Intermoney | Sacyr (SCYR) (Buy, Target Price €4.4 per share) announced on Wednesday after the market closed that it had signed the contract to build the Messina Bridge, which will link the island of Sicily with the rest of Italy. The project concessionaire, Stretto di Messina, is majority-owned by the Italian state and other public administrations. The main contractors include WeBuild, formerly Impregilo, and Sacyr, with a 22% stake, among other companies. The total planned investment, including the bridge itself and other works in both Sicily and Calabria, amounts to €10.6 billion. The bridge will have a suspended span of 3,300 metres, by far the longest in the world, while the deck will be 60 metres wide, including three lanes in each direction and two railway tracks.
Assessment: This is great news for Sacyr, as, in theory, it would increase its portfolio by around €2.3 billion, or nearly 20%, with this project alone. The Messina bridge project has suffered numerous delays in its implementation, as it was initially awarded in 2005, although it seems that the current Italian government’s impetus may be the definitive one. Italy is also a key market for Sacyr, by far the most important in the Group’s concessions business, with annual EBITDA currently exceeding €300 million. However, this project will only contribute from the construction activity, which generates around €100 million in EBITDA per year for Sacyr, less than 10% of the total.
