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Construction

Infrastructure/Concessions

Hochtief is eyeing up Abertis

26 September 2017
Olivia Peters
Analyst
+44 20 3465 2646
olivia.peters@berenberg.com

Saravana Bala
Analyst
+44 20 3753 3043
saravana.bala@berenberg.com

Robert Muir
Analyst
+44 20 3207 7860
robert.muir@berenberg.com

James Williamson
Specialist Sales
+44 20 3207 7842
james.williamson@berenberg.com

ATLAS ALPHA THOUGHT LEADERSHIP ACCESS SERVICE


Construction
Infrastructure/Concessions

THE TEAM

Olivia Peters joined Berenberg in January 2016 as part of the Construction research team.
Before joining Berenberg, she covered the construction and infrastructure sectors at Royal
Bank of Canada for five years. Prior to that, Olivia worked as part of the construction
research team at MF Global.

Saravana Bala joined Berenberg in October 2015 on the graduate scheme. Having
successfully completed the programme, he joined the Construction team in July 2016. Prior
to this, Saravana gained experience through an internship in sales and trading at Citi. He
holds a BSc in Statistics and Management for Business from University College London and
is currently a CFA Level II candidate.

Robert Muir currently heads up Berenbergs Construction research team and his principal
focus is the global cement sector. In addition to this, he has played a significant role in
developing the associates training programme at Berenberg. Rob was previously at
Morgan Stanley for six years, initially covering aerospace and defence stocks before
moving into building and construction. Prior to this, he spent four years as a management
consultant at PricewaterhouseCoopers.

James Williamson joined the Berenberg sales desk in July 2016 covering chemicals,
construction and metals and mining. James has over 30 years of experience in the basic
materials sector, both in industry and equity sales and research, having started his career
at Johnson Matthey, and then at the leading chemical consultancy CMAI (now part of IHS).
From there, he moved to the sell-side at ABN AMRO (five years) as a research analyst
covering chemicals, then joined UBS as specialist sales chemicals, construction and pulp
and paper (nine years) as part of the top-ranked chemicals franchise. Prior to joining
Berenberg, James worked for Morgan Stanley in a similar role (six years), helping to take
the chemicals franchise from number four to top-ranked.

For our disclosures in respect of Article 20 of Regulation (EU) No. 596/2014 of the
European Parliament and of the Council of 16 April 2014 on market abuse (market abuse
regulation MAR) and our disclaimer please see the end of this document.

Please note that the use of this research report is subject to the conditions and restrictions
set forth in the disclosures and the disclaimer at the end of this document.
Construction
Infrastructure/Concessions

Table of contents
Hochtief is eyeing up Abertis 4

We maintain Atlantia is best placed to acquire Abertis 5

Hochtief counterbid is increasingly likely, in our view 5

Hochtief could offer EUR18 per share for Abertis 7

We believe Hochtief will be worth EUR142 following a merger with Abertis 8

What would a Hochtief bid mean for ACS 11

Atlantia could increase its offer to EUR18.5 per share 15

ACS 17

Hochtief 26

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Construction
Infrastructure/Concessions

Hochtief is eyeing up Abertis


A counteroffer is potentially on the cards: We believe that it is increasingly likely Abertis HOLD
that ACS, via its German subsidiary Hochtief, in which it holds a 71.7% stake, will
launch a counteroffer for Abertis. We downgrade ACS to Hold and reduce our price Price target EUR 16.00
target to EUR35 from EUR40. We assume that Hochtief could offer EUR18 per Current price EUR 17.20
25/09/2017 Madrid Close
Abertis share compared to Atlantias cash offer of EUR16.5 per share, or EUR18.7
under the partial share alternative (PSA). HOLD
ACS
Hochtief could fund a deal with a debt-to-equity split of 74:26: We believe that (BUY)
Hochtief will deploy its cEUR800m net cash position and fund the remaining Price target EUR 35.00
purchase with cEUR4bn in equity (potentially under a PSA structure) and (40.00)
EUR11.6bn in debt. Criteria Caixa is Abertiss largest shareholder with a 22.3% stake Current price EUR 30.90
25/09/2017 Madrid Close
worth EUR4bn at EUR18 per share. As Atlantias offer is worth EUR18.7 under the
PSA agreement, which is deemed to have been created for Criteria, Hochtief will BUY
Atlantia
have to persuade Criteria that it will provide it access to higher growth through
access to the greenfield infrastructure market where internal rate of returns are Price target EUR 30.00
typically higher. Current price EUR 26.47
25/09/2017 Milan Close
We believe Hochtiefs share price could be worth EUR141 following a merger
with Abertis, with 7% upside to EUR151 over time if it can effectively deploy capital Hochtief HOLD
in greenfield infrastructure projects. We think there is potential for 43% EPS
accretion in year one and a 6% dividend yield. The aim is to create value for Price target EUR 141.00
shareholders by forming a global construction/concession operator with ample (135.00)
balance-sheet firepower, the technical know-how to manage construction risk and Current price EUR 137.75
25/09/2017 XETRA Close
a wealth of operational experience. Hochtief will shift from being a contractor to
having a 76% exposure to concessions. We believe that the infrastructure market in
the US and Australia has significant growth opportunities, and we estimate that
there are cEUR170bn of projects in the pipeline over the next five years.
We believe that ACS is unlikely to partake in a Hochtief equity raise: Reports
suggest that ACS may use Hochtief to bid for Abertis. Our base-case scenario sees
Hochtief raising EUR4bn of equity (in a PSA), meaning ACSs 71.7% stake may be
diluted to 49%. Deconsolidating Hochtief would raise net debt/EBITDA to 2.2x
from 0.6x 2018E. Our SOTP valuation suggests ACS would be worth EUR35 per
share, 13% upside to the current share price, but our fair value is reduced by EUR5
from EUR40 on a standalone basis. In a scenario where Hochtief funds the
acquisition using 100% debt, ACS would be worth EUR42 per share. However, net
debt/EBITDA would increase to 4.2x from 0.6x, which may jeopardise its
investment-grade credit rating, awarded in May 2017, which ACS has made clear it
is sacrosanct.
How to play the deal: We think there is potential for 5-8% upside in Abertiss
shares on a three-month basis should a counterbid scenario arise. We believe
Atlantia is best positioned to acquire Abertis and create value, with a merger
reducing Atlantias cost of capital and its exposure to Italy as we head into an
Italian election next year. If Atlantias current offer is accepted, the group could be
worth EUR32 per share, EUR2 of upside to our standalone valuation and 20%
upside to the current share price. Our analysis suggests if Hochtief bids for Abertis,
Atlantia could increase its cash offer to EUR18.5 per share without destroying
value. In this scenario Atlantia could be worth EUR30 per share, 13% upside to the
share current share price. Although Hochtief may put together a credible bid we
see less upside than at Atlantia. We believe Hochtief would be worth ~EUR142 per
share, roughly in line with the current share price. An optimistic scenario suggests
that Hochtief is able to deploy capital in greenfield infrastructure assets. Assuming
it could invest EUR340m in 2018 Hochtief could be worth EUR145 per share and
ACS could be worth EUR37 per share.
26 September 2017

Olivia Peters Saravana Bala Robert Muir James Williamson


Analyst Analyst Analyst Specialist Sales
+44 20 3465 2646 +44 20 3753 3043 +44 20 3207 7860 +44 20 3207 7842
olivia.peters@berenberg.com saravana.bala@berenberg.com robert.muir@berenberg.com james.williamson@berenberg.com
Construction
Infrastructure/Concessions

We maintain Atlantia is best placed to acquire Abertis


In this note we examine a number of acquisition scenarios and their impact on our SOTP
valuations for Atlantia, ACS and Hochtief. We conclude that Atlantias current offer at
EUR16.5/share is the most favourable scenario providing 7% upside to our current SOTP
valuation, and 20% to the current share price (see Figure 1 below). Clearly, if a counterbid
comes in from ACS/Hochtief, Atlantia could increase its offer if it were to maintain an
interest in acquiring Abertis. We see value accretion for Atlantia from a potential deal up to
EUR18.5/share for Abertis.
We believe the most likely scenario is that ACS will use Hochtief to fund an acquisition for
Abertis. If Hochtief were to use 100% debt funding to facilitate a deal, it would provide 5%
and 6% upside to our current SOTP valuation for ACS and Hochtief respectively. However, we
believe this is unlikely as it would drastically increase ACSs leverage to 4.2x net
debt/EBITDA from 0.6x, potentially jeopardising its investment grade credit rating, which it
is keen to defend at all costs.
If Hochtief partially funds the acquisition with equity, in a similar way to Atlantia, we believe
this could be value-dilutive to ACS. We see 13% downside to our SOTP resulting in a
EUR35/share valuation for ACS and only EUR1/share of value accretion to our Hochtief
SOTP. In a bull case scenario, Hochtief should be able to access the strong growth in the
greenfield infrastructure pipeline in the US and Australia, implying Hochtief could be worth
EUR150/share.

Figure 1: Our analysis suggests Atlantia, as an acquirer, offers the greatest degree of upside
Implied share Upside to current Change to our
price (Eur) share price SOTP valuation

Hochtief EUR4bn equity funding 142 2% 1%


Hochtief 100% debt funding 149 7% 6%
ACS (with Hochtief EUR4bn equity funding) 35 12% -13%
ACS (with Hochtief 100% debt funding) 42 34% 5%
Atlantia EUR16.5/share offer 32 20% 7%
Atlantia EUR18.5/ share offer 30 12% 0%

Source: Berenberg estimates

Hochtief counterbid is increasingly likely, in our view


We think it is increasingly likely that Hochtief will bid for Abertis, as the executive board of
Hochtief continues to examine the possibility. Hochtief will have until five days before the
end of the Atlantia offer period to present a counteroffer.
The aim is to create value for shareholders by forming a global construction/concession
operator that will have the balance-sheet fire-power, the technical know-how to manage
construction risk and a wealth of operational experience. Hochtief will shift from being a
contractor to having a major concession exposure (76% of EBITDA). The plan is to take
advantage of the growing greenfield infrastructure pipeline in the US and Australia. We
estimate that there are cEUR170bn of projects in the pipeline over the next five years.

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Construction
Infrastructure/Concessions

Figure 2: Hochtief is a contractor with a large Figure 3: A merger with Abertis will create Figure 4: The new company would have
exposure to Australia and the US a contractor/concession operator with a the ability to take market share in the
global reach greenfield and brownfield
infrastructure market

Hochtief pre-
pre -merger EBITDA 2018E HOT/ABE NewCo EBITDA 2018E HOT/ABE NewCo EBITDA 2018E
Europe Italy Germany
6% 5% 2% Contracting
Americas
Americas (Hochtief)
22%
27% 25%
Spain
23%

Concessions
Asia Pacific (Abertis)
Asia Pacific France
19% 75%
72% 24%

Source: Company reports, Berenberg


Source: Company reports, Berenberg estimates Source: Company reports, Berenberg estimates
estimates

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Construction
Infrastructure/Concessions

Hochtief could offer EUR18 per share for Abertis


A EUR18 per share offer represents a 9% premium to Atlantias EUR16.5 cash offer, a 6%
premium including the PSA (Atlantia assumes it is protected, and a discount to the La Caixa
PSA), and a 5% premium to the Abertiss share price. Given the size of the acquisition, with
Hochtief having a market capitalisation of EUR8.6bn compared to Abertiss at EUR16.9bn,
Hochtief will likely fund the acquisition with a combination of cash, debt and equity.
In our base-case scenario we assume that Hochtief will deploy its cEUR800m net cash
position and fund the remaining purchase with 74% debt/26% equity. In other words,
Hochtief will raise cEUR4bn in equity (under a PSA), EUR11.6bn in debt and cancel Abertiss
treasury shares (8.25% of the share capital). The EUR4bn equity portion is equivalent to
Criteria Caixas 22.3% stake, and Hochtief will have to persuade Abertiss largest shareholder
that a concession/contractor tie-up will provide it with more favourable growth prospects
than a merger with Atlantia. Due to the lockup period under Atlantias PSA, we believe it was
designed with Criteria Caixa in mind, and is worth EUR18.7/share.

Figure 5: Hochtief may acquire Abertis using a combination of debt and equity

Debt Level
2018E 100% 74% 50%
Abertis BASE CASE
Incremental equity - 3,975 7,793
Hochtief net cash 769 769 769
Incremental debt (ABE market cap) 15,587 11,611 7,793
Existing net debt 16,508 16,508 16,508
EV of target 32,095 32,095 32,095

Abertis EBIT 2,338 2,338 2,338


Incremental debt interest rate 3.5% 3.5% 3.5%
Incremental pretax debt cost -546 -406 -273
Existing debt cost -764 -764 -764
Share of profit/(loss) in associates 34 34 34
PBT 1,062 1,201 1,335
Tax rate 30% 30% 30%
Tax expense -404 -404 -404
Minorities -190 -190 -190
PAT attributable to HOT 468 607 740

Hochtief PAT 522 522 522


Combined PAT of New Co 989.9 1,129.1 1,262.7
EPS upside 89% 47% 26%
Additional shares issued (at 3% discount) - 30 59
New number of shares 64 94 123
Source: Company reports, Berenberg estimates

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Infrastructure/Concessions

We believe Hochtief will be worth EUR142 following a


merger with Abertis
As highlighted above, we think there is potential for 47% EPS accretion in year one. Our
merged SOPT suggests Hochtiefs fair value reaches EUR142 from its current share price of
EUR138 and our SOTP for Hochtief on standalone basis of EUR141. We assume Hochtief will
sell Abertiss 34% stake in Cellnex, the satellite assets and a 20% stake in Sanef. We assume
cost synergies of EUR15m at 7x EBIT.

Figure 6: In our merged SOTP we forecast upside to EUR142 per share

EURm
EUR m Enterprise value

A) TOTAL HOCHTIEF 9,309

ABERTIS TOTAL 28,620


France 10,721
Spain 6,990
AP7 3,787
LATAM 5,530
Italy 1,257
Satellites 0
Other assets 333
B) ABE PROPORTIONATE EV 28,620
PROPORTIONATE EV (A+B) 37,928

Growth synergies -
Cost synergies (7x EBIT) 105
Tax shield 1,231
New co net debt pre-disposals -27,350
Disposals
Cellnex -1,409
Hispasat -1,622
Sanef (20% stake) -1,268
Total disposals -4,299
New co net debt post-disposals -23,052

Minority (Sanef EV) (2,144)


Minority debt (Sanef) 877
Minority (CIMIC) (1,463)
Minority debt -
Equity value 13,482
Time adjustment (2)
Equity value per share 142
Source: Company reports, Berenberg estimates

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Construction
Infrastructure/Concessions

Value accretion may come from the new company effectively deploying capital in greenfield
infrastructure projects in the US and Australia. We believe that there is a sizable pipeline
worth approximately EUR170bn over the next five years. If Hochtief is able to invest
EUR340m of equity in new projects at an IRR of 15%, we see upside to EUR150/share.

Figure 7: We see potential for value creation if Hochtief can win projects in the greenfield
infrastructure space

(EUR bn)
Estimated greenfield pipeline US and Australia 170
Over five years 34
Hochtief bids for 20% of projects 6.8
Win rate 20% 1.4

For Hochtief (EUR m)


Equity investment assuming a 25% equity cheque 340
Total value of greenfield infrastructure projects as 15% IRR 784
Hochtief per share including synergies 150/share
Source: Company reports, Berenberg estimates

High but manageable leverage


Following several conversations with management, ACS has reiterated that it wishes to
maintain its investment-grade credit rating awarded in May 2017. In our 74:26 base-case
scenario, the net debt/EBITDA of the new company would reach 5.4x 2018E pre-disposals
and 4.6x post-disposals. We estimate that asset disposals will generate EUR4.3bn meaning
that the new companys net debt will decrease to EUR23bn from EUR27.3bn. As highlighted
in Figure 8, the new companys net debt/EBITDA at 4.6x should be manageable in the
context of the peer group, but peers hold debt at their concession assets and maintain net
cash positions at their contracting businesses. We understand, credit rating agencies look at
total net debt at the group level --
- not which asset it is allocated to --
- with the focus on FCF
generation, and the ability to pay down and service the debt. In Figure 9, we estimate that
that the new companys FCF will be EUR3bn pa.

Figure 8: New company debt/EBITDA could reach 4.6x Figure 9: New company could generate cEUR3bn of FCF pa

Net debt/EBITDA 2018E Free Cash Flow


5.0 2,500

4.0
2,000
3.0
EURm

1,500
2.0

1.0 1,000

0.0 500
-1.0
VINCI Ferrovial Eiffage Hochtief ACS HOT/ ABE ACS (ex- 0
NewCo Hochtief) Hochtief Abertis

Source: Company reports, Berenberg estimates Source: Company reports, Berenberg estimates

Potential for a 6% dividend yield


The new company could generate cEUR3bn of FCF pa as Hochtief generates cEUR800m of
FCF pa and we estimate that Abertiss FCF post-disposals to be EUR2.2bn. We assume that
acquisition debt funding costs 3.5%, ie EUR406m and that the new company is able to invest
EUR340m pa in new infrastructure projects. This will enable the group to pay down EUR1bn
of debt pa and leave ample room for a dividend. Assuming a 90% payout ratio, the new
company could pay a dividend of EUR777m (6% upside to Abertiss dividend EUR736m
2018E) and implied dividend yield of 6% (based on 94.2m share and a new company share
price EUR142 per share).

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Infrastructure/Concessions

Figure 10: Strong FCF generation should allow for debt repayments and a healthy dividend

FCF (EURm) 2910


Interest on new debt -406
Greenfield equity investments -340
Other -300
Debt reduction -1000
Dividend (90% payout) 777
DPS 8.3
New number of shares (m) 94.2
Dividend yield 6%
Source: Company reports, Berenberg estimates

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Infrastructure/Concessions

What a Hochtief bid would mean for ACS


ACS confirmed its interest in acquiring Abertis at the companys H1 2017 conference call. ACS
was a major shareholder in Abertis for almost a decade; its holding peaked at 25.3% between
2004 and 2010. ACS started to reduce its stake between 2010 and 2012 in order to deleverage.
As previously suggested, we believe the most likely scenario is that ACS will use Hochtief to
fund the acquisition, which could placate the Spanish governments desire for a Spanish
solution due to the nature of Abertiss assets (toll roads and satellites). Ultimately, Hochtief
is a German company, but it is owned and controlled by a Spanish parent.
To assess the impact of the acquisition on our ACS valuation, we have analysed two
scenarios. In both cases, we assume that Cellnex, Hispasat and 20% of Sanef are sold to help
fund the acquisition, generating EUR4.3bn). We also take into account ACSs share of
Hochtiefs net cash position of ~EUR800m. We assume an acquisition price of EUR18 per
Abertis share.

Scenario one: Hochtief raises EUR4bn of equity (74% debt/equity ratio) and ACSs
ACSs
stake in Hochtief declines to 49%
Hochtief could partially fund the acquisition with a PSA similar to Atlantias bid. With less
than a 50% stake we believe ACS would have to deconsolidate Hochtief. As a result ACSs
EBITDA could decline to ~EUR1.1bn 2018E from EUR2.3bn and the net debt/EBITDA may
increase to 2.2x from 0.6x 2018E.
ACS could receive a dividend worth ~EUR380m, a 6% dividend yield, assuming a 90% payout
ratio. Our SOTP valuation implies ACS would be worth EUR35 per share in this scenario. This
reduces upside by EUR5 compared to our standalone ACS valuation of EUR40 per share.
If ACS deconsolidates Hochtief, ACS will primarily be exposed to the Americas with a major
exposure to industrial services. The pie charts below show how ACSs geographical and end-
market mix could change. ACS is currently more exposed to Asia-Pacific, mainly due to
Hochtiefs stake in CIMIC and construction is its primary activity.

Figure 11: EBITDA split assuming Hochtief does not acquire Figure 12: EBITDA split after deconsolidating Hochtief, due to a
Abertis EUR4bn equity raise, which may dilute ACSs stake to below 50%

ACS EBITDA 2018E ACS new EBITDA 2018E (ex-


(ex-
Africa Hochtief)
1% Africa
Europe
3%
18%
Europe
Americas 30%
39%

Americas
58% Asia Pacific
Asia Pacific
42% 9%

Source: Berenberg estimates Source: Berenberg estimates

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Infrastructure/Concessions

Figure13: EBITDA end market mix assuming Hochtief does not Figure14: EBITDA end market mix assuming Hochtief acquires
acquire Abertis Abertis. ACS will be more geared to industrial services

ACS business split by EBITDA ACS business split by EBITDA ex-


ex-
Services Hochtief
3% Services
6%
Industrial
Services Construction
29% 31%

Construction Industrial
68% Services
63%

Source: Company reports, Berenberg estimates Source: Company reports, Berenberg estimates

Figure 5: Our SOTP valuation suggests ACS would be worth EUR35 per share if Hochtief raised EUR4bn of equity, potentially diluting ACSs
stake to 49%
Target
multiple Value
Revenue EBIT EBIT (EV/EBIT per
EURm (2018e) (2018e) margin % '18e) EV share

Dragados 4,530.9 267.6 5.9% 8.0 2,141 7


Construction Services 4,530.9 267.6 5.9% 8.0 2,141 7

Support Services 3,507.7 328.9 9.4% 9.0 2,960 9


EPC projects 3,314.2 283.7 8.6% 8.0 2,270 7
Industrial Services 6,821.9 612.6 9.0% 8.5 5,230 17
Facilities Management 1,451.0 68.8 4.7% 7.0 482 2
Environment 1,451.0 68.8 0.0 7.0 - 482 2
Group expenses (140.6) 9.0 (1,265) (4)
Net derivative assets/(liabilities) (235) (1)
Equity Investments
Xfera Moviles, S.A 13 0
Other equity assets 282 1
Book value
Energy assets 300 300 1
Saeta Yield stake 155 0
Equity stake in HOT 6,554 21
Book value Additions Discount unwind

Infrastructure concessions (Iridium) 1,154.0 302.6 80.8 1,537 5


Minorities (EBIT IS and ES) 22.2 7.0 155 0
Net debt (excluding non-recourse, including HOT dividend) (674) (2)
Net debt (non-recourse ex concessions and ex HOT net cash) (1,099) (3)
Other non-current provisions (1,655) (5)

Net deferred tax assets 62 0.2


Implied PT 11,426 35
Source: Berenberg estimates

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Infrastructure/Concessions

Scenario two: Hochtief funds the acquisition of Abertis using 100% debt and ACS
retains its 71.7% stake in Hochtief
EBITDA would increase to ~EUR6.2bn. However, due to the EUR15.5bn of additional debt
raised, ACSs net debt/EBITDA ratio would rise to 4.2x from 0.6x 2018E. This is significantly
higher than the 3.2x average of other concession contractors within our coverage and may be
detrimental to ACSs investment-grade credit rating, making this scenario unlikely, in our
view. Our SOTP valuation implies ACS would be worth EUR42 per share in this scenario.
While this is higher than our valuation under the equity scenario, we would be concerned
about the amount of leverage in the business.
As highlighted below, a Hochtief Abertis merger would change ACSs geographical and
business mix: ACSs geographical and end-market mix would shift away from Asia-Pacific in
favour of Europe and from contracting to concessions. This is due to concessions in higher-
margin, higher-capital-employed businesses than construction. We believe that ACSs
shareholders value the cyclical and industrial exposure that the shares provide and that the
onus will be on the new company to demonstrate the synergies and value creation that
would come from a potential merger.

Figure 15: EBITDA split assuming the new company is fully Figure 16: ACS will go from 100% contracting to just 38% if it
consolidated retained a majority stake in the new company

ACS new EBITDA 2018E ACS New EBITDA 2018E


Africa
0%

Americas
33%
Contracting
38%
Europe
50%
Concessions
62%
Asia Pacific
17%

Source: Berenberg estimates Source: Berenberg estimates

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Infrastructure/Concessions

Figure 17: Our SOTP valuation suggests that ACS is worth EUR42 per share if Hochtief acquires Abertis using 100% debt
Target
Multiple Value
Revenue EBIT EBIT (EV/EBIT per
EURm (2018e) (2018e) margin % '18e) EV share

Hochtief 20,922.3 2,304.2 11.0% 10.0 22,935.4 72.89


Dragados 4,530.9 267.6 5.9% 8.0 2,140.6 6.80
Construction Services 25,453.2 2,571.7 10.1% 9.8 25,076.0 79.69

Support Services 3,507.7 328.9 9.4% 9.0 2,960.3 9.41


EPC projects 3,314.2 283.7 8.6% 8.0 2,269.7 7.21
Industrial Services 6,821.9 612.6 9.0% 8.5 5,230.0 16.6
Facilities Management 1,451.0 68.8 4.7% 7.0 481.6 1.53
Environment 1,451.0 68.8 0.0 7.0 - 481.6 1.5
Group expenses (140.6) 9.0 (1,265.2) (4.02)
Net derivative assets/(liabilities) (235.0) (0.75)
Equity Investments
Xfera Moviles, S.A 13.5 0.04
Other equity assets 282.0 0.90
Book value
Energy assets 300 300.0 0.95
Saeta Yield stake 154.7 0.49
Book value Additions Discount unwind

Infrastructure concessions (Iridium) 1,154.0 302.6 80.8 1,537.4 4.89


Minorities (EBIT IS and ES) 22.2 7.0 155.1 0.49
Net debt (excluding non-recourse) 154.8 0.49
Net debt (non-recourse ex concessions) (16,849.5) (53.55)
Other non-current provisions (1,655.0) (5.26)
Net deferred tax assets 62.4 0.20
Target Price 13,141.0 42.00
Source: Berenberg estimates

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Infrastructure/Concessions

Atlantia could increase its offer to EUR18.5 per share


Recap of offer terms: Atlantia has offered EUR16.5 per Abertis share and there is an optional
PSA at an exchange ratio of 0.697 per special Atlantia share. However, the PSA is limited to
23% of the share capital and subject to a lock-up until February 2019. If investors take their
full allocation under the PSA, the offer values Abertis at EUR17 per share, based on Atlantias
share price at EUR26.9. The PSA on its own is worth EUR18.7 per share. We believe that an
Atlantia/Abertis tie-up makes sense owing to the presence of synergies, which we estimate
at EUR100m, Atlantias focus on transportation infrastructure, the geographical
diversification and a reduction in the cost of capital that such a deal would provide.

Our SOTP valuation implies 19% upside to the current share price
We have created a new SOTP for Atlantia to ascertain the value of the group following the
potential merger with Abertis. On this basis we forecast 20% upside to the current share
price. Our analysis suggests that a merger with Abertis would take our valuation of Atlantia
to EUR32 per share from EUR30.
We believe that an SOTP-based valuation best captures the value. We have built separate
DCFs for each of the toll road assets, reflecting the different regulatory regimes, concession
durations, capex requirements and costs of capital.
Our assumptions are:
a cash offer at EUR16.5 per share;
a maximum take-up of 23% under the PSA agreement;
EUR100m of synergies; and
a sale by Atlantia of Hispasat and Abertiss 34% stake in Cellnex.

Figure 18: Our combined post-merger SOTP suggests that Atlantia is worth EUR32, representing 19% upside to the current share price

NEW SOTP
ATLANTIA
Italian toll roads 24,009
International toll roads 2,790
Airports 5,824
Other assets 1,376
A) ATL PROPORTIONATE EV 34,000

ABERTIS
France 10,721
Spain 6,990
AP7 3,787
LATAM 5,530
Italy 1,257
Satellites 2,487
Other assets 333
B) ABE PROPORTIONATE EV 31,106
PROPORTIONATE EV (A+B) 65,106
Synergies at 10x EBITDA 1,000
New co net debt after disposals (Cellnex; Hispasat) -40,215
New debt/tax impact 1,350
Minority debt adj 3,218
New co equity value 30,459
Number of shares at max allocation 954
Implied share price 32
ATLANTIA SHARE PRICE 32
Source: Company reports, Berenberg estimates

15
Construction
Infrastructure/Concessions

Substantial EPS and DPS accretion


Since the equity element of the transaction is limited to 23% and the cost of funding is low at
1.9%, this transaction would be highly earnings accretive in year one. We estimate that the
earnings accretion could be 51% in 2018E, should the deal be structured according to same
assumptions as in the scenario above.
Atlantia has guided for 30% DPS growth in the first year followed by 10% growth pa
thereafter. This translates into a payout ratio of 60% based on the new companys EPS. We
believe that this is quite conservative, given that concession operators payout ratios typically
exceed 70%, and we think there is potential for further upside.

Figure 19: We see 51% EPS accretion in year one Figure 20: Guidance is for DPS +30% following the merger

2017E 2018E 2019E 2017E 2018E 2019E


Atlantia EPS 1.39 1.52 1.74 Atlantia DPS 1.07 1.17 1.29
New co EPS 2.34 2.60 Atlantia dividend yield 3.9% 4.3% 4.7%
Upside 51% 47% New co DPS 1.07 1.39 1.53
New dividend yield 4.3% 4.8%
Source: Company reports, Berenberg estimates Source: Company reports, Berenberg estimates

Value creation even if offer is increased


On a standalone basis we believe Atlantia is worth EUR30 per share. We believe that
Atlantia has some financial flexibility and could increase its offer by 12% to EUR18.5 per
share. In this scenario our analysis suggests that the company would be worth EUR30 per
share (versus EUR32 per share at the current EUR16.5 per share offer for Abertis). Each of our
scenarios are shown in Figure 17 below.

Figure 21: Merger SOTP if Atlantia offers EUR18.5 per share for Abertis

Offer price for Abertis EUR16.5 EUR18.5 EUR19 EUR20

Implied value of Atlantia EUR32 EUR30 EUR29 EUR28

Upside/downside to current share price 19% 12% 8% 4%

Upside/downside to ATL PT 7% 0% -3% -7%


Source: Company reports, Berenberg estimates

16
ACS Actividades Construccion y Servicios
Construction Construction Contractors

A bid too far


We downgrade our recommendation to Hold and lower our price 26 September 2017
target to EUR35 from EUR40 on the back of ACSs potential bid for
Abertis. We have analysed the impact of using two potential funding
structures for the acquisition, using 74% or 100% debt. We believe the
result is either: 1) our SOTP valuation is reduced by 12%, which leaves
HOLD
limited upside to the current share price; or 2) the group becomes Current price Price target
substantially levered and could risk losing its investment-grade credit
rating, which we believe is sacrosanct. We are now somewhat unsure of EUR 30.90 EUR 35.00
the long-term strategic objectives following ACSs unexpected interest 25/09/2017 Madrid Close
in acquiring Abertis.
Market cap (EUR m) 9,723
ACS may use Hochtief to bid for Abertis (ACS holds a 71.7% stake in
Reuters ACS.MC
Hochtief): We believe Hochtief could offer EUR18 per share for Abertis. Bloomberg ACS SM
This compares to Atlantias cash offer of EUR16.5 per share and
EUR18.70 per share under the partial share alternative agreement. The Changes made in this note
~EUR1bn net cash position at Hochtief and proceeds from selling
Rating: Hold (Buy)
Cellnex, Hispasat and 20% of Sanef could be used to help fund the
Price target: EUR 35.00 (40.00)
acquisition. However, due to the size of the acquisition (EUR16.4bn),
Hochtief may need to issue equity in order to help fund the deal. If Estimates changes
Hochtief raises EUR4bn of equity to acquire Abertis at EUR18 per share, 2017E 2018E 2019E
old % old % old %
we believe ACS would be worth EUR35 per share (-12% compared to our Sales 34,856 - 36,769 - 38,923 -
standalone SOTP valuation). This offers just 13% upside to the current EBIT 1,706 - 1,831 - 2,063 -
share price. We assume that ACS does not partake in Hochtiefs equity EPS 2.54 - 2.68 - 3.05 -
Source: Berenberg estimates
raise and gets diluted to 49% (therefore deconsolidating Hochtief). A
fully debt-funded acquisition is unlikely, in our view, as it would Share data
increase ACSs net debt/EBITDA to 4.2x, posing a risk to its investment- Shares outstanding (m) 315
grade credit rating, which management is committed to retaining. Enterprise value (EUR m) 13,745
We believe ACS should stick to its path of self-improvement, but the Daily trading volume 1,400,000
potential acquisition casts a shadow over the story: ACS offers
investors significant exposure to some attractive developed markets and Key data
we expect this to support revenue CAGR. Industrial services appears to Price/book value 2.0
be finding a bottom, but we are mindful of the risks as it is geared to the Net gearing 7.6%
oil and gas cycle. However, free cash flow generation is improving and
we think ACS should continue to reshape its portfolio, which could
enable it to do a substantial share buyback (~10% of its market cap).
Risk-reward skewed to the downside, on the basis ACS uses Hochtief
to fund a deal: We believe that investors will have a show me attitude
as far as the potential for value creation from the merger is concerned,
despite evidence of a strong greenfield infrastructure pipeline.
Source: Thomson Reuters Datastream
Y/E 31/12, EUR m 2015 2016 2017E 2018E 2019E
Revenue 33,291 31,975 34,856 36,769 38,923
EBITDA 2,140 2,023 2,329 2,517 2,681
EBIT 1,420 1,445 1,706 1,831 2,063
Net profit 733 759 805 845 960
Y/E net debt (net cash) 2,624 1,214 494 -295 -1,037
Reported EPS (segment) 2.35 2.44 2.56 2.68 3.05
Underlying EPS (segment) 2.30 2.39 2.54 2.68 3.05
CPS 5.13 3.85 3.53 3.56 3.61
DPS 1.16 1.15 1.16 1.25 1.46
EBITDA margin 6.4% 6.3% 6.7% 6.8% 6.9%
EBIT margin 4.3% 4.5% 4.9% 5.0% 5.3%
Dividend yield 3.8% 4.4% 3.8% 4.0% 4.7%
ROCE 10.3% 9.7% 12.5% 13.4% 14.9%
EV/sales 0.4 0.4 0.4 0.4 0.3
EV/EBITDA 7.0 6.3 5.9 5.3 4.8
EV/EBIT 10.5 8.8 8.1 7.3 6.3
P/E 13.1 11.0 12.2 11.5 10.1
Source: Company data, Berenberg

Olivia Peters Saravana Bala Robert Muir James Williamson


Analyst Analyst Analyst Specialist Sales
+44 20 3465 2646 +44 20 3753 3043 +44 20 3207 7860 +44 20 3207 7842
olivia.peters@berenberg.com saravana.bala@berenberg.com robert.muir@berenberg.com james.williamson@berenberg.com

17
ACS Actividades Construccion y Servicios
Construction Construction Contractors

HOLD
Investment thesis
ACS is a global contractor, providing geographic and business
26 September 2017 Reuters ACS.MC
diversification.
Bloomberg ACS SM
Current price Price target We believe that the outlook at ACSs end-markets is positive, which
should lead to a more favourable tendering environment and
Market cap (EUR m) 9,723 margin improvement.
EUR 30.90 EUR 35.00
25/09/2017 Madrid Close EV (EUR m) 13,745 Deleveraging and the simplification of ACSs business model make
Trading volume 1,400,000 it a more attractive investment, particularly given the valuation
discount to European contractor peers.
Free float 100.0%
Non-institutional shareholders Share performance Our valuation is based on an SOTP.
Inversiones Vesan: 12.52%; Corporacin High 52 weeks EUR 36.49
Financiera: 6.3%; Iberostar: 5.6%; Alba Low 52 weeks EUR 26.26
Participaciones: 4.73%
Business description Performance relative to
Engineering and construction company, with SXXP Euro Stoxx
main markets in Australia, the US and Spain. TMI
1mth -7.0% -
3mth -11.4% -
12mth -4.3% 0.9%

Profit and loss summary Cash flow summary


EURm 2015 2016 2017E 2018E 2019E EURm 2015 2016 2017E 2018E 2019E
Revenues 33,291 31,975 34,856 36,769 38,923 Net income 724 751 798 845 960
EBITDA 2,140 2,023 2,329 2,517 2,681 Depreciation 652 514 530 685 618
EBITA 1,420 1,445 1,716 1,831 2,063 Working capital changes 625 -178 150 134 148
EBIT 1,420 1,445 1,706 1,831 2,063 Other non-cash items 0 0 0 0 0
Associates contribution 186 -1 0 0 0 Operating cash flow 2,009 1,404 1,477 1,752 1,910
Net interest -91 -310 -310 -278 -248 Capex -261 474 399 483 523
Tax -292 -407 -497 -548 -633 FCFE 1,299 520 2,162 2,582 2,847
Minorities -320 -258 -286 -348 -414 Acquisitions, disposals 581 852 -286 -348 -414
Net income adj. 724 751 798 845 960 Other investment CF -131 506 0 0 0
EPS reported 2.35 2.44 2.56 2.68 3.05 Dividends paid 345 326 366 393 461
EPS adjusted 2.30 2.39 2.54 2.68 3.05 Buybacks, issuance -1,649 -1,394 0 0 0
Year end shares 315 315 315 315 315 Change in net debt -1,190 -646 -720 -788 -742
Average shares 315 315 315 315 315 Net debt 2,624 1,214 494 -295 -1,037
DPS 1.16 1.15 1.16 1.25 1.46 FCF per share 5.13 3.85 3.53 3.56 3.61

Growth and margins Key ratios


2015 2016 2017E 2018E 2019E 2015 2016 2017E 2018E 2019E
Revenue growth -4.6% -4.0% 9.0% 5.5% 5.9% Net debt / equity 50.5% 24.4% 7.6% -4.0% -12.6%
EBITDA growth -16.2% -5.5% 15.1% 8.1% 6.5% Net debt / EBITDA 1.7 1.5 1.0 0.6 0.3
EBIT growth -15.7% 1.8% 18.1% 7.4% 12.6% Avg cost of debt 4.9% 4.0% 3.9% 3.9% 3.9%
EPS adj growth -20.5% 3.7% 6.3% 5.8% 13.6% Tax rate 22.7% 40.6% 31.3% 31.5% 31.5%
FCF growth 160.3% -24.9% -8.2% 0.7% 1.5% Interest cover 15.6 4.7 - - -
EBITDA margin 6.4% 6.3% 6.7% 6.8% 6.9% Payout ratio 50.4% 48.3% 45.8% 46.5% 48.0%
EBIT margin 4.3% 4.5% 4.9% 5.0% 5.3% ROCE 10.3% 9.7% 12.5% 13.4% 14.9%
Net income margin 3.2% 3.2% 3.1% 3.2% 3.5% Capex / sales -0.8% 1.5% 1.1% 1.3% 1.3%
FCF margin 4.9% 3.8% 3.2% 3.0% 2.9% Capex / depreciation -40.0% 92.2% 75.3% 70.4% 84.6%

Valuation metrics Key risks to our investment thesis


2015 2016 2017E 2018E 2019E Construction activity: Our forecasts are influenced by the level of
P / adjusted EPS 13.1 11.0 12.2 11.5 10.1 new build and renovation activity, mainly in Australia, the US and
P / book value 2.7 2.3 2.0 1.9 1.7 Spain.
FCF yield 17.0% 14.7% 11.4% 11.5% 11.7%
Dividend yield 3.8% 4.4% 3.8% 4.0% 4.7% Contract write-
write-downs: Construction contracts can be large, span a
EV / sales 0.4 0.4 0.4 0.4 0.3 number of years and have fixed prices. Typical problems include poor
EV / EBITDA 7.0 6.3 5.9 5.3 4.8 forecasting, unforeseen design issues, adverse weather, and sub-
EV / EBIT 10.5 8.8 8.1 7.3 6.3 contractor and customer failures.
EV / FCF 7.8 8.4 9.7 9.5 9.4 FX risk: We estimate that ACS derives about 73% of revenue in
EV / cap. employed 1.7 1.6 1.6 1.5 1.4 currencies other than its reporting currency (EUR)..

Olivia Peters Saravana Bala Robert Muir James Williamson


Analyst Analyst Analyst Specialist Sales
+44 20 3465 2646 +44 20 3753 3043 +44 20 3207 7860 +44 20 3207 7842
olivia.peters@berenberg.com saravana.bala@berenberg.com robert.muir@berenberg.com james.williamson@berenberg.com
ACS Actividades Construccion y Servicios
Construction Construction Contractors

Berenberg versus consensus


Figure 2: We believe we are ahead of consensus

2017 2018 2019


Revenue Berenberg 34,856 36,769 38,923
Consensus 34,913 36,376 37,861
% difference -0.2% 1.1% 2.8%
EBIT Berenberg 1,706 1,831 2,063
Consensus 1,634 1,750 1,846
% difference 4.4% 4.7% 11.8%
Net Income Berenberg 798 845 960
Consensus 770 827 896
% difference 3.6% 2.1% 7.2%
Source: Berenberg estimates

19
ACS Actividades Construccion y Servicios
Construction Construction Contractors

Valuation
We believe that an SOTP best captures the value at ACS, given the spread of activities it
undertakes. We downgrade our ACS valuation on the basis that it deconsolidates Hochtief
and a merger with Abertis goes ahead. On this basis, we reduce our price target from
EUR40 per share to EUR35.

Figure 3: Our SOTP valuation suggests ACS is worth EUR35 per share
Target
Multiple Value
Revenue EBIT EBIT (EV/EBIT per
EURm
EUR m (2018e) (2018e) margin % '18e) EV share

Dragados 4,530.9 267.6 5.9% 8.0 2,141 7


Construction Services 4,530.9 267.6 5.9% 8.0 2,141 7

Support Services 3,507.7 328.9 9.4% 9.0 2,960 9


EPC projects 3,314.2 283.7 8.6% 8.0 2,270 7
Industrial Services 6,821.9 612.6 9.0% 8.5 5,230 17
Facilities Management 1,451.0 68.8 4.7% 7.0 482 2
Environment 1,451.0 68.8 0.0 7.0 - 482 2
Group expenses (140.6) 9.0 (1,265) (4)
Net derivative assets/(liabilities) (235) (1)
Equity Investments
Xfera Moviles, S.A 13 0
Other equity assets 282 1
Book value
Energy assets 300 300 1
Saeta Yield stake 155 0
Equity stake in HOT 6,554 21
Book value Additions Discount unwind

Infrastructure concessions (Iridium) 1,154.0 302.6 80.8 1,537 5


Minorities (EBIT IS and ES) 22.2 7.0 155 0
Net debt (excluding non-recourse, including HOT dividend) (674) (2)
Net debt (non-recourse ex concessions and ex HOT net cash ) (1,099) (3)
Other non-current provisions (1,655) (5)

Net deferred tax assets 62 0.2


Implied PT 11,426 35
Source: Berenberg estimates

20
ACS Actividades Construccion y Servicios
Construction Construction Contractors

Financials
Profit and loss account

Year-end December(EUR m) 2015 2016 2017E 2018E 2019E


Revenue 33,291 31,975 34,856 36,769 38,923
Changes in inventories 0 0 0 0 0
Capitalised expenses 102 77 0 0 0
Procurements 0 0 0 0 0
Other operating income 354 462 0 0 0
Staff costs -7,103 -6,752 -7,668 -8,089 -8,563
Other operating expenses -24,504 -23,739 -24,970 -26,341 -27,884
Reported EBITDA 2,140 2,023 2,169 2,351 2,510
Non-recurring items 0 0 10 0 0
Underlying EBITDA 2,140 2,023 2,329 2,517 2,681
Margin % 6.4% 6.3% 6.7% 6.8% 6.9%
Depreciation and amortisation -652 -514 -530 -685 -618
Allocation of grants -68 -64 -12 0 0
Reported EBIT 1,420 1,445 1,716 1,831 2,063
Non-recurring items 0 0 10 0 0
Underlying EBIT 1,420 1,445 1,706 1,831 2,063
Margin % 4.3% 4.5% 4.9% 5.0% 5.3%
Impairment and gains on disposals -32 -20 -34 -34 -34
Other profit or loss -197 -111 -70 -70 -70
Operating income 1,191 1,314 1,612 1,727 1,959
Margin % 3.6% 4.1% 4.6% 4.7% 5.0%
Finance income 224 186 0 0 0
Finance costs -699 -526 -310 -278 -248
Changes in fair value of financial instruments 36 66 50 0 0
Exchange differences 0 0 0 0 0
Impairment 299 -23 286 291 295
Financial result -91 -310 -310 -278 -248
Results of companies accounted for using the equity method 186 -1 286 291 295
Reported profit before tax 1,286 1,003 1,588 1,741 2,007
Non-recurring items 0 0 0 0 0
Underlying profit before tax 1,286 1,003 1,588 1,741 2,007
Income tax -292 -407 -497 -548 -633
Statutory tax rate 28% 25% 31% 31% 32%
Effective tax rate 23% 41% 31% 31% 32%
Profit for the period from continuing operations 994 596 1,091 1,192 1,374
Profit after tax from discontinued operations 59 421 0 0 0
Reported profit for the period 1,053 1,017 1,091 1,192 1,374
Non-recurring items after tax 0 0 7 0 0
Underlying profit for the period 1,053 1,017 1,084 1,192 1,374
Reported profit attributed to non-controlling interests -320 -258 -286 -348 -414
Reported profit attributable to the parent 733 759 805 845 960
Non-recurring items after tax and minorities 0 0 0 0 0
Underlying profit attributable to the parent 724 751 798 845 960
Basic EPS 2.35 2.44 2.56 2.68 3.05
Diluted EPS 2.35 2.44 2.56 2.68 3.05
Underlying diluted EPS 2.30 2.39 2.54 2.68 3.05
Source: Company data, Berenberg estimates

21
ACS Actividades Construccion y Servicios
Construction Construction Contractors

Balance sheet

Year-end December (EUR m) 2015 2016 2017E 2018E 2019E


Intangible assets 4,448 4,398 5,073 4,697 4,345
Goodwill 2,915 3,108 3,108 3,108 3,108
Other intangible assets 1,533 1,290 1,965 1,589 1,237
Property, plant and equipment 2,320 1,839 1,808 1,982 2,239
Non-current assets in projects 703 0 286 633 1,047
Investment property 62 0 0 0 0
Equity method investments 1,907 1,532 1,532 1,532 1,532
Non-current financial assets 2,141 2,485 2,485 2,485 2,485
Long-term cash collateral deposits 6 7 7 7 7
Derivative financial instruments 12 67 67 67 67
Deferred tax assets 2,181 2,312 2,312 2,312 2,312
Other assets 0 0 0 0 0
Non-
Non -current assets 13,779 12,640 13,570 13,715 14,034
Inventories 1,468 1,407 1,550 1,640 1,743
Trade and other receivables 10,916 10,988 11,833 12,371 12,994
Other current financial assets 2,311 1,813 1,813 1,813 1,813
Derivative financial instruments 3 98 98 98 98
Other current assets 140 224 224 224 224
Cash and cash equivalents 5,804 5,655 6,081 6,609 7,122
Non-current assets held for sale and discontinued operations 859 549 549 549 549
Current assets 21,501 20,734 22,149 23,305 24,542
Total assets 35,280 33,374 35,719 37,019 38,576
Share capital 157 157 157 157 157
Share premium 897 897 897 897 897
Reserves 1,951 1,951 1,952 1,952 1,952
Treasury shares and equity interests -277 181 181 181 181
Profit for the period of the parent 725 1,158 1,598 2,049 2,549
Interim dividend 0 0 0 0 0
Shareholders' equity 3,455 3,571 4,786 5,237 5,736
Adjustments for changes in value -34 11 11 11 11
Available-for-sale financial assets 142 142 142 142 142
Hedging instruments -234 0 0 0 0
Exchange differences 58 0 0 0 0
Equity attributed to the parent 3,421 3,421 3,421 3,421 3,421
Non-controlling interests 1,776 1,400 1,686 2,033 2,447
Equity 5,197 4,982 6,482 7,281 8,194
Grants 59 4 4 4 4
Non-current provisions 1,620 1,655 1,655 1,655 1,655
Non-current financial liabilities 7,382 4,907 4,613 4,353 4,124
Derivative financial instuments 115 70 70 70 70
Deferred tax liabilities 1,334 1,188 1,188 1,188 1,188
Other non-current liabilties 180 110 110 110 110
Non-
Non -current liabilities 10,689 7,934 7,640 7,380 7,151
Current provisions 1,034 1,028 1,028 1,028 1,028
Current financial liabilities 3,363 3,782 3,782 3,782 3,782
Derivative financial instruments 124 63 63 63 63
Trade and other payables 13,923 14,823 15,961 16,723 17,596
Other current liabilities 425 444 444 444 444
Liabilities relating to non-current assets held for sale and discontinued operations 525 318 318 318 318
Current liabilities 19,393 20,458 21,596 22,358 23,231
Total equity and liabilities 35,280 33,374 35,719 37,019 38,576
Source: Company data, Berenberg estimates

22
ACS Actividades Construccion y Servicios
Construction Construction Contractors

Cash flow statement

EUR m 2015 2016 2017E 2018E 2019E


Profit/(loss) before tax 1,286 1,003 1,588 1,741 2,007
Depreciation and amortisation charge 652 514 530 685 618
Other adjustments to profit (net) 124 222 -286 -291 -295
Changes in working capital 625 -178 150 134 148
Interest payable -803 -595 -294 -260 -229
Dividends received 271 435 286 291 295
Interest received 197 180 0 0 0
Income tax payment/proceeds -342 -177 -497 -548 -633
Cash flow from operating activities 2,009 1,404 1,477 1,752 1,910
Group companies, associates and business units -1,030 -107 -286 -348 -414
Property, plant and equipment, intangible assets and property investments -722 -588 -439 -483 -523
Other financial assets -49 -255 0 0 0
Other assets -117 -20 0 0 0
Total investments -1,918 -970 -725 -831 -937
Group companies, associates and busines units 1,611 959 0 0 0
Property, plant and equipment, intangible assets and investment property 983 114 40 0 0
Other financial assets 30 661 0 0 0
Other assets 4 120 0 0 0
Cash flow from investing activities 710 884 -685 -831 -937
Equity acquisition -841 -765 0 0 0
Equity disposal 17 68 0 0 0
Equity instruments proceeds (and payment) -825 -697 0 0 0
Liability instrument issue 4,311 1,231 0 0 0
Liability instrument refund and repayment -5,444 -2,615 0 0 0
Liability instrument proceeds (and payment) -1,134 -1,384 0 0 0
Dividends paid and remuneration relating to other equity instruments -345 -326 -366 -393 -461
Other financing activity proceeds and payables 72 -70 0 0 0
Cash flow from financing activities -2,231 -2,477 -366 -393 -461
Effect of changes in exchange rates 148 41 0 0 0
Net increase/(decrease) in cash and cash equivalents 636 -148 426 528 513
Cash and cash equivalents at beginning of year 5,167 5,804 5,656 6,082 6,610
Cash and cash equivalents at end of year 5,803 5,656 6,082 6,610 7,123
Source: Company data, Berenberg estimates

23
ACS Actividades Construccion y Servicios
Construction Construction Contractors

Regional sales

Regional Sales (EUR m) 2015 2016 2017E 2018E 2019E


Revenue
Dragados 4,152 4,236 4,399 4,531 4,667
Hochtief 21,097 19,908 22,454 23,908 25,736
Iridium 71 72 93 94 95
Construction 25,319 24,217 26,944 28,525 30,464
Support Services 3,759 3,425 3,360 3,508 3,609
EPC projects and Renewable Energy 2,805 2,840 3,203 3,364 3,449
Adjustments -63 -10 -10 -10 -10
Industrial Services 6,501 6,256 6,548 6,852 7,038
Waste treatment 524 0 0 0 0
Urban Services 1,109 0 0 0 0
Logistics 129 131 0 0 0
Environment 3,139 1,538 1,423 1,451 1,480
Corporate unit and adjustments -1,668 -36 -59 -59 -59
Total 33,291 31,975 34,856 36,769 38,923
Revenue Growth %
Construction -1.9% -4.4% 11.3% 5.9% 6.8%
Industrial Services -3.7% -3.8% 4.7% 4.6% 2.7%
Environment 34.3% -51.0% -7.5% 2.0% 2.0%
Total -4.6% -4.0% 9.0% 5.5% 5.9%
Underlying EBIT
Dragados 230 218 246 268 276
Hochtief 729 753 948 1,045 1,153
Iridium -10 -10 0 28 28
Adjustments -129 -51 -68 -103 -15
Construction 820 910 1,126 1,237 1,442
Support Services 296 311 320 329 338
EPC projects and Renewable Energy 262 266 274 284 293
Industrial Services 608 579 594 613 632
Waste treatment 50 0 43 43 43
Urban Services 42 0 0 0 0
Logistics 11 12 12 12 0
Environment 167 49 52 53 54
Corporate unit and adjustments -133 -144 -141 -141 -20
Total 1,462 1,393 1,632 1,762 2,107
EBIT margin %
Dragados 5.5% 5.1% 5.6% 5.9% 5.9%
Hochtief 3.5% 3.8% 4.2% 4.4% 4.5%
Iridium -14.1% -13.8% 0.5% 29.7% 29.7%
Construction 3.2% 3.8% 4.2% 4.3% 4.7%
Support Services 7.9% 9.1% 9.5% 9.4% 9.4%
EPC projects and Renewable Energy 9.3% 9.4% 8.6% 8.4% 8.5%
Industrial Services 9.4% 9.3% 9.1% 8.9% 9.0%
Waste treatment 9.5% - - - -
Urban Services 3.8% - - - -
Logistics 8.4% 9.0% - - -
Environment 5.3% 3.2% 3.6% 3.6% 3.6%
Corporate unit and adjustments 0.0% 0.0% 0.0% 0.0% 0.0%
Total 4.4% 4.4% 4.7% 4.8% 5.4%
Source: Company data, Berenberg estimates

24
ACS Actividades Construccion y Servicios
Construction Construction Contractors

Ratios

Ratios 2015 2016 2017E 2018E 2019E


Revenue 33,291 31,975 34,856 36,769 38,923
EBIT 1,420 1,445 1,706 1,831 2,063
NOPAT 921 781 1,101 1,183 1,341
EBITDA 2,140 2,023 2,329 2,517 2,681
Underlying Attributable Net Income 724 751 798 845 960
FCF 1,615 1,212 1,112 1,120 1,136
EPS 2.30 2.39 2.54 2.68 3.05
DPS 1.16 1.15 1.16 1.25 1.46
Payout Ratio 50% 48% 46% 47% 48%
FCF/share 5.13 3.85 3.53 3.56 3.61
Margins
EBIT margin 4.3% 4.5% 4.9% 5.0% 5.3%
EBITDA Margin 6.4% 6.3% 6.7% 6.8% 6.9%
Net Margin 3.2% 3.2% 3.1% 3.2% 3.5%
Capital Structure
Diluted Shares Outstanding (m) 315 315 315 315 315
Market Capitalisation 9,481 8,266 9,723 9,723 9,723
Net Debt 2,624 1,214 494 -295 -1,037
Net Debt (excluding non recourse financing) 2,083 1,402 682 -107 -849
Pension Obligations 427 427 427 427 427
Non-current provisions (ex pensions) 1,620 1,655 1,655 1,655 1,655
Adjusted Net Debt 3,703 3,057 2,337 1,548 806
Minorities (at book value) 1,776 1,400 1,686 2,033 2,447
Enterprise Value 14,960 12,723 13,745 13,305 12,976
Capital Employed
Adjusted Net Debt 3,703 3,057 2,337 1,548 806
Total Equity (book value) 5,197 4,982 6,482 7,281 8,194
Total Capital Employed 8,900 8,039 8,819 8,830 9,001
Economic Profit
ROE 20.3% 20.4% 16.7% 16.4% 16.8%
ROCE 10.3% 9.7% 12.5% 13.4% 14.9%
WACC 8.1% 8.1% 8.1% 8.1% 8.1%
Spread 2.2% 1.6% 4.4% 5.3% 6.8%
EVA 200 130 386 468 612
Valuation Ratios
EV/Sales 0.4 0.4 0.4 0.4 0.3
EV/EBIT 10.5 8.8 8.1 7.3 6.3
EV/EBITDA 7.0 6.3 5.9 5.3 4.8
EV/Invested Capital 1.7 1.6 1.6 1.5 1.4
P/E 13.1 11.0 12.2 11.5 10.1
Dividend Yield 3.8% 4.4% 3.8% 4.0% 4.7%
FCF yield 17.0% 14.7% 11.4% 11.5% 11.7%
P/BV 2.7 2.3 2.0 1.9 1.7
Leverage
Net Debt/ Market Cap 0.3 0.1 0.1 0.0 -0.1
Net Debt/Equity 50% 24% 8% -4% -13%
Net Debt/EBITDA 1.7 1.5 1.0 0.6 0.3
Source: Company data, Berenberg estimates

25
Hochtief AG
Construction Construction Contractors

Synergies hold the key


It looks increasingly likely that ACS may bid for Abertis through 26 September 2017
Hochtief: Hochtiefs shares declined 7% on 20 September following the
publication of an article referring to a supervisory board meeting.
According to Hochtief, the meeting was part of normal business and
nothing was discussed regarding Abertis. However, the executive board
HOLD
continues to study the possibility of launching a counterbid for Abertis, as Current price Price target
confirmed on ACSs H1 results conference call. We believe a bid is
increasingly likely. We reiterate our Hold rating, upgrading our price target EUR 137.75 EUR 141.00
to EUR141. 25/09/2017 XETRA Close

The aim of a deal is to create value for shareholders by forming a Market cap (EUR m) 8,850
construction/infrastructure group with ample balance-sheet firepower, Reuters HOTG.DE
the technical know-how to manage construction risk and a wealth of Bloomberg HOT GY
operational experience. Hochtief would shift from being a contractor to
having a 75% exposure to concessions if it acquired Abertis. Changes made in this note
Upside potential reliant on substantial growth synergies: We believe Rating: Hold (no change)
Hochtiefs share price could be worth EUR142 following a merger with Price target: EUR 141.00 (135.00)
Abertis due to ~EUR15m of cost synergies. There is potential for 43% EPS Estimates changes
accretion in year one and a 6% dividend yield post-acquisition under this 2017E 2018E 2019E
scenario. However, if the new group were able to effectively deploy capital old % old % old %
Sales 22,581 -0.6 23,707 0.8 25,170 2.2
by investing EUR340m of equity in new greenfield infrastructure projects, PBT 842.66 1.2 911.25 7.6 982.46 10.5
which might otherwise be unattainable, we believe there could be a further EPS 6.89 1.7 7.57 7.4 8.13 10.6
Source: Berenberg estimates
6% upside to EUR150 per share.
Share data
We analyse two ways Hochtief could structure the potential transaction:
The size of the acquisition (~EUR16.4bn) may require Hochtief to issue Shares outstanding (m) 64
Enterprise value (EUR m) 9,116
equity; in our base-case scenario we assume that EUR4bn of equity is
Daily trading volume 200,000
raised under a PSA. Under this scenario we believe the new companys net
debt/EBITDA would increase to 4.6x from -0.5x 2018E. This assumes a
Key data
cash offer of EUR18 per Abertis share and that Cellnex, Hispasat and 20%
of Sanef are sold to help fund the acquisition. If funded with 100% debt, net Price/book value 3.5
debt/EBITDA would be 5.4x 2018E. Net gearing -21.4%

Valuation looks unappealing: On a standalone basis, we value Hochtief at


EUR141 per share, with a further EUR1 per share possible following a
potential deal with Abertis, owing to cost synergies. Even with the addition
of substantial growth synergies we can only see a further 6% upside to our
Hochtief price target to EUR150 per share. As such, the risk-reward profile
is unappealing, and, as a result, we maintain our Hold rating.

Y/E 31/12, EUR m 2015 2016 2017E 2018E 2019E Source: Thomson Reuters Datastream
Sales 21,097 19,908 22,454 23,908 25,736
EBITDA 1,143 1,041 1,210 1,317 1,448
EBITA 729 753 948 1,045 1,153
Net profit 265 361 450 522 578
Y/E net debt (net cash) -819 -704 -978 -1,099 -1,323
Reported EPS 3.11 4.98 6.74 7.92 8.82
Underlying EPS 3.95 5.62 7.01 8.13 8.99
CPS 12.98 10.22 7.94 6.41 8.71
DPS 2.00 2.60 3.24 3.76 4.16
EBITDA margin 5.4% 5.2% 5.4% 5.5% 5.6%
EBITA margin 3.5% 3.8% 4.2% 4.4% 4.5%
Dividend yield 2.7% 2.3% 2.4% 2.7% 3.0%
ROCE 17.3% 22.6% 33.6% 39.5% 48.5%
EV/sales 0.3 0.5 0.4 0.4 0.3
EV/EBITDA 5.2 9.7 8.1 7.3 6.5
EV/EBITA 7.5 12.4 9.6 8.7 7.7
P/E 18.6 24.5 19.7 16.9 15.3
P/E (excluding concessions) 18.0 23.9 19.2 16.5 14.9
Source: Company data, Berenberg

Olivia Peters Saravana Bala Robert Muir James Williamson


Analyst Analyst Analyst Specialist Sales
+44 20 3465 2646 +44 20 3753 3043 +44 20 3207 7860 +44 20 3207 7842
olivia.peters@berenberg.com saravana.bala@berenberg.com robert.muir@berenberg.com james.williamson@berenberg.com

26
Hochtief AG
Construction Construction Contractors

HOLD
Investment thesis
The outlook in Hochtiefs end-markets is positive and supported by
26 September 2017 Reuters HOTG.DE
large infrastructure plans. This has driven accelerated growth in
Bloomberg HOT GY the order backlog. However, we believe this is already reflected in
Current price Price target the share price.
Market cap (EUR m) 8,850 The groups restructuring programme has paid off, but the easy
EUR 137.75 EUR 141.00 margin wins from the unwinding of legacy contracts are over; in our
25/09/2017 XETRA Close EV (EUR m) 9,116 view, margins are approaching normalised levels, and we see
Trading volume 200,000 limited scope for margin uplift.
Free float 28.2% Hochtiefs net cash position provides more optionality for its M&A
Non-institutional shareholders Share performance strategy.
ACS: 71.72% High 52 weeks EUR 172.20 The valuation looks unappealing. Hochtief is trading at a premium
Low 52 weeks EUR 120.50 to ACS. Our SOTP valuation methodology is based on observed
average forward EV/EBIT multiples for Hochtiefs construction
Business description Performance relative to peer group.
Provides construction and related services SXXP Euro Stoxx
mainly in Australia, the US and Europe. TMI
1mth -10.6% -
3mth -17.4% -
12mth -8.2% -3.0%

Profit and loss summary Cash flow summary


EURm 2015 2016 2017E 2018E 2019E EURm 2015 2016 2017E 2018E 2019E
Revenues 21,097 19,908 22,454 23,908 25,736 Net income 265 361 450 522 578
EBITDA 1,143 1,041 1,210 1,317 1,448 Depreciation 410 287 262 272 295
EBITA 729 753 948 1,045 1,153 Working capital changes 359 385 131 110 149
EBIT 729 753 948 1,045 1,153 Other non-cash items 102 73 100 0 0
Associates contribution 79 75 77 80 82 Operating cash flow 1,135 1,106 943 1,044 1,183
Net interest -208 -123 -133 -133 -133 Capex 150 187 383 582 573
Tax -190 -187 -249 -289 -322 FCFE 869 657 510 412 559
Minorities -125 -113 -146 -163 -180 Acquisitions, disposals 883 54 -27 -50 -50
Net income adj. 261 360 450 522 578 Other investment CF 231 67 0 0 0
EPS reported 3.11 4.98 6.74 7.92 8.82 Dividends paid 0 1 240 291 335
EPS adjusted 3.95 5.62 7.01 8.13 8.99 Buybacks, issuance -248 -355 1 0 0
Year end shares 67 64 64 64 64 Change in net debt -1,507 116 -274 -121 -224
Average shares 67 64 64 64 64 Net debt -819 -704 -978 -1,099 -1,323
DPS 2.00 2.60 3.24 3.76 4.16 FCF per share 12.98 10.22 7.94 6.41 8.71

Growth and margins Key ratios


2015 2016 2017E 2018E 2019E 2015 2016 2017E 2018E 2019E
Revenue growth -4.5% -5.6% 12.8% 6.5% 7.6% Net debt / equity -14.8% -10.2% -21.4% -26.3% -34.7%
EBITDA growth -12.4% -8.9% 16.3% 8.8% 10.0% Net debt / EBITDA -0.4 -0.3 -0.4 -0.5 -0.6
EBIT growth -15.7% 3.3% 26.0% 10.2% 10.4% Avg cost of debt 5.7% 5.7% 5.7% 5.7% 5.7%
EPS adj growth 43.8% 42.1% 24.7% 16.1% 10.6% Tax rate 36.3% 30.2% 30.2% 30.2% 30.2%
FCF growth 93.7% -24.3% -22.4% -19.2% 35.7% Interest cover 3.5 6.1 7.2 7.9 8.7
EBITDA margin 5.4% 5.2% 5.4% 5.5% 5.6% Payout ratio 50.6% 46.3% 46.3% 46.3% 46.3%
EBIT margin 3.5% 3.8% 4.2% 4.4% 4.5% ROCE 17.3% 22.6% 33.6% 39.5% 48.5%
Net income margin 1.8% 2.4% 2.7% 2.9% 2.9% Capex / sales 0.7% 0.9% 1.7% 2.4% 2.2%
FCF margin 4.1% 3.3% 2.3% 1.7% 2.2% Capex / depreciation 36.7% 65.3% 146.5% 214.0% 194.3%

Valuation metrics Key risks to our investment thesis


2015 2016 2017E 2018E 2019E Construction activity: A significant change in the outlook in key
P / adjusted EPS 18.6 24.5 19.7 16.9 15.3 markets could impact our earnings estimates.
P / book value 1.6 3.4 3.5 3.5 3.5
FCF yield 17.6% 7.4% 5.8% 4.7% 6.3% Project execution: This is a main determinant of the margin and
Dividend yield 2.7% 2.3% 2.4% 2.7% 3.0% returns. Failure to assess the risk properly may have a negative
EV / sales 0.3 0.5 0.4 0.4 0.3 impact on returns.
EV / EBITDA 5.2 9.7 8.1 7.3 6.5 FX risk: With c92% of 2017E revenue in currencies other than the
EV / EBIT 7.5 12.4 9.6 8.7 7.7 reporting currency (EUR), Hochtief faces translational risk.
EV / FCF 5.1 12.0 14.2 16.6 12.9
EV / cap. employed 2.0 4.0 4.6 4.9 5.4

Olivia Peters Saravana Bala Robert Muir James Williamson


Analyst Analyst Analyst Specialist Sales
+44 20 3465 2646 +44 20 3753 3043 +44 20 3207 7860 +44 20 3207 7842
olivia.peters@berenberg.com saravana.bala@berenberg.com robert.muir@berenberg.com james.williamson@berenberg.com
Hochtief AG
Construction Construction Contractors

Changes to our estimates


Figure 1: Changes to our forecasts

2017 2018 2019


Revenue Current forecast 22,454 23,908 25,736
Old forecast 22,730 23,878 25,256
% difference -1.2% 0.1% 1.9%
PBT Current forecast 828 961 1,069
Old forecast 817 882 974
% difference 1.4% 9.0% 9.8%
Net income Current forecast 450 522 578
Old forecast 434 489 535
% difference 3.8% 6.8% 8.0%

Source: Berenberg estimates

Berenberg versus consensus


Figure 2: We believe our estimates are approximately in line with consensus

2017 2018 2019


Revenue Berenberg 22,454 23,908 25,736
Consensus 22,581 23,707 25,170
% difference -0.6% 0.8% 2.2%
PBT Berenberg 828 961 1,069
Consensus 829 897 968
% difference -0.1% 7.1% 10.5%
Net Income Berenberg 450 522 578
Consensus 443 487 523
% difference 1.6% 7.3% 10.5%
Source: Berenberg estimates

28
Hochtief AG
Construction Construction Contractors

Valuation
We value Hochtief at EUR141 per share. Our SOTP valuation methodology is based on
observed average forward EV/EBIT multiples for Hochtiefs construction peer group. We
value the Americas business at 9x EV/EBITA, the Europe business at 7x EV/EBITA and the
Asia-Pacific business (CIMIC) at 9x EV/EBITA.

Figure 3: Our SOTP valuation suggests Hochtief is worth EUR141per share


EURm
EUR m Revenue EBIT EBIT Multiple Enterprise EV
2018e 2018e margin % 18 value per share

Construction Services 12,167 272 2.2% 9.0x 2,450 38.04


America

Construction Services Asia 9,823 726 7.4% 9.0x 6,530 101.39


Pacific

Europe - Construction 1,602 47 2.9% 7.0x 329 5.11


Services

Total Trading 23,592 1,045 4.4% 8.9x 9,309 144.54


Central costs - 7.0x - -
Minorities (EBIT) (163) 9.0x (1,463) (22.72)
Adjusted net debt 659 10.23
Net deferred tax liabilities (1) (0.02)
Concessions 5.26
Real estate 6.77
Equity value 144.07
Months discount at CoE (3.07)
Price target (EUR)
EUR ) 141.00

Source: Berenberg estimates

29
Hochtief AG
Construction Construction Contractors

Financials
Profit and loss account

Year-end December(EUR m) 2015 2016 2017E 2018E 2019E


Revenue 21,097 19,908 22,454 23,908 25,736
Gross Profit 5,340 2,622 5,683 6,051 6,514
Personnel Costs -3,367 -3,285 -3,705 -3,945 -4,247
Other Operating Income 217 372 429 475 523
Other Operating Expenses -1,203 1,208 1,390 1,541 1,696
Other Non-operating Income 0 0 0 0 0
Income from Associates 79 75 77 80 82
Income from Participating Interests 77 40 41 42 43
Interest Credited to Operations 0 0 0 0 0
Reported EBITDA 1,143 1,032 1,188 1,317 1,448
Reported EBITDA margin 5.4% 5.2% 5.3% 5.5% 5.6%
Additional non-recurring income/(expense) 0 -9 -22 0 0
Underlying EBITDA 1,143 1,041 1,210 1,317 1,448
Underlying EBITDA margin 5.4% 5.2% 5.4% 5.5% 5.6%
Depreciation -340 -244 -213 -223 -246
Impairment -34 -7 0 0 0
Amortisation -40 -37 -48 -49 -49
Depreciation, amortisation and impairment -414 -288 -262 -272 -295
Reported Profit from Operating Activities 575 629 808 923 1,028
Reported EBITA 729 744 926 1,045 1,153
Reported EBITA margin 3.5% 3.7% 4.1% 4.4% 4.5%
Underlying EBITA 729 753 948 1,045 1,153
Underlying EBITA Margin 3.5% 3.8% 4.2% 4.4% 4.5%
Goodwill Amortisation 0 0 0 0 0
Financial Income 93 87 0 0 0
Financial Expense -300 -210 0 0 0
Net Financial Cost -208 -123 -133 -133 -133
Reported EBT 523 621 828 961 1,069
Reported EBT margin 2.5% 3.1% 3.7% 4.0% 4.2%
Non-recurring income/(expense) -77 -57 -25 -20 -16
Underlying EBT 600 678 853 981 1,086
Underlying EBT margin 2.8% 3.4% 3.8% 4.1% 4.2%
Underlying tax -218 -204 -257 -296 -327
Exceptional tax 24 18 8 6 5
Tax Expense -190 -187 -249 -289 -322
Statutory Tax Rate 31.5% 32.0% 32.0% 32.0% 32.0%
Effective Tax Rate 36.3% 30.2% 30.2% 30.2% 30.2%
Profit/(loss) from discontinued operations 0 0 0 0 0
Net Income 333 433 579 671 747
Underlying Net Income 386 473 596 685 758
Minority Interests -125 -113 -146 -163 -180
Net Income to Common Shareholders 208 320 433 509 567
Non recurring Income/(Expenses), Net -56 -41 -17 -14 -11
Underlying Net Income to Common Shareholders 265 361 450 522 578
Average Basic Shares Outstanding (m) 67 64 64 64 64
Weighted Average Diluted Shares Outstanding (m) 67 64 64 64 64
Basic EPS 3.11 4.98 6.74 7.92 8.82
Underlying Diluted EPS 3.95 5.62 7.01 8.13 8.99
Source: Company data, Berenberg estimates

30
Hochtief AG
Construction Construction Contractors

Balance sheet

Year-end December (EUR m) 2015 2016 2017E 2018E 2019E


Inventories 768 559 597 655 701
Financial Receivables 66 56 56 56 56
Trade Receivables 4,537 5,025 4,191 4,476 4,723
Other Receivables and Other Assets 173 450 450 450 450
Current Income Tax Assets 52 31 31 31 31
Marketable Securities 577 463 463 463 463
Cash and Cash Equivalents 2,809 2,847 3,068 3,189 3,413
Assets held for sale 158 33 33 33 33
Total Current Assets 9,140 9,465 8,889 9,353 9,871
Goodwill 0 1,095 1,106 1,117 1,128
Other Intangible Assets 176 212 176 135 89
Property, Plant and Equipment 1,116 1,178 991 1,000 982
Investment Properties 14 12 12 12 11
Equity Method Investments 980 705 732 782 832
Other Financial Assets 124 72 72 72 72
Financial Receivables 679 819 819 819 819
Pensions 0 0 0 0 0
Other Receivables and Other Assets 147 181 181 181 181
Deferred Tax Assets 171 292 292 292 292
Total Fixed Assets 4,130 4,585 4,399 4,428 4,425
Total Assets 13,270 14,050 13,289 13,782 14,296
Other Provisions 818 822 822 822 822
Financial Liabilities 309 1,047 1,047 1,047 1,047
Trade Payables 5,420 6,468 5,803 6,256 6,699
Other Liabilities 277 555 555 555 555
Current Income Tax Liabilities 10 4 4 4 4
Liabilities associated with assets held for sale 33 0 0 0 0
Total Current Liabilities 6,867 8,896 8,231 8,684 9,127
Pensions 353 440 440 440 440
Other Provisions 450 423 423 423 423
Financial Liabilities 2,355 1,633 1,580 1,580 1,580
Other Liabilities 68 37 88 132 167
Deferred Tax Liabilities 30 35 35 35 35
Total Long-
Long-Term Liabilities 3,256 2,569 2,566 2,610 2,645
Share Capital 177 165 165 165 165
Capital Reserves 804 817 817 817 817
Revenue Reserves 1,005 656 313 -27 -367
Treasury Shares -293 -4 -3 -3 -3
Accumulated Other Comprehensive Income 18 19 19 19 19
Retained profits 139 167 392 659 958
Common Equity 2,144 1,824 1,706 1,633 1,592
Minority Interests 1,003 761 804 873 950
Total Equity 3,147 2,585 2,509 2,505 2,542
Total Liabilities and Shareholders Equity 13,270 14,050 13,307 13,799 14,314
Source: Company data, Berenberg estimates

31
Hochtief AG
Construction Construction Contractors

Cash flow statement

EUR m 2015 2016 2017E 2018E 2019E


Profit after Tax 333 433 579 671 747
Depreciation and Amortisation 410 287 262 272 295
Impairment 0 -68 0 0 0
Change in Provisions -2 -82 -46 0 0
Change in Deferred Taxes 61 83 27 0 0
Gain on Disposals of Non-Current Assets -9 -7 -9 -9 -9
Other Non-cash Income and Expenses -24 66 0 0 0
Change in Working Capital 359 385 131 110 149
Changes in Other Balance Sheet Items 8 8 0 0 0
Cash Flow from Operations 1,135 1,106 943 1,044 1,183
Purchases of Intangibles, PPE and Investment Properties -285 -273 -273 -251 -242
Proceeds from Disposal of Intangibles, PPE and Investment Properties 135 85 -110 -331 -331
Net Capital Expenditure -150 -187 -383 -582 -573
Acquisitions and Purchase of Participating Interests -116 -261 -50 -50 -50
Proceeds from Asset Disposals/Divestments 1,464 151 23 0 0
Changes due to Consolidation Changes -465 164 0 0 0
Change in Securities Holdings and Financial Receivables 231 67 0 0 0
Cash Flow from Investing 964 -66 -410 -632 -623
Payment Received from Sale of Treasury Stock -246 -80 1 0 0
Payments for repurchase of treasury stock 1 1 0 0 0
Proceeds from new share issue -6 -277 0 0 0
Payments into Equity by minority shareholders 3 0 0 0 0
Dividend Paid to Common Shareholders 0 0 -167 -208 -242
Minority Dividends Paid 0 -1 -73 -83 -94
Proceeds from Borrowings 786 682 1,107 0 0
Service of Debt -2,308 -936 -1,161 0 0
Net Change In Debt -1,522 -255 -54 0 0
Cash Flow from Financing -2,009 -1,136 -312 -291 -335
Net Change in Cash and Equivalents 90 -96 221 121 224
FX Translation Adjustment 134 67 0 0 0
Transfer to Pension Fund 0 0 0 0 0
Net Change in Cash 224 -29 221 121 224
Source: Company data, Berenberg estimates

32
Hochtief AG
Construction Construction Contractors

Regional sales

Regional Sales (EUR m) 2015 2016 2017E 2018E 2019E


Revenue
Americas Division 10,354 10,906 11,716 12,167 13,018
Asia Pacific Division 8,946 7,303 8,855 9,823 10,763
Airport Division 0 0 0 0 0
Europe Division 1,660 1,597 1,773 1,808 1,845
Headquarters 136 103 110 110 110
Total 21,097 19,908 22,454 23,908 25,736
Revenue Growth
Americas Division 20.2% 5.3% 7.4% 3.8% 7.0%
Asia Pacific Division -21.5% -18.4% 21.2% 10.9% 9.6%
Airport Division - - 39.6% -48.3% 82.2%
Europe Division -15.5% -3.8% 11.1% 2.0% 2.0%
Headquarters 3.0% 3.0% 3.0% 3.0% 3.0%
Total -4.5% -5.6% 12.8% 6.5% 7.6%
Revenue Share
Americas Division 49% 55% 52% 51% 51%
Asia Pacific Division 42% 37% 39% 41% 42%
Airport Division 0% 0% 0% 0% 0%
Europe Division 8% 8% 8% 8% 7%
Headquarters 1% 1% 0% 0% 0%
Total 100% 100% 100% 100% 100%
Reported EBITA
Americas Division 191 220 257 272 298
Asia Pacific Division 628 490 646 726 802
Airport Division 0 0 0 0 0
Europe Division -20 40 44 47 53
Headquarters -71 -5 -21 0 0
Total 729 744 926 1,045 1,153
Reported EBITA Margin
Americas Division 1.8% 2.0% 2.2% 2.2% 2.3%
Asia Pacific Division 7.0% 6.7% 7.3% 7.4% 7.5%
Airport Division - - - - -
Europe Division -1.2% 2.5% 2.5% 2.6% 2.9%
Headquarters -51.9% -5.2% -18.8% 0.0% 0.0%
Total 3.5% 3.7% 4.1% 4.4% 4.5%
Source: Company data, Berenberg estimates

33
Hochtief AG
Construction Construction Contractors

Ratios

Ratios 2015 2016 2017E 2018E 2019E


Sales 21,097 19,908 22,454 23,908 25,736
EBITA 729 753 948 1,045 1,153
NOPAT 464 526 662 730 805
EBITDA 1,143 1,041 1,210 1,317 1,448
Net Income (before minorities) 386 473 596 685 758
FCF 869 657 510 412 559
EPS 3.95 5.62 7.01 8.13 8.99
DPS 2.00 2.60 3.24 3.76 4.16
Payout Ratio 51% 46% 46% 46% 46%
FCF/share 12.98 10.22 7.94 6.41 8.71
Margins
EBITDA Margin 5.4% 5.2% 5.4% 5.5% 5.6%
EBITA Margin 3.5% 3.8% 4.2% 4.4% 4.5%
NOPAT Margin 2.2% 2.6% 2.9% 3.1% 3.1%
Net Margin 1.8% 2.4% 2.7% 2.9% 2.9%
Capital Structure
Market Capitalisation 4,925 8,856 8,850 8,850 8,850
Debt -2,644 -2,670 -2,617 -2,617 -2,617
Cash and Equivalents 3,464 3,374 3,595 3,716 3,940
Net Debt/(Cash) -819 -704 -978 -1,099 -1,323
Pension Obligations 353 440 440 440 440
Provisions 450 423 423 423 423
Adjusted Net Debt -466 -264 -538 -659 -883
Minority Interests 1,003 761 804 873 950
Enterprise Value 5,462 9,354 9,116 9,064 8,918
Capital Employed
Adjusted Net Debt -466 -264 -538 -659 -883
Shareholders' Equity 2,144 1,824 1,706 1,633 1,592
Minorities 1,003 761 804 873 950
Total Equity 3,147 2,585 2,509 2,505 2,542
Total Capital Employed - - - - -
Economic Profit
ROE 12.2% 19.7% 26.4% 32.0% 36.3%
ROCE 17.3% 22.6% 33.6% 39.5% 48.5%
WACC 7.2% 7.2% 7.2% 7.2% 7.2%
Spread 10.1% 15.5% 26.4% 32.3% 41.4%
EVA 272 359 521 597 686
Valuation Ratios
EV/Sales 0.3x 0.5x 0.4x 0.4x 0.3x
EV/EBITA 7.5x 12.4x 9.6x 8.7x 7.7x
EV/EBITDA 4.8x 9.0x 7.5x 6.9x 6.2x
EV/Invested Capital 2.0x 4.0x 4.6x 4.9x 5.4x
P/E 18.6x 24.5x 19.7x 16.9x 15.3x
Adjusted P/E (excluding concessions) 18.0x 23.9x - - -
Dividend Yield 2.7% 2.3% 2.4% 2.7% 3.0%
FCF yield 17.6% 7.4% 5.8% 4.7% 6.3%
P/BV 1.6x 3.4x 3.5x 3.5x 3.5x
Leverage
Adjusted Net Debt/Equity -14.8% -10.2% -21.4% -26.3% -34.7%
Adjusted Net Debt/EBITDA -0.4 -0.3 -0.4 -0.5 -0.6
Source: Company data, Berenberg estimates

34
ACS Actividades Construccion y Servicios
Construction Construction Contractors

Please note that the use of this research report is subject to the conditions and restrictions set forth in the General investment
investment-
stment -related
disclosures and the Legal disclaimer at the end of
of this document.
country--specific disclosures, please refer to the respective
For analyst certification and remarks regarding foreign investors and country
paragraph at the end of this document.

Disclosures in respect of Article 20 of Regulation (EU) No. 596/2014 of the European Parliament and of the
Council of 16 April 2014 on market abuse (market abuse regulation MAR)

Company Disclosures
ACS Actividades Construccion y Servicios no disclosures
Hochtief AG no disclosures
Abertis Infraestructuras SA no disclosures
Atlantia SpA no disclosures

(1) Joh. Berenberg, Gossler & Co. KG (hereinafter referred to as the Bank) and/or its affiliate(s) was Lead Manager or Co-
Lead Manager over the previous 12 months of a public offering of this company.
(2) The Bank acts as Designated Sponsor/Market Maker for this company.
(3) Over the previous 12 months, the Bank and/or its affiliate(s) has effected an agreement with this company for investment
banking services or received compensation or a promise to pay from this company for investment banking services.
(4) The Bank and/or its affiliate(s) holds 5% or more of the share capital of this company.
(5) The Bank holds a long position in shares of this company.
(6) The Bank holds a short position in shares of this company.

Production of the recommendation completed: 26.09.2017, 19:45

Historical price target and rating changes for ACS Actividades Construccion y Servicios in the last 12 months
months

Date Price target - EUR Rating First dissemination GMT Initiation of coverage
14 March 17 36.00 Buy 2017-03-15 07:07 17 March 16
30 August 17 40.00 Buy 2017-08-31 07:02
26 September 17 35.00 Hold -

Historical price target and rating changes for Hochtief AG in the last 12 months

Date Price target - EUR Rating First dissemination GMT Initiation of coverage
06 April 17 126.00 Hold 2017-04-07 07:10 17 March 16
27 July 17 135.00 Hold 2017-07-28 07:10
26 September 17 141.00 Hold -

Historical price target and rating changes for Abertis Infraestructuras SA in the last 12 months

Date Price target - EUR Rating First dissemination GMT Initiation of coverage
20 April 17 15.00 Hold 2017-04-21 07:35 22 June 16
30 August 17 16.00 Hold 2017-08-31 07:02

Historical price target and rating changes for Atlantia SpA in the last 12 months

Date Price target - EUR Rating First dissemination GMT Initiation of coverage
20 April 17 30.00 Buy 2017-04-21 07:35 22 June 16

Click here for a list of all recommendations on any financial instrument or issuer that were disseminated during the preceding 12-
month period.
Berenberg
Berenberg Equity Research ratings distribution and in proportion to investment banking services on a quarterly basis, as
of 1 July 2017

Buy 47.87 % 77.05 %


Sell 13.78 % 0.00 %
Hold 38.35 % 22.95 %

35
ACS Actividades Construccion y Servicios
Construction Construction Contractors

Valuation basis/rating key


The recommendations for companies analysed by Berenbergs Equity Research department are made on an absolute basis for
which the following three-step rating key is applicable:
Buy: Sustainable upside potential of more than 15% to the current share price within 12 months;
Sell: Sustainable downside potential of more than 15% to the current share price within 12 months;
Hold: Upside/downside potential regarding the current share price limited; no immediate catalyst visible.
NB: During periods of high market, sector, or stock volatility, or in special situations, the recommendation system criteria may be
breached temporarily.

Competent supervisory authority


authority
Bundesanstalt fr Finanzdienstleistungsaufsicht -BaFin- (Federal Financial Supervisory Authority),
Graurheindorfer Strae 108, 53117 Bonn and Marie-Curie-Str. 24-28, 60439 Frankfurt am Main, Germany.

General investment-
investment - related disclosures
Joh. Berenberg, Gossler & Co. KG (hereinafter referred to as the Bank) has made every effort to carefully research all information
contained in this financial analysis. The information on which the financial analysis is based has been obtained from sources which
we believe to be reliable such as, for example, Thomson Reuters, Bloomberg and the relevant specialised press as well as the
company which is the subject of this financial analysis.
Only that part of the research note is made available to the issuer (who is the subject of this analysis) which is necessary to properly
reconcile with the facts. Should this result in considerable changes a reference is made in the research note.
Opinions expressed in this financial analysis are our current opinions as of the issuing date indicated on this document. The
companies covered by Berenberg are continuously followed by the analyst. Based on developments with the relevant company, the
sector or the market which may have a material impact on the research views, research reports will be updated as it deems
appropriate.
The functional job title of the person/s responsible for the recommendations contained in this report is Equity Research Analyst
unless otherwise stated on the cover.
The following internet link provides further remarks on our financial analyses:
http://www.berenberg.com/research.html?&L=1&no_cache=1

Legal disclaimer
This document has been prepared by Joh. Berenberg, Gossler & Co. KG (hereinafter referred to as the Bank). This document does
not claim completeness regarding all the information on the stocks, stock markets or developments referred to in it.
On no account should the document be regarded as a substitute for the recipient procuring information for himself/herself or
exercising his/her own judgements.
The document has been produced for information purposes for institutional clients or market professionals.
Private customers, into whose possession this document comes, should discuss possible investment decisions with their customer
service officer as differing views and opinions may exist with regard to the stocks referred to in this document.
This document is not a solicitation or an offer to buy or sell the mentioned stock.
The document may include certain descriptions, statements, estimates, and conclusions underlining potential market and company
development. These reflect assumptions, which may turn out to be incorrect. The Bank and/or its employees accept no liability
whatsoever for any direct or consequential loss or damages of any kind arising out of the use of this document or any part of its
content.
The Bank and/or its employees may hold, buy or sell positions in any securities mentioned in this document, derivatives thereon or
related financial products. The Bank and/or its employees may underwrite issues for any securities mentioned in this document,
derivatives thereon or related financial products or seek to perform capital market or underwriting services.

Analyst
Analyst certification
I, Saravana Bala, hereby certify that all of the views expressed in this report accurately reflect my personal views about any and all
of the subject securities or issuers discussed herein.
In addition, I hereby certify that no part of my compensation was, is, or will be, directly or indirectly related to the specific
recommendations or views expressed in this research report, nor is it tied to any specific investment banking transaction
performed by the Bank or its affiliates.

36
ACS Actividades Construccion y Servicios
Construction Construction Contractors

I, Robert Muir, hereby certify that all of the views expressed in this report accurately reflect my personal views about any and all of
the subject securities or issuers discussed herein.
In addition, I hereby certify that no part of my compensation was, is, or will be, directly or indirectly related to the specific
recommendations or views expressed in this research report, nor is it tied to any specific investment banking transaction
performed by the Bank or its affiliates.

I, Olivia Peters, hereby certify that all of the views expressed in this report accurately reflect my personal views about any and all
of the subject securities or issuers discussed herein.
In addition, I hereby certify that no part of my compensation was, is, or will be, directly or indirectly related to the specific
recommendations or views expressed in this research report, nor is it tied to any specific investment banking transaction
performed by the Bank or its affiliates.

Remarks regarding foreign investors


The preparation of this document is subject to regulation by German law. The distribution of this document in other jurisdictions
may be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe,
any such restrictions.

United Kingdom
This document is meant exclusively for institutional investors and market professionals, but not for private customers. It is not for
distribution to or the use of private investors or private customers.

United States of America


This document has been prepared exclusively by the Bank. Although Berenberg Capital Markets LLC, an affiliate of the Bank and
registered US broker-dealer, distributes this document to certain customers, Berenberg Capital Markets LLC does not provide input
into its contents, nor does this document constitute research of Berenberg Capital Markets LLC. In addition, this document is meant
exclusively for institutional investors and market professionals, but not for private customers. It is not for distribution to or the use of
private investors or private customers.
This document is classified as objective for the purposes of FINRA rules. Please contact Berenberg Capital Markets LLC (+1 617 292
8200) if you require additional information.

Third-
Third-party research disclosures

Company Disclosures
Disclosures
ACS Actividades Construccion y Servicios no disclosures
Hochtief AG no disclosures
Abertis Infraestructuras SA no disclosures
Atlantia SpA no disclosures

(1) BCM or its affiliates owned 1% or more of the outstanding shares of any class of the subject company by the end of the prior
month.
(2) The subject company is or was, during the 12-month period preceding the date of distribution of this report, a client of BCM or
its affiliates. BCM or its affiliates provided the subject company non-investment banking, securities-related services.
(3) BCM or its affiliates received compensation from the subject company during the past 12 months for products or services other
than investment banking services.
(4) During the previous 12 months, BCM or its affiliates has managed or co-managed any public offering for the subject company.
(5) BCM is making a market in the subject securities at the time of the report.
(6) BCM or its affiliates received compensation for investment banking services in the past 12 months, or expects to receive such
compensation in the next 3 months.
(7) There is another potential conflict of interest of the analyst(s), BCM, of which the analyst knows or has reason to know at the
time of publication of this research report.
(8) The research analyst or a member of the research analyst's household serves as an officer, director, or advisory board member
of the subject company
(9) The research analyst or a member of the research analysts household has a financial interest in the equity or debt securities of
the subject company (including options, rights, warrants, or futures).
(10) The research analyst has received compensation from the subject company in the previous 12 months.
* For disclosures regarding affiliates of Berenberg Capital Markets LLC please refer to the Disclosures in respect of section 34b of the
German Securities Trading Act (Wertpapierhandelsgesetz WpHG) section above.

37
ACS Actividades Construccion y Servicios
Construction Construction Contractors

Copyright
The Bank reserves all the rights in this document. No part of the document or its content may be rewritten, copied, photocopied or
duplicated in any form by any means or redistributed without the Banks prior written consent.

2017 Joh. Berenberg, Gossler & Co. KG

38
Contacts

JOH. BERENBERG, GOSSLER & CO. KG Internet www.berenberg.com E-mail: firstname.lastname@berenberg.com

EQUITY RESEARCH CHEMICALS GENERAL MID CAP - UK (cont'd)


AEROSPACE & DEFENCE Sebastian Bray +44 20 3753 3011 Antony Plom +44 20 3207 7908 REAL ESTATE
Ryan Booker +44 20 3753 3074 Rikin Patel +44 20 3753 3080 Edward James +44 20 3207 7811 Kai Klose +44 20 3207 7888
Andrew Gollan +44 20 3207 7891 Benjamin May +44 20 3465 2667 Tina Munda +44 20 3465 2716
Charlotte Keyworth +44 20 3753 3013 CONSTRUCTION Richard Odumosu +44 20 3207 7851
Ross Law +44 20 3465 2692 Saravana Bala +44 20 3753 3043 Owen Shirley +44 20 3465 2731 TECHNOLOGY
Lush Mahendrarajah +44 20 3207 7896 Donald Tait +44 20 3753 3031 Josep Bori +44 20 3753 3058
AUTOMOTIVES Robert Muir +44 20 3207 7860 Georgios Kertsos +44 20 3465 2715
Cristian Dirpes +44 20 3465 2721 Olivia Peters +44 20 3465 2646 GENERAL RETAIL Tammy Qiu +44 20 3465 2673
Alexander Haissl +44 20 3465 2749 Conrad Bartos +44 20 3753 3053
Fei Teng +44 20 3753 3049 DIVERSIFIED FINANCIALS Camilla Mazzolini +44 20 3753 3042 TELECOMMUNICATIONS
Chris Turner +44 20 3753 3019 Michelle Wilson +44 20 3465 2663 Ondrej Cabejsek +44 20 3753 3071
BANKS Charles Bendit +44 20 3465 2729 Nicolas Didio +44 20 3753 3091
Adam Barrass +44 20 3207 7923 HEALTHCARE Usman Ghazi +44 20 3207 7824
Stephanie Carter +44 20 3207 3106 FOOD MANUFACTURING AND H&PC Scott Bardo +44 20 3207 7869 Siyi He +44 20 3465 2697
James Chappell +44 20 3207 7844 Rosie Edwards +44 20 3207 7880 Jakob Berry +44 20 3465 2724 Laura Janssens +44 20 3465 2639
Andrew Lowe +44 20 3465 2743 Philip Patricha +44 20 3753 3039 Alistair Campbell +44 20 3207 7876
Andreas Markou +44 20 3753 3022 Fintan Ryan +44 20 3465 2748 Klara Fernandes +44 20 3465 2718 THEMATIC RESEARCH
Alex Medhurst +44 20 3753 3047 James Targett +44 20 3207 7873 Tom Jones +44 20 3207 7877 Nick Anderson +44 20 3207 7838
Eoin Mullany +44 20 3207 7854 Joseph Lockey +44 20 3465 2730 Oyvind Bjerke +44 20 3753 3082
Peter Richardson +44 20 3465 2681 FOOD RETAIL Michael Ruzic-Gauthier +44 20 3753 3128 Steven Bowen +44 20 3753 3057
Dusan Milosavljevic +44 20 3753 3123 Laura Sutcliffe +44 20 3465 2669 Asad Farid +44 20 3207 7932
BEVERAGES Charles Weston +44 20 3465 2746 Robert Lamb +44 20 3465 2623
Javier Gonzalez Lastra +44 20 3465 2719 GENERAL MID CAP - DACH Paul Marsch +44 20 3207 7857
Matt Reid +44 20 3753 3075 Gunnar Cohrs (DACH + US) +44 20 3207 7894 INSURANCE James Sherborne +44 20 3753 3073
Martin Comtesse +44 20 3207 7878 Trevor Moss +44 20 3207 7893
BUSINESS SERVICES, LEISURE & TRANSPORT Charlotte Friedrichs +44 20 3753 3077 Emanuele Musio +44 20 3207 7916 TOBACCO
Roberta Ciaccia +44 20 3207 7805 Gerhard Orgonas +44 20 3465 2635 Iain Pearce +44 20 3465 2665 Jonathan Leinster +44 20 3465 2645
Najet El Kassir +44 20 3207 7836 Benjamin Pfannes-Varrow +44 20 3465 2620
Stuart Gordon +44 20 3207 7858 Julia Scheufler +44 20 3753 3016 LUXURY GOODS UTILITIES
Josh Puddle +44 20 3207 7881 Mariana Horn +44 20 3753 3044 Oliver Brown +44 20 3207 7922
Kate Somerville +44 20 3753 3081 GENERAL MID CAP - EU core Zuzanna Pusz +44 20 3207 7812 Andrew Fisher +44 20 3207 7937
Joel Spungin +44 20 3207 7867 Aymeric Lang +44 20 3753 3037 Neha Saxena +44 20 3753 3048
Anna Patrice +44 20 3207 7863 MEDIA Lawson Steele +44 20 3207 7887
CAPITAL GOODS Trion Reid +44 20 3753 3113 Robert Berg +44 20 3465 2680
Nicholas Housden +44 20 3753 3050 Laura Janssens +44 20 3465 2639
Sebastian Kuenne +44 20 3207 7856 GENERAL MID CAP - UK Alastair Reid +44 20 3207 7841 ECONOMICS
Philippe Lorrain +44 20 3207 7823 Calum Battersby +44 20 3753 3118 Sarah Simon +44 20 3207 7830 Florian Hense +44 20 3207 7859
Rizk Maidi +44 20 3207 7806 Robert Chantry +44 20 3207 7861 Carsten Hesse +44 20 3753 3001
Jaroslaw Pominkiewicz +44 20 3753 3035 Sam England +44 20 3465 2687 METALS & MINING Kallum Pickering +44 20 3465 2672
Simon Toennessen +44 20 3207 7819 Ned Hammond +44 20 3753 3017 Charlie Clark +44 20 3207 3133 Holger Schmieding +44 20 3207 7889
Ethan Zhang +44 20 3465 2634 Omar Ismail +44 20 3753 3102 Fawzi Hanano +44 20 3207 7910
Ian Osburn +44 20 3207 7814 Yuriy Vlasov +44 20 3465 2674

EQUITY SALES
SPECIALIST SALES UK (cont'd) CRM LONDON (cont'd)
AUTOS & TECHNOLOGY Sean Heath +44 20 3465 2742 Laura Cooper +44 20 3753 3065 Stewart Cook +44 20 3465 2752
Edward Wales +44 20 3207 7815 Gursumeet Jhaj +44 20 3753 3041 Jessica Jarmyn +44 20 3465 2696 Mark Edwards +44 20 3753 3004
BANKS, DIVERSIFIED FINANCIALS & INSURANCE James Matthews +44 20 3207 7807 Madeleine Lockwood +44 20 3753 3110 Tom Floyd +44 20 3753 3136
Iro Papadopoulou +44 20 3207 7924 James McRae +44 20 3753 3036 Rita Pilar +44 20 3753 3066 Tristan Hedley +44 20 3753 3006
Calum Marris +44 20 3753 3040 David Mortlock +44 20 3207 7850 Peter King +44 20 3753 3139
BUSINESS SERVICES, LEISURE & TRANSPORT Eleni Papoula +44 20 3465 2741 COO Office Simon Messman +44 20 3465 2754
Rebecca Langley +44 20 3207 7930 Bhavin Patel +44 20 3207 7926 Greg Swallow +44 20 3207 7833 AJ Pulleyn +44 20 3465 2756
CONSTRUCTION,CHEMICALS, METALS & MINING Kushal Patel +44 20 3753 3038 Fenella Neill +44 20 3207 7868 Matthew Regan +44 20 3465 2750
James Williamson +44 20 3207 7842 Richard Payman +44 20 3207 7825 Michael Schumacher +44 20 3753 3006
CONSUMER DISCRETIONARY Clmence Peyraud +44 20 3465 2651 CORPORATE ACCESS Paul Somers +44 20 3465 2753
Victoria Maigrot +44 20 3753 3010 Christopher Pyle +44 20 3753 3076 Lindsay Arnold +44 20 3207 7821
HEALTHCARE Joanna Sanders +44 20 3207 7925 Jennie Jiricny +44 20 3207 7886
David Hogg +44 20 3465 2628 Mark Sheridan +44 20 3207 7802 Stella Siggins +44 20 3465 2630 EQUITY TRADING
MEDIA & TELECOMMUNICATIONS George Smibert +44 20 3207 7911 HAMBURG
Julia Thannheiser +44 20 3465 2676 Alexander Wace +44 20 3465 2670 EVENTS David Hohn +49 40 350 60 761
THEMATICS Paul Walker +44 20 3465 2632 Charlotte David +44 20 3207 7832 Gregor Labahn +49 40 350 60 571
Chris Armstrong +44 20 3207 7809 Suzy Khan +44 20 3207 7915 Lennart Pleus +49 40 350 60 596
FRANCE Natalie Meech +44 20 3207 7831 Marvin Schweden +49 40 350 60 576
SALES Thibault Bourgeat +33 1 5844 9505 Eleanor Metcalfe +44 20 3207 7834 Omar Sharif +49 40 350 60 563
BENELUX Alexandre Chevassus +33 1 5844 9512 Rebecca Mikowski +44 20 3207 7822 Philipp Wiechmann +49 40 350 60 346
Miel Bakker +44 20 3207 7808 Dalila Farigoule +33 1 5844 9510 Ellen Parker +44 20 3465 2684 Christoffer Winter +49 40 350 60 559
Bram van Hijfte +44 20 3753 3000 Benjamin Voisin +33 1 5844 9507 Sarah Weyman +44 20 3207 7801
LONDON
GERMANY SALES TRADING Edward Burlison-Rush +44 20 3753 3005
Michael Brauburger +49 69 91 30 90 741 SCANDINAVIA HAMBURG Richard Kenny +44 20 3753 3083
Nina Buechs +49 69 91 30 90 735 Mikko Vanhala +44 20 3207 7818 Tim Storm +49 40 350 60 415 Chris McKeand +44 20 3207 7938
Andr Grosskurth +49 69 91 30 90 734 Marco Weiss +49 40 350 60 719 Ross Tobias +44 20 3753 3137
Florian Peter +49 69 91 30 90 740 PARIS
Joerg Wenzel +49 69 91 30 90 743 SWITZERLAND, AUSTRIA & ITALY Vincent Klein +33 1 58 44 95 09
Andrea Ferrari +41 44 283 2020 Antonio Scuotto +33 1 58 44 95 03
UK Gianni Lavigna +41 44 283 2038 ELECTRONIC TRADING
Fabian De Smet +44 20 3207 7810 Jamie Nettleton +41 44 283 2026 LONDON Jonas Doehler +44 40 350 60 391
Jules Emmet +44 20 3753 3260 Yeannie Rath +41 44 283 2029 Assia Adanouj +44 20 3753 3087 Matthias Fhrer +49 40 350 60 597
Robert Floyd +44 20 3753 3018 Benjamin Stillfried +41 44 283 2033 Charles Beddow +44 20 3465 2691 Sven Kramer +49 40 350 60 347
Karl Hancock +44 20 3207 7803 Mike Berry +44 20 3465 2755 Matthias Schuster +44 40 350 60 463

BERENBERG CAPITAL MARKETS LLC Member FINRA & SIPC E-mail: firstname.lastname@berenberg-us.com

EQUITY RESEARCH EQUITY SALES SALES (cont'd) SALES TRADING


Adam Mizrahi +1 646 445 4878 SALES Ryan McDonnell +1 646 445 7214 Michael Haughey +1 646 445 4821
Gal Munda +1 646 445 4846 Enrico DeMatt +1 646 445 4845 Emily Mouret +1 415 802 2525 Christopher Kanian +1 646 445 5576
Kelleigh Faldi +1 617 292 8288 Peter Nichols +1 646 445 7204 Lars Schwartau +1 646 445 5571
CRM Isabella Fantini +1 646 445 4861 Kieran O'Sullivan +1 617 292 8292 Brett Smith +1 646 445 4873
LaJada Gonzales +1 646 445 7206 Ted Franchetti +1 646 445 4864 Rodrigo Ortigao +1 646 445 7202 Bob Spillane +1 646 445 5574
Monika Kwok +1 646 445 4863 Shawna Giust +1 646 445 7216 Ramnique Sroa +1 415 802 2523 Jordan White +1 646 445 4858
Rich Harb +1 617 292 8228 Matt Waddell +1 646 445 5562
CORPORATE ACCESS Zubin Hubner +1 646 445 5572 ECONOMICS
Olivia Lee +1 646 445 7212 Michael Lesser +1 646 445 5575 EVENTS Mickey Levy +1 646 445 4842
Tiffany Smith +1 646 445 4874 Jessica London +1 646 445 7218 Laura Hawes +1 646 445 4849 Roiana Reid +1 646 445 4865

39