The CAT, the body in charge of determining the composition of the Ibex 35, meets four times a year, once a quarter, but traditionally it is the December and June meetings that present the great news. Last December there were no movements on the board, so it does not seem ruled out that CAT made the decision today to incorporate a new company to replace some other.
Among the possible candidates to be part of the selective, today we are left with Sacyr, a company with many possibilities to be a candidate to become part of the most important Spanish selective. Among the criteria to highlight the accumulated cash and the minimum capitalization, the last company to enter the Ibex was MásMóvil, which in June 2019 moved to the position of Técnicas Reunida.
Current situation of the Ranking
Accumulated Cash (€)
Shaded in yellow, NOT IBEX values
The entry into the selective Ibex 35 is always good news for companies that, in addition to joining indexed portfolios, will have greater visibility in the market.
Regarding Sacyr’s business, in recent years the Group has carried out a deep restructuring giving greater weight to the concession business and greater control of debt risk. Thus, currently, more than 80% of its debt is debt related to Project finance, without recourse against the parent, and therefore debt that is only limited to the project and is paid with the project flows. The recourse debt is approximately 848 million euros, which represents a reduction of 25% in 2019 (-290 million euros) .The group highlights its clear objective of continuing to reduce it quarterly, as it has been doing in recent years. The concession projects are financed in the very long term. The average cost of debt is 3.9%.
On the other hand, it should be noted that the Sacyr group now has more stable, predictable and solid income thanks to the greater weight of its concession business. Currently, close to 80% of EBITDA comes from concession assets, which means very long-term contracts, attractive returns and, above all, with very predictable income and EBITDA. From the company they highlight that only 10% of its assets have demand risk while the remaining 90% are assets under the modality of payment for availability or mitigated risk, knowing from the moment 0 the income they will receive in the life of the projects (average life 27 years). All this makes Sacyr an even stronger and more resilient company in a context like the current one.
In a key figure valuation, Sacyr is listed with a PER 6.82x, with a margin against its historical average and against the average market ratio. If it fulfills forecasts, the undervaluation by PEG will be consistent. High profitability on contributions from partners, ROE 12.15% and on market valuation, ROM> 18%. Yield on dividend-Yield is not negligible, 4% at current prices.
Based on our fundamental assessment, we see potential in the medium / long-term value, and since the Group has lowered its risk level in recent years, our recommendation is positive.
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