ACS seeks new objectives after confirming that finally it will not be done with the acquisition of Autostrade per l’Italia (ASPI), the largest motorway operator in the transalpine country.
The board of directors of Atlantia, which owns just over 88% of ASPI, confirmed last week the sale of the company to a consortium of which the Italian State is part, through the public bank CDP, and to two foreign investment funds, the US Blackrock and the australian Macquarie.
The operation will finally close at 9,100 million euros, slightly less than the 10,000 million with which it was speculated a few months ago that Florentino Pérez, president of ACS, was offering for the still subsidiary of Atlantia.
Although it will be necessary to wait until November to close the operation, the international strategy of the largest Spanish construction company is now oriented towards other regions outside of Europe.
Higher cash after sale of Cobra
On the positive side, ACS has a solid cash position to undertake new investments. Especially after sale of its Cobra industrial division to the French group Vinci, what will irrigate the accounts with 4.9 billion euros.
“The feeling is that it is looking for some growth after some asset sales. If you can’t find reasonable prices in Europe, you might start in more remote regions ”, explains David Tomás Navarro, equity manager at Andbank Wealth Management.
The “difficult thing”, explains the expert, is to know the focus to which ACS is oriented. “It can surprise you with very large operations in places where it seemed that it had nothing to do.”
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Despite the difficulty in anticipating ACS’s movements, in early May, at the general shareholders meeting, Florentino Pérez made a declaration of intent, stating that the focus is now on the concessions business.
Mainly on the highways, as the president of the construction company assured during the meeting with the investors.
“The concessions part may be where to grow at the business level, while in infrastructure and construction, it may be better outside of Europe,” says David Tomás Navarro.
“Somehow it gives a great visibility of results and recurrence of dividends, it is much more visible in the longer term,” says Ángel Pérez, an analyst at Renta 4.
Australia, the great focus of ACS
Away from Italy, ACS has one of its main markets on the Asia-Pacific axis. Faced with its commitment in recent years to Asian countries, it is in Australia where the construction company focuses its sights after the loss of ASPI.
In the last week of May, ACS announced a € 1.2 billion ‘mega-contract’ to build a highway in New South Wales through its Australian subsidiary Cimic.
In February, Cimic announced another contract for the operation and maintenance of the railway network precisely in the State of New South Wales, where Sydney, the largest Australian city, is located.
A confirmation that Australia has become one of the main livelihoods for the company. In the first quarter, sales accounted for 20 percent of the group’s total, making it the second region in project volume only behind the United States, whose sales reached 54 percent of the total.
“In Australia they have very good margins compared to the United States, there they are somewhat lower,” explains Ángel Pérez.
North America pending Biden funds
On the other side of the Pacific, the departure of funds announced by US President Joe Biden as cover after the pandemic is another of ACS’s international objectives.
“The expectations that infrastructure projects and financing from the Biden Administration could support large tenders and concessions for the construction company,” explains Darío García, an analyst at XTB.
“That money will fall little by little, it will have its share of the pie. The infrastructure business is turning to the West and ACS is probably caught with little presence, so it will have to accelerate growth in North America, ”says David Tomás Navarro.
“Politicians like the infrastructure sector very much to reactivate the economy because of its visibility and because it employs a lot of workforce. ACS is very well positioned to continue leading projects in both regions,” says Ángel Pérez.
New IPO in search of cash
In the same way, the ACS subsidiary is considering the IPO of Ventia, the services business that it manages together with the Apollo fund, in an operation that the Australian press speculated could reach 2,700 million local dollars, in exchange, about 2,200 millions of euros.
“The operation could serve to generate additional cash for the group and be able to cope with the expected growth in Australia thanks to the infrastructure plans in the country”, explains Ángel Pérez.
Not surprisingly, the division generates revenues close to 5 billion Australian dollars – more than 3.1 billion euros – per year.
According to known figures, the operation would entail valuing Ventia’s EBITDA at 7.7 times, in which ACS has a 47 percent stake through the control position exercised by its Hotchief division in Cimic.
26 percent appreciation potential in the stock market
Another indicator that reflects the good reception of ACS’s new international strategy is the confidence that the market places in the value.
Despite the fact that stocks move in a negative context. “Since it lost the main bullish guideline in May, which began in February 2020, it has been concatenating decreasing highs and lows that could conclude with a retest of the support close to 24 euros,” says Darío García.
According to the expert, that level continues to be the reference compared to the more than 25 euros at which its shares are listed now.
However, the consensus consulted by Finanzas.com sees ACS securities at more than 32 euros, which shows a 12-month revaluation potential close to 26 percent.
The recommendations, following the panel of experts, are also decisive to know the sensations of the market: 75 percent of analysts bet on the purchase while 25 percent remain neutral on a security that does not have any recommendation for sale of actions.
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