Intermoney | ACS (ACS) (Buy, Target Price 40 euros) held its AGM last Friday. Chairman Florentino Pérez confirmed that the focus of the group’s future investments will be renewable energies via its joint venture with Vincí, and concessions, using both Iridium and Abertis.
Perhaps the main novelty was ACS’ intention to bring together in one holding all its shares in Abertis. These are currently divided into 30% within the Group, while the remaining 20% is in the hands of Hochtief. This task will be one for new CEO Juan Santamaría.
Valuation:
It seems clear that, after the buy-out of Cimi, the next step in the simplification of the Group should be to unify the stake in Abertis. The most obvious way of doing this would be a transaction between Hochtief and ACS. That said, it would not be surprising if some minority shareholder from the German construction firm warned of a theoretical conflict of interests, given that the former is controlled by ACS. One alternative would be, at least theoretically, that Hochtief handed over its Abertis shares as a dividend. In this way, and via a simple listing, it would be the market which would de facto put a valuation on the concessionary. Book value is around 6.3 billion euros in own funds, and so we believe this would have a favourable impact on ACS’ share price. The drawback is that, at least initially, the Group would not have 50% of Abertis, but just a little over 40% versus Atlantia’s 54%.
