the situation seems to be drifting away from being in Atlantia’s favour.
While the Group reported revenues in line with market expectations, earnings were significantly dampened by the additional provision made for the Genoa incident. However, after the ever-increasing rumours, the group’s statements are a relief for the market. 2020 will be tough for Atlantia owing to the building uncertainties, firstly around the withdrawal of ASPI’s concession contracts and latterly due to COVID-19. We will be making significant changes to our model to reflect both these uncertain
Our view is that revoking the Autostrade concession could only take place at a fair price for Atlantia as Italy belongs to the European Union. At AlphaValue, we would welcome a revoking (at a fair price) as it would accelerate the geographical diversification of Atlantia away from Italy.
Despite this and in view of the earnings release, we expect little change to our forecasts and, hence, no change in our Buy recommendation.
We reiterate our confidence in management and, hence, our Buy recommendation, but with a single-digit decrease in our target price. Our view that revoking the Autostrade concession could only take place at a fair price for Atlantia as Italy belongs to the European Union is also reiterated. At AlphaValue, we would welcome a revocation (at a fair price) as it would accelerate the geographical diversification of Atlantia away from Italy.
Motorway posted good traffic figures which compensated for the lower figures than expected in Airport.
Following this earnings release, we don’t expect any significant change in our target price or forecasts.
The key message is that the company wants to implement a compelling capital rotation, namely the opening to minority investors of Autostrade per l’Italia as well as Telepass, while developing a partnership with ACS/Hochtief as well as Getlink.
As reported net debt was lower than our forecast by about €2.5bn and EBITDA mainly in line after one-off items are stripped out, we expect to increase our target price by some 5-10% and to keep our recommendation unchanged.
Overall, there was a clear deterioration in traffic figures. Despite this, the company posted a 4% increase lfl in EBITDA in 9m 18 vs 3% lfl in H1 18.
The Board of Directors has decided not to proceed with payment of the interim dividend for 2018, which is a negative.
The shocking collapse of a major motorway bridge in Genoa gives birth to political posturing with threats of cancelling motorway concessions held by Atlantia’s Autostrade per l’Italia. This is bad for Atlantia’s image but the loss of revenues on an essential section of their network (the Genoa hub) may also hurt. While the company assesses the damage to its operations, we move our recommendation to “Under Review”
The Italian motorways division’s capex amounted to €207m, namely 55% of the group’s capex, but note that the division generates 68% of the group’s EBITDA, meaning the company is somewhat trying to reallocate its capital towards areas with higher growth profiles, namely airports.
The fact that we included for FY18, one quarter of Abertis’ contribution somewhat blurs the picture. We will adjust our model following this press release, but we don’t expect a change of recommendation.
Atlantia reported net income for Q1 18 that beat analysts’ average estimate.
All in all, the group posted rather good numbers, highlighting solid traffic growth in all geographies except for Italian motorways, where AlphaValue expects traffic trends to rebound in Q2. We remain positive on Atlantia. We keep our current target price and recommendation.
Atlantia released a positive set of full-year results, marked by the acquisition of a 15% stake in Getlink (Eurotunnel), positive traffic growth in all geographies (airports and toll roads) and a robust start to 2018.
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