RBC sees strong opportunities for value creation in European concessions sector
Repeats to widen distribution. No change to text.
** RBC has an overall positive view on European concessions sector, seeing strong value creation opportunities, as current investment levels have supported growing order books
** It expects infrastructure investment needs to rise, with encouraging mid-term traffic trend forecasts
** It assumes coverage of Vinci SGEF.PA and Eiffage FOUG.PA with "outperform" due to their current attractive valuations and overdiscounted French political risks
** RBC notes Vinci's majority stake in Gatwick, foreseeing potential expansion approval due to Britain's political backdrop, and highlights positive impact on Vinci's contracting business from the energy transition
** It says Eiffage's upside potential is so substantial that even without its 20.55% Getlink shareholding and all concessions except APRR/AREA, the valuation still surpasses the share price
** RBC assumes Getlink GETP.PA with "sector perform" due to more modest 2025 upside vs peers, and expected ferry overcapacity moderation for Eurotunnel next year
** Despite an implied upside above 15%, it assumes Ferrovial FERF.AS with "sector perform" citing more compelling value elsewhere in the sector and uncertainties over valuation of its North American assets
** The brokerage sees an average implied upside of 29% total return across the four names with stocks trading below its estimates
Reporting by Tiago Brandao, Marta Serafinko
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