Intermoney | According to today’s Expansion, ACS (Buy, T.P. 40 euros/share) is beefing up its works portfolio in the US, after signing two new contracts in California with a budget of 800 million euros. Through Flatiron, one of its main subsidiaries in the US along with Turner and Dragados, the Spanish firm has teamed up with local group Myers & Sons to reformulate the current motorway Interestatal 105 (I-105) in California. The budget for the work is over 500 million euros. The second contract, in a joint venture with local firm Stacy and Witbeck, consists of the construction of a bus corridor on a dedicated electric line or one with low energy consumption (Bus rapid transit) with a budget of 300 million euros.
Valuation: Over half of ACS’ revenues are generated in the US, which has become its main market. The company entered the capital of Germany’s Hochtief in 2006, thus becoming the biggest contracter in the US via its subsidiaries Turner and Flatiron. Dragados had previously carried out work in the country and ACS had made various acquisitions, such as that of local builder Schiavonne. The Spanish infrastructure firm has almost a dozen subsidiaries operating in the US. Furthermore, through Abertis and Iridium, ACS also figures amongst the big groups involved in the management of private infrastructures projects in the US. The two new contracts in California come in the wake of those already obtained for the Los Angeles airport and the construction of the state AVE.
We believe the share price offers an opportunity to take a position in the stock (potential revaluation of 80% vs our Target Price of 40 euros). We reiterate our Buy stance.
