ING was gisteren eigelijk heel positief. Koersdoel : 28,50 euro
VolkerWessels: Lowers outlook, retreats from big Infra,
extra €5.5m sea lock provision
Event: Publication of 9M18 results
Conclusion: KVW released its 9M18 trading update this morning. Underlying 9M18
EBITDA came to €167m, c.2% above our forecast (beat of c.5% on the quarter) on a
slightly higher than expected 9M19 revenue level of €4.17bn. Headline EBITDA however
was negatively impacted by a small additional €5.5m loss provision for the sea lock
project. Management lowered its FY18 guidance, expecting FY18 EBITDA to be c.€250m
vs previous guidance of around last year’s €265m level. This deviance is not only
explained by the additional €5.5m provision on the sea lock project but also by the, in
our view, sturdy decision to retreat from the large infra project market (DBFM projects).
KVW expects FY18 EBITDA of the large Dutch Infra division to be €20-25m. We currently
have €30m EBITDA in our 2018F model. The company announced an interim dividend of
€0.28, in line with our expectations (to be paid before the end of the month). The
company smartly guides for a stable YoY final dividend of €1.05 also in line with our
expectations. We expect the stock to react to the lowered guidance today. Maybe the
Dutch central government should read this press release as well, as the largest Infra
player in the Netherlands considers the risks of DBFM projects structurally too high and
will no longer participate in the tenders. Not an easy decision for Volker, but we fully
understand why they took it.
Fig 3 VolkerWessels 9M18 results
(€m) 9M17 9M18F 9M18 Diff. (%) FY17 FY18F
Revenue 3,967.0 4,146.0 4,166.0 0.5 5,714.0 5,924.8
Growth (%) 0.1 4.5 0.5 4.1 3.7
EBITDA incl. participations 155.0 131.7 130.0 -1.3 265.0 267.1
Margin (%) 3.9 3.2 3.1 4.6 4.5
Sealock n/a 31.5 37.0 17.5 67.5 31.5
SAAone and A9 n/a NA NA -35.0 0.0
Adj. EBITDA incl. participations n/a 163.2 167.0 2.3 297.5 298.6
Adj. margin (%) n/a 3.9 4.0 5.2 5.0
Net result 142.0 142.6
Interim DPS (€) 0.28 0.28 0.28 0.0
Final DPS (€) 1.05 1.05
Source: Company data, ING estimates
Highlights:
Order book arrived at €8.88bn at the end of September, a new record high.
Shares trade at 8.0x PER19F of on Bloomberg consensus estimates, now well below
the historic mid-cycle level of the Dutch construction sector of c.9.2x. KVW has
above industry average operating margins, better operating margin stability
through-the-cycle and a healthier financial position compared to its Dutch peers but
the shares suffer materially from negative sentiment post the sea lock loss provision
announcements, as it does again today. We rate the stock BUY. [/u]