STRABAG confirmed at BUY, TP EUR 51.5 - Insignificant estimate changes post Q1, Buy case intact
STRABAG released a sound Q1 22 trading statement that was characterised by slightly double-digit output growth and a new record order backlog of EUR 23.73 bnThe management displayed confidence as regards the full-year guidance of output reaching at least the 2019 record figure of EUR 16.6 bn as well as the EBIT margin target of at least 4% on a sustainable basis (RBIe EUR 17.02 bn and 4.2%, respectively)
We maintain the TP of EUR 51.5 and confirm the BUY rating
The positive stance is based on 1) the scope of a sustained sound operating performance not being derailed by rising building costs and higher interest rates with 2) the confirmed >4% EBIT margin implying sound risk management and STRABAGs ability to pass on cost inflation, 3) the backing of an all-time high order book, 4) sound balance sheet fundamentals with more FCF to be piled up, that all 5) appears substantially underappreciated in the trading multiples even on unaggressive estimates (FY 22-23e P/E 9-10x, EV/EBITDA of 2.3x and 1.6x) and 6) a compelling dividend capacity with yields of almost 5%.
Strabag 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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