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Sacyr has a 33% upside potential for Bankinter: "There is value in its concessions"


Sacyr have a upside potential of 33% for analysts of Bankinter, which have set a target price of 2.70 euros per share for the company, which justifies its advice to buy the value to achieve that expected revaluation over the next twelve months.

"There is value in your concessions"These experts affirm, who nonetheless acknowledge that Sacyr will have to face this year" the challenge of maintaining the growth rate of its business in an environment of strong economic slowdown. "

But in any case, they highlight that "the company has the stability of its concession business", which currently represents 75% of its operating profit (EBITDA) and represents 84% ​​of its target price.

For Bankinter, the concessions business is a factor that contributes visibility to the future, due to its long useful life. According to his calculations, in the 44 concession assets managed by Sacyr, its current half-life is 25 years. In addition, the company has the capacity to rotate mature assets with capital gains. Thus, they give as an example to Guadalcesa, sold with a 10% premium last October for 220 million euros.

They also highlight that most concession revenue, 90%, "are not subject to demand risk and therefore will not be affected by the traffic drops resulting from confinement."

On the other hand, Bankinter highlights that Sacyr "has fully covered" the financial risk in the face of decreases in the share price of Repsol and that it has recently contracted a 'call-spread' to be able to benefit from the increases from 8.5 euros.

Although they specify that "in only a quarter of the total derivatives, since the rest is very far from generating profits, given their exercise prices between 11.8 and 13.9 euros per share. "

Finally, these analysts are not concerned about the debt of 4.5 billion euros because for the most part it is debt without recourse. However, they recognize that the high proportion of debt over the estimated total company value (EV) contributes, from their point of view, "to increase the volatility of the price"

In general, Bankinter values ​​positively "the risk profile reduction of the company that has occurred in recent years and that has contributed significantly to greater business stability. "And although they know that the current environment of economic slowdown weighs down activities such as building, specify that "its weight is not significant" (6% of the estimated company value) and does not affect its valuation

His conclusion is that "At current market price, there is value in the concession business that is not being reflected"in the share price. Sacyr's shares are trading at 2.02 euros, after marking an annual minimum of 1.06 euros in the worst times of the year and a maximum of 2.79 euros before the March crash.

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