Renta 4 | Ferrovial (FER)‘s partial sale of its UK services affiliate Amey to the fund Rubicon Partners would be at an advanced stage, according to the press.
We are talking specifically about the utilities business, focused on electricity and water. This activity invoiced 200 million GBP in 2020 (9.4% of the sales of this division in the UK and 3.5% of total group sales. More residual weighting in terms of EBITDA). So far the price of the operation has not been revealed, but it allows the company to continue to go ahead with the process of divesting non-strategic assets.
Ferrovial has also announced it has won 3 contracts for water projects in Texas, worth close to 280 million dollars (256 million euros), involving the construction of treatment plants. These projects account for 2.1% of its portfolio of projects at end-2021.
Valuation:
We favourably value the divestment in Amey on a qualitative level (pending finding out the price of the deal). So the sale of the facility management and infrastructures maintenance area in the UK, along with the mining services business in Chile, would still be pending. We recall that the area related to waste treatment in the UK has been reclassified as an ongoing activity, as Ferrovial looks to boost that business and sell it off further down the line.
The awarding of the water projects in Texas is positive. The company is gaining strong ground in a business which up to now did not have significant weighting in its portfolio. It thus achieves greater diversification in an activity with an important growth outlook for the future.
We reiterate our positive view of the stock, with an Overweight rating, Target Price under review.
