OHL: A long wait until 2020
Our valuation implies a 43.9% upside potential. Nevertheless, we expect the market to assign no value to the construction business during the next 12 to 18 months until the positives of the strategic plan become visible and that: 1) scarce visibility on 2020 results; 2) poor track record of the business in the last years; and 3) the risk of further cash outflows from legacy projects undermines the perception. Excluding the construction business, our valuation of OHL would be €766mn or €2.56/share (8% below the current price). Our recommendation is Hold.
Obrascon Huarte Lain is an international concession and construction groups based in Spain. Co. maintains significant operations in 30 countries across all five continents. Co. is engaged in hospital and railway construction, transport infrastructure concessions, oil and gas, energy, solids handling and fire protection systems and international contracts. Co.'s operations are organized along four divisions: OHL Concesiones, OHL Construccion, OHL Industrial y OHL Desarrollos. Co. is also engaged in real state project developments of mixed use managed by the international hotel chains.
Bankinter S.A. is a Spanish brokerage firm established in 1989. The company's line of business includes the provision of market research and trading services for Equity and Fixed Income products.
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