STRABAG confirmed at BUY, TP EUR 38 - Model update: Insignificant changes after solid 1H
Despite digesting some negative spillover effects from the Covid-19 pandemic (mostly in domestic operations), STRABAG posted decent 1H 20 results that lived up to our estimates. In the aftermath of the release we reiterate our stance that the group is well equipped to navigate rougher waters and confirm the BUY recommendation and the target price of EUR 38. The fact that the order backlog has reached another peak level of EUR 19.44 bn should provide comfort as regards top-line visibility. Against the backdrop of the high order book and overall solid prospects in its most important markets, we think that STRABAG is well diversified to cope with potentially temporarily weaker pockets. The balance sheet, determined by a net cash position and an equity ratio of 31.7% at the end of 1H 20, provides a strong foundation. A very attractive valuation remains at the centre of the investment case and we deem the stock too cheap to ignore. The stock trades at FY 20-21e EV/EBITDA multiples of 2.0x and 1.9x and EV/EBIT multiples come to 4.1x and 3.7x. P/EsStrabag is a technology group for construction services. Co. provides its services in four operating segments: North + West, which executes construction services of nearly any kind and size with a focus on Germany, Poland, the Benelux countries and Scandinavia; South + East is focused on Austria, Switzerland, Hungary, the Czech Republic, Slovakia, Russia and neighbouring countries as well as on the region South-East Europe; International + Special Divisions, which include on the one hand, the field of tunneling and the concessions business; and Other, which contains the intra-company Central Divisions and Central Staff Divisions.
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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