Acciona: The value in energy is there
Together with our preview for 2Q18 results, we are now updating our estimates for Acciona, incorporating our new Iberian energy price outlook (see Fig 6) and recent asset sales. Despite retaining its holding structure, Acciona has 2/3s of its EV coming from renewable energy assets, which are currently in high demand from several types of investors. However, during 1H18, positive valuation readacross points from deals in renewable assets in Iberia have been offset by concerns about the Infrastructure area, either about the worse than expected working capital (WC) evolution or the loss of the ATLL water concession. Going forward, we expect investors to focus on the attractive implied valuation of the energy area (EV/EBITDA 18E of 7.8x), especially when there is large ticket M&A in Iberian utilities, with the possible second-round effects of CTG’s bid for EDP/EDPR being important to monitor. Regulation wise, despite the recent change in the Spanish government, we maintain our scenario of a lower RoR from 2020 onwards. We lower our FV to Eur81.0 (from Eur87.0), still keeping a 10% holding discount, but maintain a BUY recommendation on Acciona.Acciona is the parent company of a construction group. Co. is engaged in general construction activities in the areas of civil engineering and buildings, including railways, marine and hydraulic works, motorways and airports, town planning, conduits, pavements, parking lots, and industrial and urban buildings. In addition, Co. is engaged in the provision of real estate services, the operation of parking lots, telecommunications, services, ecology and alternative means of energy. Co.'s operations are organized in six business divisions: Infrastructures, Real Estate, Energy, Water, Environmental & Urban Services and Logistic & Transport Services.
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