Haitong Bank, S.A. - Mota-Engil SGPS SA (EGL) Mota-Engil: Africa boosting valuation

Report

Haitong Bank, S.A.

Nuno Estácio

Mota-Engil: Africa boosting valuation

We reiterate our Neutral rating on Mota Engil (ME) ahead of its FY17 results, which should be out in the coming days. Our FV goes up to Eur3.5/sh from Eur2.5/sh on the back of the strong backlog growth in Africa during 2017. ME has been a star performer in the last 6M months, up 26% vs. the PSI20 2%. We have revisited our case but we think the recent share price performance has mostly discounted the improved prospects. ME has grown its backlog in Africa from c. Eur1.7bn in FY16 to c. Eur2.8bn in 2017E, mostly driven by new contracts in Mozambique, Guinea and the Ivory Coast. It also has, pending financing, large potential contracts like an airport in Rwanda and a railway line in Mozambique. These 2 projects could add more than Eur1.5bn to the backlog. With commodity prices going up and relatively loose monetary conditions worldwide, the outlook looks positive for Africa. In Portugal, the construction outlook also seems to be improving, although no major projects have been awarded yet, but important tenders could be launched soon.

22/03/2018 10 EN

Underlying

Mota-Engil SGPS SA

Mota-Engil SGPS is a holding company. Through its subsidiaries, Co. is engaged in construction, restoration and public work projects in Portugal, Ghana, Germany, Mozambique, Tunisia, Chile, Peru, Angola and Cape Verde. Construction projects undertaken include residential buildings, apartment buildings, commercial buildings, office buildings, factories and other industrial facilities, warehouses, laboratories, hospitals, schools, water reservoirs, subway stations, television transmission towers, highways, bridges and railway trestles. Co.'s subsidiaries are also engaged in the sale of cement.

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PTMEN0AE0005 Euronext Lisbon Portugal

Provider

Haitong Bank, S.A.

Haitong is the first international Chinese investment bank and our goal is to be the primary channel for capital flows into and out of China. During 2015 the Senior Management Team in London was expanded significantly to focus on this objective and to provide a full-service cross-asset markets business coupled with sector-focused investment banking. We work closely with our world-wide network of offices to bring a true depth of understanding to all client situations.

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Analysts

Nuno Estácio

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