Storm is over, Time to Re-start!
Valuation more than attractive at current levels Post a rather turbulent 1H16, we think that time has come for the value to shine.
Recovery will mainly stem from the construction business with all ELLAKTOR’s projects now turning profitable (Greek Roads + Doha’s METRO).
With new major projects (TAP pipeline) added to construction backlog that currently exceeds €3.3bn, we feel more confident with our FY15-18 CAGR adj. Ebit assumption of 17%.
We are strong buyers on the name since we consider that with the shares trading at a mere 0.4 P/BV 2017e and just 4.1x its FY17e EV/EBITDA (including non recourse debt), its valuation is more than penalized.
Upbeat Q1 results on robust construction
Ellaktor released 1Q16 trading update.
Results came above our estimates at the top end Ebit lines.
In specific, Q1 sales at €400m vs. €388 million expected, +6% yoy and adj. EBIT +38% yoy at €38m vs. €29m last year (AFe at €35m).
Please note that for the Ebit adjustment we don’t take into account the €12.4 million impairment that occurred in 1Q15 due to the significant retroactive drop in value of ELDORADO (1.1% stake) and HELLAS GOLD (5% stake) shares, vs. zero gains/losses in 1Q16. Page 2 for segmental headline figures.
Group’s net debt shaped at €520m vs. €527m in December 2015 on €10m CAPEX (€5m in Moreas). While no cash flow figures were provided, we were expecting for a bigger debt relief thanks to the MOREAS compensation paid in February.
On our projections, working capital cycle may further improve in the coming months thanks to payment of the State’s financial contribution in Public Works.