Morningstar | SNC-Lavalin Announces Sale of 10% Stake in Ontario’s Highway 407; Maintaining FVE
We are maintaining our CAD 36 per share fair value estimate for SNC-Lavalin after the no-moat engineering and construction firm announced it will sell a 10% stake in the Highway 407 toll road in the Toronto area to OMERS Infrastructure for CAD 3.25 billion. After the sale, SNC will retain a 6.8% interest in the asset, one of the company’s most profitable investments and a source of consistent cash flow streams. The announcement does not come as a surprise, as management had previously made comments that it was exploring the sale of its stake in the infrastructure asset.SNC-Lavalin had a rough 2018 with multiple challenges including a CAD 1.2 billion charge in its oil and gas segment due to deteriorating relations between Canada and Saudi Arabia, cost overruns on a project in the mining and metallurgy segment, and the uncertainty around the outcome of a court decision regarding bribery and corruption charges related to projects in Libya. In the first quarter of 2019, management decided to cut the quarterly dividend from CAD 0.287 to CAD 0.10 per share in order to reduce debt, and proceeds from the sale of its stake in Highway 407 should help SNC-Lavalin further pay down its debt.
SNC-Lavalin Group is an engineering and construction group, and is engaged in the ownership of infrastructure and in the provision of operations and maintenance services. Co.'s segments are: mining and metallurgy, which provide tailored solutions for projects in the aluminum, gold, copper product sectors, among others; oil and gas, which includes projects for oil and gas and resources companies; power, which includes projects and services in hydro, and nuclear and thermal power generation, among others; infrastructure, which include infrastructure & construction, and operations and maintenance; capital, which invest in equity or subordinated debt into projects for public services.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.