SACYR: EXCESSIVE CORRECTION, CHANGE TO BUY (ANÁLISIS BANCO SABADELL)
We change our recommendation to BUY following the stock’s recent drop.After the stock’s sharp drop in the past three sessions (-25%, -26% vs. IBEX 35), our T.P. yields 33% upside. We believe that the market largely prices in the losses stemming from the arbitral award, as the company’s value on the stock market has been reduced by €~300 M in the last three sessions, an amount that exceeds the cash outflows expected as a result of the arbitral award (€ 86 M plus another € 29 M in contingencies) and that should cover a lower likelihood of receiving positive rulings going forward. Let’s forget about Panama. Going forward, the focus will be on the Concessions division (85% of EV), which has a brilliant outlook in terms of creation of value as new assets are put on stream, and as long as interest rates remain at their lows.
Sacyr is the parent company of a group engaged in the acquisition, development and construction of urban properties for their subsequent rental or resale. Co. primarily leases and sells office buildings and complexes, housing units, and shopping centers. Co. is also engaged in the operation of urban car parking facilities. Co. offers services related to the real estate industry such as technical assistance in energy savings, inventory management, architectural design, telecommunications management, property maintenance, as well as gardening and landscaping. Co. also provides consulting services in the real estate fund management sector.
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