PORR confirmed at HOLD, TP EUR 17 - Model update: Covid-19 taking its toll

We have revisited our model in the effort to reflect the currently assessable information of the Covid-19 crisis. We have cut FY 20e sharply and FY 21e to a lesser extent. Despite having a comfortable order book, the temporary construction halt in PORRs largest market Austria underscored the vulnerability of the sector. The fact that PORR has revoked the financial targets for FY 20 (prev. flat output and 1.3-1.5% EBT margin) did not come as a surprise. The construction ban in Austria (accounting for ~40% of output) was short-lived and, according to management comments, government measures did not restrict construction works in most of its markets. This is true for Germany, the bulk of the CEE markets (especially Poland, Slovakia, Romania) as well as for Qatar. Construction work in Switzerland also seems to progress as planned, while some limitations are experienced in the Czech Republic (about 50-60% of the business remains unimpacted). Importantly, there are no noteworthy disruptions in the supply chain. Also STRABAG confirmed that the supply chains are intact and that it did not encounter bottlenecks in the availability of construction workers from CEE countries or raw/building materials and machinery. We maintain the HOLD rating but lower the TP to EUR 17 from EUR 18 due to lower forecasts.