Ferrovial studies getting rid of Heathrow: book value assuming a valuation at RAB would be €840 M

Heathrow FerrovialFerrovial studies getting rid of Heathrow

Intermoney | Ferrovial (Hold, Target Price 24 euros/share) would be considering selling its 25% stake in Heathrow, where it has been present since 2006, according to various media outlets on Tuesday.

These same sources say that one of the interested parties in this stake would be the fund Ardian, who would join forces with the Saudi firm PIF. Currently, in addition to Ferrovial, Heathrow’s shareholders are QIA (20%), the Canadian fund CDPQ (12.6%), GIC (11.2%), Alinda Capital (11.2%), CIC (10%) and Universities Superannuation Scheme (10%).

Valuation:

We think it would make a lot of sense for Ferrovial to offload Heathrow. Its stake is not a controlling one and it also contributes a lot of volatility to results, apart from being a clearly mature business. All this just at a time when the company is facing large investments in a more attractive aeronautic project, the New Terminal One at JFK airport in New York. This will involve an investment of over 10 billion dollars, including 2.3 billion of equity.

In H1’22, Heathrow registered passenger traffic of 26.1 million, still 33% below pre-pandemic levels. Meanwhile, revenues were just 12% lower, due to the weighting of that part of the income not directly linked to traffic, as well as the hike in tariffs per passenger. The valuation of the Regulatory Asset Base (RAB) at June 2022 was some 18.4 billion pounds, counting Heathrow with a net debt of 15.6 billion. The RAB includes the commercial activity, in contrast to Aena’s case (Hold, Target Price 140 euros).

The book value of Ferrovial’s stake, assuming a valuation at RAB, would be some 840 million euros, or a little more than 1 euro/share.

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