OHL: WAITING FOR THE DELIVERY IN CASH (ANÁLISIS BANCO SABADELL)
Expecting delivery on the cash level. SELL.After a positive operating performance in 2020, we raise our EBITDA and Net Profit’20/23 estimates by +39% and +78%, respectively, on average, but we increase working capital needs by +15% going forward, and thus, we set a new T.P. of € 0.60/sh. (vs. Under Revision; -7.7% upside). Although we cannot rule out a positive share price reaction following these 4Q’20 results (we expect € 22 M of EBITDA and € 109 M of NFD vs. the company’s guidance of € 15 M and € 131 M, respectively), we do not see an appealing yield/risk profile from current levels, and thus, we reiterate our SELL recommendation. We would take a more positive stance if the current risks on Legacy projects disappeared and the company generated positive FCF (starting in 2023 BS(e)) that allowed it to comfortably meet the maturity of its bond issuances over the 2025-26 period.
Obrascon Huarte Lain is an international concession and construction groups based in Spain. Co. maintains significant operations in 30 countries across all five continents. Co. is engaged in hospital and railway construction, transport infrastructure concessions, oil and gas, energy, solids handling and fire protection systems and international contracts. Co.'s operations are organized along four divisions: OHL Concesiones, OHL Construccion, OHL Industrial y OHL Desarrollos. Co. is also engaged in real state project developments of mixed use managed by the international hotel chains.
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