Intermoney | ACS (Buy, Target Price 40 euros) and Acciona (Buy, Target Price 245 euros) are finalists in the bid to build a new tram line in the city of Calgary, in Canada, involving an investment of nearly 4.2 billion euros. This amount was fixed in 2020, but will undoubtedly increase given the current rise in inflation.
The tram line, which envisages crossing Calgary from north to south, will be 46 km long. Another Spanish company CAF is already present in the manufacturing of the trains. Coincidentally, ACS is part of the consortia which are finalists in the project, where it participates via its US affiliate Flatiron. Acciona has ACS’ construction arm Dragados as its partner.
Valuation:
We will see which of the two proposals wins the project, but we already know that ACS will be participating in it. This company has a works portfolio of over 65 billion euros and is present in the US not just via Flatiron and Dragados, but particularly thanks to its position in Hochtief. So with good reason this market accounts for nearly half of the Group’s revenues, almost completely focused on construction. Meanwhile Acciona has a portfolio of some 12 billion euros. And in the last quarters it has seen how its margins have recovered significantly, without there being, for the moment, any relevant impact from the rise in prices. In this regard, the Group’s chairman José Manuel Entrecanales revealed at end-July that in the preceeding weeks there had in fact been a double-digit decline in prices in the main raw materials.
