Report

Sacyr : Annual results and thoughts about the liquidity position

Sacyr published a good set of annual results in our view, except at the bottom line and on the cash flow side (due notably to the costs of the derivatives on Repsol shares). - Note yet that the massive cash position (slightly more than EUR 2bn) at the end of 2017 should not be misunderstood. This comes from the completion of the financing of a mega-project in Italy which is about EUR 1.6bn (out of a global investment of EUR 2.6bn) in the form of two project bonds (non-recourse vis-à-vis the holding). - If we remove the EUR 1.6bn issuance proceeds from the cash position and after applying a 50% discount to the remaining c. EUR 500m cash (NB: Sacyr mentioned in its 2016 annual report that the restricted cash was EUR 258m), we come out with an adjusted cash position of c. EUR 250m. - Besides, we understand that Sacyr could finally manage to sell its 15.5% stake in Itinere during the summer 2018 since the majority of shareholders now agrees on the disposal of the company. Sacyr expects a disposal price of around EUR 200m (there is no debt associated to this stake): half of this amount would be used to finance future equity commitments on concessions and the other half would be transferred to the holding (to repay the corporate debt for example). - We continue to think that Sacyr will need to tap the primary market to refinance the May 2019 convertible bond (EUR 250m outstanding amount) and we believe that the group will be able to do so. Note there is no major capital markets debt to repay before the maturity of the 2019 CB (except the commercial papers with an outstanding amount of c. EUR 86m as at end-2017 but these instruments can be rolled in our view). - We maintain our “Speculative” Buy recommendation on Sacyr’s 2019 CB yielding 3.7% (“Speculative” because of the unsustainable leverage of the group). We continue to think that the absence of any leveraged family holding in the share capital (contrary to some of other Spanish conglomerates), the fact that there is no debt at the concession business that is guaranteed by the holding (contrary to the “non-recourse debt in process” of Abengoa for example), the recent elimination of Repsol share price risk, the rather good coverage of the holding debt by the assets, the potential disposal of the stake in Itinere and the significant equity buffer (market capitalization of c. EUR 1.2bn) are good signals for bondholders. - - >
Underlying
Sacyr S.A.

Provider
Oddo BHF
Oddo BHF

​Oddo Securities provides securities brokerage and research services. The company offers equity, economic, and derivatives research and credit analysis services. It focuses on insurance, automotive, building materials, pharmaceuticals, telecommunications, information technology, and agri-food industries.

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