PORR confirmed at HOLD, TP EUR 13.5 ? Improved balance sheet main key to re-rating
Following PORRs recent profit warning we maintain the HOLD rating and have revised the target price to EUR 13.5 from EUR 14. We have aligned our FY 20e earnings forecasts with the reduced guidance (pre-tax loss of EUR -45-55 mn, RBIe EUR -46 mn) but as the FY 21e outlook met our estimates, have left the FY 21-22e projections unchanged. While we hope that the latest profit warning actually was the final clean sweep and hence the phase of negative forecasts revisions is coming to an end, we do not think that the foundations for a re-rating are already in place. In our view, the following hurdles need to be cleared with #1 deserving the highest priority: 1) Improving balance sheet quality focussing on a low equity ratio, 2) Finalisation of the Austrian cartel investigations and clarity on the outcome (and a potential fine), 3) Restoration of a track record by capitalising on what the management deems an improved order backlog.PORR is engaged in the building construction, structural and civil engineering, road construction and infrastructure construction. Co. also operates the construction branches of planning, development, execution and operation. Co. also coordinates the supraregional activities of the construction branch subsidiaries. Co. is engaged in the contruction of buildings and industrial plants; revitalizing protected architectural treasures; general contractor services, project planning and development; railway construction; foundation engineering; power-plant, tunnel, underground rail and traffic route construction; environmental engineering and prestressing technology.
The Institutional Equity Research team of Raiffeisen Bank International AG covers 85 stocks from Austria, Central & Eastern Europe with sell-side research and thus levers our local broker status with excellent company relationships. For corporates in Austria, CEE and Western Europe, we offer co-sponsored research, which includes research coverage and marketing activities to investors. Additionally, through our Spotlight Research product we also shed light on leading European small and micro-caps, seeking greater visibility with investors.
The Institutional Equity Research team consists of roughly 15 analysts, both in Vienna and the CEE countries. Our analysts provide long-standing sector expertise in tandem with profound local market know how and a sectoral approach across the entire region.
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