-
Abengoa Spain/ Renewable Energy Company update
Produced by: All ESN research is available on Bloomberg:
“ESNR”
Distributed by the Members of ESN (see last page of this
report)
Investment Research 8 February 2011
Buy
21.10closing price as o f 07/02/2011
27.3627.54vs Target Price: EUR
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg ABG.MC/ABG SM
Daily avg. no. trad. sh. 12 mth 562,418Daily avg. trad. vol. 12
mth (m) 10.56Price high 12 mth (EUR) 21.99Price low 12 mth (EUR)
13.37Abs. perf. 1 mth 22.0%Abs. perf. 3 mth 12.3%Abs. perf. 12 mth
4.1%
Market capitalisation (EURm) 1,909Current N° of shares (m)
90Free float 41%
Key financials (EUR) 12/09 12/10e 12/11eSales (m) 4,147 5,929
7,120EBITDA (m) 750 978 1,112EBITDA margin 18.1% 16.5% 15.6%EBIT
(m) 431 735 845EBIT margin 10.4% 12.4% 11.9%Net Profit (adj.)(m)
170 204 222ROCE 6.0% 8.6% 9.4%Net debt/(cash) (m) 4,097 5,418
5,456Net Debt Equity 3.5 3.9 3.3Net Debt/EBITDA 5.5 5.5 4.9Int.
cover(EBITDA/Fin.int) 3.0 2.2 2.2EV/Sales 1.5 1.2 1.1EV/EBITDA 8.4
7.5 6.9EV/EBITDA (adj.) 8.4 7.5 6.9EV/EBIT 14.7 10.0 9.1P/E (adj.)
12.0 8.1 8.6P/BV 2.5 1.7 1.6OpFCF yield 24.2% -31.0% 28.8%Dividend
yield 0.9% 0.9% 1.0%EPS (adj.) 1.88 2.26 2.45BVPS 8.87 10.93
13.17DPS 0.19 0.20 0.21
vvdsvdvsdy
13.0
14.0
15.0
16.0
17.0
18.0
19.0
20.0
21.0
22.0
Jan 10 Feb 10 M ar 10 Apr 10 M ay 10 Jun 10 Jul 10 Aug 10 Sep 10
Oct 10 Nov 10 Dec 10 Jan 11 Feb 11
ABENGOA IBEX 35 (Rebased)
Source: Factset Shareholders: Inversión Corporativa 56%;
Management 3%;
For company descrip t ion p lease see summary tab le f
ootnote
New structure, strong growth
We have updated our estimates on Abengoa, adapting these to the
new reporting system adopted by the company. Also included are the
projects not previously accounted. Buy recommendation reiterated
and fair value at EUR 27.4/sh.
Concessions make up 30% of the company: Abengoa has created a
new activity called Contracted Off Takes (concessions), grouping 3
activities with recurrent revenues, high margins and strong growth
based on the 2 year backlog. We estimate this activity to represent
26% of the results in 2011, and if we include all the future
projects it would rise to 40% in 2013.
No risks in solar and strong growth in Spain and abroad: the new
thermosolar regulation in Spain has hardly affected Abengoa’s
accounts. At the moment the company has 181 MW in production in
Spain. In 2011 150 MW will begin production in Algeria. In the
future, the company has projects for 1,100MW (500MW in Spain, 500
MW in US and 100 MW in Abu Dhabi), of which 650 MW are financed
(300 MW in Spain, 250 MW in US and 100 MW in Abu Dhabi). Apart from
these projects that 4 fold production capacity, we estimate new
projects to proceed from Desertec.
High voltage lines represent 15% of EBITDA: This activity, apart
from generating recurrent revenues (updated by CPI in Brazil or
America) presents wide margins (EBITDA mg over 75%). Abengoa
estimates doubling its kilometres during the next 3 years (these
projects are completely financed).
High order intake: The E&C division (48% of Abengoa’s
EBITDA) presents an order intake of EUR 9,586 m, around EUR 1,000 m
are maintenance contracts, therefore by removing these, sales would
be covered by 2x. We estimate 95% of 2011 sales to be hedged and
70% in 2012.
Our estimates are -30% below Abengoa’s targets: Abengoa’s goal
is to double 2009 EBITDA in 2013, i.e. up to EUR 1,500 m. Our
estimates and consensus point to EUR 1,200 m.
Fair value EUR27.4/share, upside 30%: We value Abengoa via two
methods: the DCF (EUR 27.1/share) and sum of the parts (EUR
27.6/share).
Consensus will have to revise estimates up: Consensus’ estimates
for 2011 are below our forecasts, -15% in sales and -10% in EBITDA.
In our opinion, consensus will have to improve estimates once 2010
results are released.
Conclusion: We reiterate our Buy recommendation and our fair
value at EUR 27.4/share and 30% upside potential. Abengoa is
creating a perfect mix between activities with a large order intake
and strong cash generation and activities with recurrent revenues,
high margins and strong growths in various projects presented for
upcoming years.
Analyst(s): Sergio Ruiz Martin +34 91 436 7866
[email protected]
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Abengoa
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CONTENTS The New
Abengoa.......................................................................................
3
Concessions
...............................................................................................
4
High Voltage Lines (for further details see Annex I) 4
Solar Plants’ Electricity Generation (for further details see
Annex I) 5
Desalination Plants 6
Estimates on the Concessions Division 7
Commodities Division
................................................................................
9
Bioethanol 9
Industrial Waste Recycling 10
Estimates on the Commodities Division 11
E&C Division
.............................................................................................
13
Estimates on the E&C Division 14
Financial Estimates on Abengoa
............................................................ 16
Consensus Below our Forecasts
............................................................ 18
Valuation: Buy; Upside Potential
30%.................................................... 19
Sum of the Parts Valuation 19
Valuation via DCF 21
Annex I: Concessions Division
...............................................................
22
Abengoa’s High Voltage Lines in Brazil 22
Abengoa’s High Voltage Lines in Peru & Chile 22
The IRR of an Electricity Transmission Concession 23
The Situation of the Solar Plants 24
Thermosolar Regulation in Spain 25
IRR on Thermosolar Projects 26
IRR on a Desalination Plant 27
Annex II: Commodities
Division..............................................................
28
Steel Waste Recycling Process 28
Aluminium Recycling Process 30
ESN Recommendation System
...............................................................
33
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Abengoa
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The New Abengoa Abengoa has restructured activities reducing the
previous 5 (Engineering, Befesa, Telvent, Solar and Bioethanol) to
3 (Concessions, Commodities and E&C). The intention behind
these changes is to differentiate between: 1) E&C: division
with large order intake portfolio, being the company’s cash cow; 2)
Concessions: recurrent revenues and high margins; and 3)
Commodities: activities more exposed to the economic cycle and raw
materials.
Abengoa’s Structure
Abengoa
Concessions E&CCommodities
High Voltage Lines
Solar Generation
Desalination
Bioethanol
Industrial Wastes Recycling
Engineering
Telvent
EPC Water
Solar Engineering
Source: Abengoa
In the following graphs we can see that the E&C activity is
the heavy weight in both sales and EBITDA. However, the Concessions
division stands out with 6% sales but over 25% EBITDA.
Sales Mix 2011 EBITDA Mix 2011
Concessions5%Commodities
32%
E&C63%
Commodities26%
E&C48%
Concessions26%
Source: Caja Madrid Bolsa Source: Caja Madrid Bolsa
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Abengoa
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Concessions
The new Concessions division includes the high voltage lines in
Latin America, electricity generation in solar plants and
desalination plants. Therefore, the Concessions division groups the
activities with recurrent revenues and high margins. The large
project portfolio in this division also endows the division with
strong growth potential.
Structure of the Concessions Division
Concessions Division
High Voltage Lines
Desalination PlantsSolar Generation
LatAm Spain
US
Algeria
China
India
Algeria
Abu Dhabi
Source: Abengoa
High Voltage Lines (for further details see Annex I)
Abengoa’s high voltage transmission lines concessions are
located in Latin America (Brazil, Chile and Peru), Brazil
represents the highest share (85% of the total kms). Abengoa has
been present in LatAm for 40 years (high voltage lines opened to
private investors 10 years ago). Thanks to this move and the
alliances with local partners such as Electrobras, a large number
of electricity transmission concessions were attained, setting
Abengoa as one of the leading private companies in this area and
with the greatest possibilities of being awarded new
concessions.
High voltage lines in Brazil
Brazil is the most important country for Abengoa when referring
to electricity transmission line concessions. Abengoa currently
operates 9 concessions (following the sale of 2 concessions at the
end of 2010 that were equity accounted) with 2,981 kms and three
3,948 kms under construction. During 2012 2 concessions of 1,500
kms will start up and in 2013 Abengoa’s largest concession, Norte
Brasil, will also start up with 2,375 kms.
High voltage lines in Peru and Chile
Abengoa also has electricity transmission lines concessions in
Peru and Chile. The length of the concessions in Chile is only 305
kms and there are no other projects in the portfolio. However, in
Peru there is a 575 km concession (although Abengoa only holds 24%
of the latter) and in 2011 the first concession, ATN, will be
inaugurated in which Abengoa holds 100% and in 2014 ATS reaching a
total of 1,973 kms in the country. In 2013 Peru will represent
around 20% of the total length of concessions in Latin America.
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Abengoa
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We must bear in mind that the construction of transmission lines
in Peru is much more difficult
than in other regions considering the Andes divides the country
in three geographic regions: coast, mountains and jungle. Some
transmission lines are in areas above 4,800 metres.
Abengoa’s Transmission Lines Plan
Source: Abengoa
Solar Plants’ Electricity Generation (for further details see
Annex I)
Abengoa Solar was created in 1984 with the construction of a
solar platform in Almeria (Spain). The division focuses on the
construction and exploitation of CSP solar plants. During the next
25 years the company will grow in Spain and abroad. Demonstrating
this growth is the agreement signed in the US with APS (Arizona
Public Services) to build what will be the largest thermosolar
plant world wide, Solana, as well as the agreement with the
electricity company Pacific Gas & Electric to build a 250MW
plant in the Californian desert. Abengoa is also participating in
the construction of the first 2 combined gas solar cycle hybrid
plants world-wide, in Algeria and Morocco.
Abengoa has also signed the adhesion as a founding partner to
the Desertec Industrial Initiative project. This project is to
produce renewable energies in the desert areas in north Africa and
Middle East for local consumption and exports to Europe.
The Spanish company currently has 181 MW CSP technology in force
(located in Spain). During the next three years these will begin to
produce 500 MW in Spain, 280 MW in US, 100 MW in Abu Dhabi, 150 MW
in Algeria (130 MW are produced via combined cycles and 20 MW by
CSP). We expect the Californian plant to start up before 2015.
Although we do not expect any news financially speaking, we do
expect news on the Desertec project.
Abengoa’s Thermosolar Production Plants
Producing
Spain: PS-10, PS-20, Solnova 1, 2, 4
2011
Spain: Helionergy 1Algeria: Hassi R´mel
Production capacity 381 MW 731 MW 1,181 MW 1,431 MW+110% +92%
+62% +21%
2012
Spain: Helioenergy 2Solacor 1, 2Solaben 1, 2
Abu Dhabi: Shams 1
2013
Spain: Solaben 3, 6Helios 1, 2
USA: Arizona
Before 2015
USA: Calofirnia
Source: Abengoa
ProducingBrazil: NTE, STE, ATE,
ATE II, ATE III, ATE IV-VII
Perú: Redesur (e.a.)
Chile: Trasam (e.a.), Palmucho
2011
Perú: ATN
2012
Brazil: Manaus, Linha Verde
2013
Brazil: Norte de Brazil
Km transmisions lines
3,717 Km 4,387 Km 5,960 Km 8,335 Km 9,207 Km+18% +36% +40%
+10.5%
2014
Perú: ATS
ProducingBrazil: NTE, STE, ATE,
ATE II, ATE III, ATE IV-VII
Perú: Redesur (e.a.)
Chile: Trasam (e.a.), Palmucho
2011
Perú: ATN
2012
Brazil: Manaus, Linha Verde
2013
Brazil: Norte de Brazil
Km transmisions lines
3,717 Km 4,387 Km 5,960 Km 8,335 Km 9,207 Km+18% +36% +40%
+10.5%
2014
Perú: ATS
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Abengoa
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Desalination Plants
Abengoa also builds and operates the desalination plants
(process to eliminate salt from sea water thus obtaining sweet
water). The order intake includes 4 international concessions.
These will start up throughout the period entailing 2010-12. There
is also a fifth concession, Skikda (Algeria) which started up
during the fourth quarter in 2009. There are no plants in Spain, 3
in Algeria, one in India and one in China. The total desalination
capacity will reach 700,000 m3/day. However, Befesa’s consolidated
stakes in these plants do not surpass 50%, thus has a real
production of just over 300,000m3/day. Befesa estimates: 1) Chennai
in India to start up this year, and equity account the 25% stake
held: 2) In mid 2011 or year end, two 200,000 m3 plants in Algeria
to start up (each); and 3) In 2012 the Chinese plant should be
completed (92% stake).
Start Up of Abengoa’s Desalination Plants
ProducingAlgeria: Skikda (34% part.)
India: Chennai (p.e)
2011
Algeria: Honaine (50% part)Tenes (51% part.)
2012
China: Qingdao (92% part.)
m3/día accumulate
200,000 500,000 600,000+150% +20%
Source: Caja Madrid Bolsa. e.a.:equity accounted
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Abengoa
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Estimates on the Concessions Division
All the activities included in the Concessions division present
not only recurrent revenues but a 3 – 4 year projects portfolio. We
therefore estimate a CAGR 10-12e in sales and EBITDA of over +30%
and 75% in EBITDA margin.
As we can see in the following graphs, the high voltage lines
contribute over 50% of the sales and solar generation around 40%.
At the EBITDA level the margins are similar in high voltage lines
and solar, being slightly lower in desalination.
Concessions Sales Mix 2011 Concessions EBITDA Mix 2011
Líneas alta tensión55%
Desaladoras8%
Generación Solar37%
Líneas alta tensión57%
Generación Solar37% Desaladoras
6%
Source: Caja Madrid Bolsa Source: Caja Madrid Bolsa
Our estimates only include projects that will begin production
within the next 12 months and are totally financed. Hence, we
include the following projects that should begin production in
2011: 1) high voltage line in Peru (ATN), although we only
consolidate it six months; 2) in solar generation we include
Solnova 4 (50MW) and Algeria (150 MW), but we do not include
Helioenergy 1 (50MW) due to the floods in Ecija (Spain) we expect
production to be delayed until the beginning of 2012.; 3) We expect
the desalination plant in Honaine to start up in mid-2011 thus will
have an affect in both 2011 and 2012.
As a result we forecast CAGR 10-12e in sales and EBITDA above
30%. Solar generation will be the activity to report the highest
growths, although high tension lines will continue representing
over 50% of the activity.
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Abengoa
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Concessions Division: Results & Estimates
EUR m 2008 2009 2010e 2011e 2012e 2013e 2014e 2015e CAGR
10/12e
Sales 167.5 165.6 282.2 388.7 480.5 494.8 509.8 522.6 30.5% %
var. 77.2% -1.1% 70.4% 37.7% 23.6% 3.0% 3.0% 2.5% High Voltage
Lines 160.0 142.1 199.6 215.6 224.0 232.8 240.8 248.0 5.9% % var.
74.9% -11.2% 40.5% 8.0% 3.9% 3.9% 3.4% 3.0% Solar Generation 7.5
23.5 62.6 142.7 215.7 220.4 226.5 231.4 85.6% % var. 150.0% 213.3%
166.4% 128.1% 51.1% 2.2% 2.8% 2.2% Desalination 20 30.4 40.8 41.6
42.5 43.3 42.8% % var. 52.0% 34.2% 2.0% 2.0% 2.0% EBITDA 120.1
141.4 210.0 290.0 357.8 368.5 379.6 389.3 30.5% % var. 0.0% 17.8%
48.6% 38.1% 23.4% 3.0% 3.0% 2.5% % margin 71.7% 85.4% 74.4% 74.6%
74.4% 74.5% 74.5% 74.5% High Voltage Lines 117.8 119.3 150.5 163.3
169.3 176.0 182.0 187.4 6.1% % var. 1.3% 26.1% 8.5% 3.7% 3.9% 3.4%
3.0% % margin 73.6% 84.0% 75.4% 75.7% 75.6% 75.6% 75.6% 75.6% Solar
Generation 2.3 17.9 47.6 108.5 163.9 167.5 172.1 175.8 85.6% % var.
693.8% 166.4% 128.1% 51.1% 2.2% 2.8% 2.2% % margin 30.0% 76.0%
76.0% 76.0% 76.0% 76.0% 76.0% 76.0% Desalination 4.2 12.0 18.2 24.5
25.0 25.5 26.0 42.8% % var. 0.0% 52.0% 34.2% 2.0% 2.0% 2.0% %
margin 60.0% 60.0% 60.0% 60.0% 60.0% 60.0%
Source: Company. Estimates: Caja Madrid Bolsa
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Abengoa
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Commodities Division
The Commodities division is formed by Bioethanol activity and
Befesa’s Recycled Industrial Wastes activity. As its name
indicates, this division depends heavily on raw materials and thus
is the most volatile of the three divisions.
Structure of the Commodities Division
Commodities Division
Industrial Wastes Recycling Bioethanol
Europe
Brazil
US
Europe
LatAm
Source: Abengoa
Bioethanol
Abengoa is the only bioethanol producer that is present in the
principle markets world wide: Europe, US and Brazil. In Europe it
has 5 plants, 3 in Spain, 1 in France and 1 in the Netherlands,
with a total production capacity of 1,275 m litres. In the US
Befesa has 6 plants and production capacity of 1,420 m litres. In
Brazil the plant produces both sugar and bioethanol (maximum
production capacity of bioethanol 400 m litres).
All the plants are first generation (1G) and Abengoa does not
plan to build any more. For years now, the company has been
investigating 2G and has begun to build a plant in Arkansas to
produce 2G bioethanol that is expected to begin production by the
end of 2013.
Plants Production Capacity (litres m)) Plants in Project Europe
5 1,275 0 Galicia 1 195 Cartagena 1 150 Salamanca 1 200 France 1
250 Rotterdam 1 480 US 6 1,420 0 York 1 210 Colwich 1 95 Portales 1
125 Ravenna 1 330 Indiana 1 330 Illinois 1 330 Brazil 2 400* 0
Source: Abengoa
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Abengoa
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Industrial Waste Recycling
Industrial Waste Recycling includes recycling aluminium, steel
wastes and industrial wastes management.
Recycling Steel Wastes
Befesa is currently the leader in Spain and Europe in recycling
steel wastes, with a much higher market share than peers (60% vs.
its main competitor’s 20%). The company has 8 production plants in
Europe, involved in the valorisation of residual dust in the
smelting and electric air furnaces, the recovery and treatment of
stainless steel wastes and recycling of zinc wastes as well as the
alloys proceeding from the galvanisation industry, metal injection
and construction industries. The company has two affiliates that
provide commercial and logistic services to transport these types
of wastes.
Location of Steel Waste Recycling Plants Capacity Utilisation of
Befesa’s Plants
Source: Befesa Source: Befesa
Recycling Auminium
Befesa has 3 aluminium plants in Spain and 5 salt slag recycling
plants in Europe (3 in Germany, 1 in UK and 1 in Spain). The
company has 160,000 ton aluminium production capacity, and 630,000
tons in the salt slag plants. The aluminium market is very
fragmentised; however, salt slag recycling is distributed among
less than 10 companies in which Befesa is the leader with 60%
market share (main competitors are K&S, RVA and Alustockach).
Befesa has an integral aluminium waste recycling model: on one
hand, it develops the technologies to improve management and waste
treatment, and on the other, it is the only operator not producing
solid wastes within the production process. Befesa recycles
aluminium without generating new wastes within the recycling
process, thus creating the perfect cycle.
Location of Befesa’s Aluminium Plants Salt Slag Market Share in
Europe
Befesa60%K&S
12%
RVA8%
CAPRA6%
Vedani6%
Aleris3%
JBMI2%
Alu-Stockach3%
Source:Befesa * Salt Slag Source: Befesa
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Abengoa
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Industrial Waste Management
The integral industrial waste management activity is specialised
in environmental services, with the goal of recycling the wastes
generated. Befesa’s main competitive advantage is that it is
present throughout the entire industrial waste management cycle,
thus attaining synergies with other links within the chain. The
activities undertaken are: waste management, industrial cleaning,
desulphurization, and plastics management, management of PCB,
de-contaminating land, and replicating the process in Latin
America. Befesa is the Spanish leader in industrial waste
management in terms of volume treated as well as an important
player in Latin American countries where present (Argentina, Chile,
Mexico and Peru). Befesa’s main clients are EDP, Repsol, Petronor
and Cepsa, representing 28% sales.
Estimates on the Commodities Division
The Commodities Division is Abengoa’s most volatile unit as it
depends on raw material prices (gas, oil, cereals, zinc, aluminium,
bioethanol…) and the economic cycle. We estimate CAGR10/12e in
sales of +11.4% and +6.6% in EBITDA:
Commodities Sales Mix 2011 Commodities EBITDA Mix 2011
Bioethanol76%
Recycling24%
Bioethanol65%
Recycling35%
Source: Caja Madrid Bolsa Source: Caja Madrid Bolsa
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Abengoa
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Within the bioethanol activity, Abengoa does not contemplate
building an 1G plant, thus we will
not see strong growths in volumes (except in 2011 which
continues gathering an impact from plants that came into stream in
2010). Regarding results, these will be exposed to both raw
material and ethanol prices. We estimate the strong hikes in the
price of wheat, maize, barley etc to erode margins.
On the other hand, Abengoa has begun the construction of a 2G
plant in Arkansas, expected to start up in 2013. We do not rule out
some of the advances in 2G could be applied to 1G to improve
efficiency in the latter.
In the industrial waste recycling activity the key would be to
recover the utilisation capacity. During recent quarters we have
seen a strong recovery due to the sharp drop seen in 2009. In 2011
we expect capacity to continue rising, but still far from 2008
levels. The optimisation of salt slag plants acquired in Germany at
the end of 2009 will also bolster results.
Estimates on the Commodities Division
EUR m 2008 2009 2010e 2011e 2012e 2013e 2014e 2015e CAGR
10/12e
Sales 1472.9 1433.3 1929.5 2255.6 2396.4 2492.1 2564.5 2638.9
11.4% % var. 21.9% -2.7% 34.6% 16.9% 6.2% 4.0% 2.9% 2.9% Bioethanol
830.1 1010.0 1415.6 1704.4 1807.6 1863.7 1922.6 1984.6 13.0% % var.
35.3% 21.7% 40.2% 20.4% 6.1% 3.1% 3.2% 3.2% Recycled 642.8 423.3
513.9 551.2 588.9 628.4 641.8 654.3 7.0% % var. 8.2% -34.1% 21.4%
7.3% 6.8% 6.7% 2.1% 1.9% EBITDA 242.3 217.7 271.4 287.8 308.2 322.5
332.8 341.6 6.6% % var. 0.0% -10.2% 24.7% 6.0% 7.1% 4.6% 3.2% 2.6%
% margin 16.5% 15.2% 14.1% 12.8% 12.9% 12.9% 13.0% 12.9% Bioethanol
90.7 123.4 176.3 187.2 197.8 203.6 209.7 216.2 5.9% % var. 0.0%
36.1% 42.8% 6.2% 5.6% 2.9% 3.0% 3.1% % margin 10.9% 12.2% 12.5%
11.0% 10.9% 10.9% 10.9% 10.9% Recycled 151.6 94.3 95.2 100.6 110.5
118.8 123.1 125.4 7.7% % var. 0.0% -37.8% 0.9% 5.7% 9.8% 7.6% 3.6%
1.9% % margin 23.6% 22.3% 18.5% 18.3% 18.8% 18.9% 19.2% 19.2%
Source: Befesa. Estimates Caja Madrid Bolsa
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Abengoa
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E&C Division
Within this Activity Abengoa has grouped the EPC (Engineering
Procurement and Construction) from Engineering, Befesa and Solar as
well as Telvent’s activity, i.e. all the activities focused on
engineering, including desalination plants up to the construction
of solar plants, technology sales, solar mirrors and other
companies, and Telvent. Therefore, the principal data in this
division is the backlog portfolio in each activity.
Structure of the E&C Division
E&C
E&C Befesa E&C SolarE&C Engineering
Telvent
Source: Abengoa
Befesa’s EPS will depend on the construction of the desalination
plants projected and mentioned within the Concessions Division, as
well as other projects in the water market. The large water market,
the strong investments (CAGR 09-2015e 5% world wide) taking place
world wide (worth mentioning are Saudi Arabia, India, Rumania,
Algeria, China and Egypt) triggers our estimated sustainable
growths for upcoming years. Internationally speaking, Befesa has
detected 55 projects valued at EUR 9 bn, among which 21 projects
are at very advanced phases (implying an investment of EUR 3,500
m). This gives a small insight regarding the size of this market
and the possibility of maintaining this backlog, as well as the
possibility of attaining more contracts in desalination.
Abengoa holds 40% Telvent, following the stake sold a couple of
years ago. Therefore, and although it seems the sales process has
been stopped, we do not rule out the process re-starting again in
the medium term.
Telvent has reflected sturdy results and high growth thanks to
the geographic and activities diversification (CAGR 05-08 EBITDA
34%). However, and despite the incorporation of DTN at the end of
2008 contributing more recurrent results, the crisis is taking its
toll. Results will improve according to the recovery of the
economic cycle and based on the geographic diversification (50%
Europe, 35% US and 15% LAtAm).
E&C Solar basically leans on the sale of mirrors for
thermosolar plants being built by Abengoa or by third parties. In
our view the strong growths seen in the construction of thermosolar
plants in Spain and US will trigger recurrent revenues in this
activity during the next few years.
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Abengoa
Page 14
Estimates on the E&C Division
In the E&C forecasts, we must bear in mind the estimated EUR
40 m capital gains from the sale of high voltage lines in Brazil,
and that in 2009 EUR 50 m was accounted from the sale of Abengoa’s
stake in Telvent. In EPC we estimate CAGR 10-12e sales of +12.2%
and +4.9% EBITDA.
The E&C figures will be defined according to the performance
of the engineering activity as well as Telvent, because as we can
see in the following graphs these represent almost 80% of the
division’s EBITDA. The division presents a backlog of EUR 9,586 m
of which EUR 982 m are maintenance, covering 2x sales. We estimate
95% sales for 2011 and 70% in 2012.
E&C’s Sales Mix 2011 E&C’s EBITDA Mix 2011
Engineering70%
E&C Befesa7%
Telvent18% E&C Solar
5%
Engineering48%
Telvent23% E&C Solar
23%E&C Befesa
6%
Source: Caja Madrid Bolsa Source: Caja Madrid Bolsa
The high backlog (EUR 9,586 m) will sustain and guarantee
revenues for upcoming quarters. However, in our view the wide
margins seen in the engineering activity in the recent past will be
narrower due to the crisis as well as the halted activity in Spain.
We estimate EBITDA margin in the Engineering activity to reach 8%
in upcoming years.
For Befesa’s E&C we estimate strong growths due to the
strong portfolio as well as high growths in the water activity
world wide. The international activity will gain weight which will
widen margins (in domestic grounds competition is greater than
abroad, hence the margins are smaller in Spain).
In 2011, in E&C Solar we will see a positive effect when
construction on the Solana plant begins. Rioglass, contolled by
Abengoa and the main mirror supplier, may begin construction of a
mirror plant in the US to supply Abengoa and third parties.
Regarding Telvent we must bear in mind that the 2009 figures are
distorted by Abengoa’s stake sale. The capital gains accounted in
2009 were above EUR 50 m. For 2011 we expect Telvent to show
growths thanks to the economic recovery, mainly in US.
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Abengoa
Page 15
Estimates on the E&C Division
EUR m 2008 2009 2010e 2011e 2012e 2013e 2014e 2015e CAGR
10/12e
Sales 2,964.3 3,574.0 3,717.2 4,475.2 4,678.2 4,891.8 5,116.5
5,353.1 12.2% % var. 28.1% 20.6% 4.0% 20.4% 4.5% 4.6% 4.6% 4.6%
Engineering 2,040.6 2,434.0 2,482.7 3,103.4 3,258.5 3,421.4 3,592.5
3,772.1 14.6% % var. 31.9% 19.3% 2.0% 25.0% 5.0% 5.0% 5.0% 5.0%
E&C Befesa 226.8 288.6 288.6 331.9 331.9 331.9 331.9 331.9 7.2%
% var. 32.9% 27.2% 0.0% 15.0% 0.0% 0.0% 0.0% 0.0% Telvent 696.9
759.0 751.4 796.5 844.3 894.9 948.6 1005.6 6.0% % var. 0.0% 0.0%
6.0% 6.0% 6.0% 6.0% 6.0% E&C Solar 92.4 194.5 243.5 243.5 243.5
243.5 243.5 11.9% % var. 110.5% 25.2% 0.0% 0.0% 0.0% 0.0% EBITDA
319.1 459.3 496.8 534.3 546.5 567.4 589.4 612.6 4.9% % var. 0.0%
43.9% 8.2% 7.5% 2.3% 3.8% 3.9% 3.9% % margin 10.8% 12.9% 13.4%
11.9% 11.7% 11.6% 11.5% 11.4% Engineering 236.3 242.7 258.5 257.6
260.7 273.7 287.4 301.8 0.4% % var. 0.0% 2.7% 6.5% -0.3% 1.2% 5.0%
5.0% 5.0% % margin 11.6% 10.0% 10.4% 8.3% 8.0% 8.0% 8.0% 8.0%
E&C Befesa 1.8 22.3 23.1 31.5 33.2 33.2 33.2 33.2 19.9% % var.
0.0% 1138.9% 3.5% 36.6% 5.3% 0.0% 0.0% 0.0% % margin 0.8% 7.7% 8.0%
9.5% 10.0% 10.0% 10.0% 10.0% Telvent 81.0 172.7 109.0 123.5 130.9
138.7 147.0 155.9 9.6% % var. 44.9% 113.2% -36.9% 13.3% 6.0% 6.0%
6.0% 6.0% % margin 11.6% 22.8% 14.5% 15.5% 15.5% 15.5% 15.5% 15.5%
E&C Solar 21.6 106.3 121.8 121.8 121.8 121.8 121.8 7.0% % var.
392.1% 14.5% 0.0% 0.0% 0.0% 0.0% % margin 23.4% 54.7% 50.0% 50.0%
50.0% 50.0% 50.0%
Source:Abengoa. Estimate: s Caja Madrid Bolsa
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Abengoa
Page 16
Financial Estimates on Abengoa
We estimate CAGR 10/12e around 13% in sales and 11.3% in EBITDA.
We must bear in mind these would be much higher if we don’t include
the EUR 40 m capital gains in 2010 proceeding from the sale of the
high voltage lines.
The Concessions division will show the highest growths thanks to
the start up of new solar MWs (as mentioned earlier in this
report), the new high voltage lines in Peru and a desalination
plant in Algeria. We do not include new projects as from 2012 as
the majority to start up in said year are completely financed.
In the E&C division, the strong backlog and the construction
of the solar plant in US will bolster additional sales. At the
operating level the EUR 40 m capital gains accounted in 2010 and
the lower margins suffered by the sector due to the crisis provoke
the less attractive results.
Commodities’ results will depend on the greater bioethanol
volume and economic recovery at world level as well as positive
effects. On the negative side, the strong rise in raw material
prices will affect bioethanol margins.
Abengoa expects to double the 2009 EBITDA results in 2013, which
implies reaching EUR 1,500 m in 2013 and +28% above our
forecasts.
Estimates on Abengoa
EUR m 2008 2009 2010e 2011e 2012e 2013e 2014e 2015e CAGR
10/12e
Sales 4604.7 5172.9 5928.9 7119.6 7555.2 7878.8 8190.8 8514.6
12.9% % var. 27.3% 12.3% 14.6% 20.1% 6.1% 4.3% 4.0% 4.0%
Concessions 167.5 165.6 282.2 388.7 480.5 494.8 509.8 522.6 30.5% %
inc. 77.2% -1.1% 70.4% 37.7% 23.6% 3.0% 3.0% 2.5% Commodities
1472.9 1433.3 1929.5 2255.6 2396.4 2492.1 2564.5 2638.9 11.4% %
var. 21.9% -2.7% 34.6% 16.9% 6.2% 4.0% 2.9% 2.9% E&C 2964.3
3574.0 3717.2 4475.2 4678.2 4891.8 5116.5 5353.1 12.2% % var. 20.6%
4.0% 20.4% 4.5% 4.6% 4.6% 4.6% EBITDA 681.5 818.4 978.3 1112.2
1212.5 1258.3 1301.8 1343.4 11.3% % var. 0.0% 20.1% 19.5% 13.7%
9.0% 3.8% 3.5% 3.2% % margin 14.8% 15.8% 16.5% 15.6% 16.0% 16.0%
15.9% 15.8% Concessions 120.1 141.4 210.0 290.0 357.8 368.5 379.6
389.3 30.5% % var. 0.0% 17.8% 48.6% 38.1% 23.4% 3.0% 3.0% 2.5% %
margin 71.7% 85.4% 74.4% 74.6% 74.4% 74.5% 74.5% 74.5% Commodities
242.3 217.7 271.4 287.8 308.2 322.5 332.8 341.6 6.6% % var. 0.0%
-10.2% 24.7% 6.0% 7.1% 4.6% 3.2% 2.6% % margin 16.5% 15.2% 14.1%
12.8% 12.9% 12.9% 13.0% 12.9% E&C 319.1 459.3 496.8 534.3 546.5
567.4 589.4 612.6 4.9% % var. 0.0% 0.0% 0.0% 7.5% 2.3% 3.8% 3.9%
3.9% % margin 0.0% 0.0% 13.4% 11.9% 11.7% 11.6% 11.5% 11.4%
Source: Abengoa. Estimates: Caja Madrid Bolsa
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Abengoa
Page 17
Abengoa is currently in a strong investment phase caused by all
the opportunities arising,
namely in the thermosolar market in Spain and abroad, and in the
high voltage line concessions in Latin America. This brings about
the very high debt ratios and weight of financial results in
EBITDA: In our estimates, we only include those projects to start
up in 2011, hence our estimated debt and capex are below the
company’s. As we can see in the following graphs, if Abengoa
reduces investments in new projects, the cash flow would surpass
capex and the weight of financial results over EBITDA would shrink
considerably.
Capex vs Cash Flow Debt/EBITDA vs Financial Rslts/EBITDA
0
500
1000
1500
2000
2500
2008 2009 2010e 2011e 2012e 2013e 2014e 2015e
CAPEX Cash Flow
0
1
2
3
4
5
6
7
2008 2009 2010e 2011e 2012e 2013e 2014e 2015e-50%
-45%
-40%
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
Debt/EBITDA Financial results/EBITDA Source: Caja Madrid Bolsa
Source: Caja Madrid Bolsa
In the following table we can see the recent debt data released
by Abengoa. We can appreciate that the company has EUR 2,500 m
cash, that much of the debt is non-recourse, and it complies with
the 3x corporate debt/corporate EBITDA target. The average cost of
debt comes to 6.5%.
Results at June 2010 EBITDA 897 Corporate EBITDA 707 Net
Corporate Debt (with recourse) 1,736 Non-recourse Debt 3,430 Debt
pre-start up 2,517 Cash 2,805 Total Net Det 5,166 Corporate Debt/
Corporate EBITDA 2.5 Total debt / EBITDA 5.8 Total debt (ex
pre-start up) / EBITDA 3.0 Source: Abengoa
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Abengoa
Page 18
Consensus Below our Forecasts
Our 2010 and 2011 estimates are above consensus. We believe
consensus will have to increase estimates for 2010 and 2011 in
upcoming months.
The main difference between our estimates and consensus is found
at the operating level, in which our estimated EBITDA for 2010 is
15% higher (part of this difference could be because consensus does
not include the capital gains from the high voltage lines sale) and
11.4% higher for 2011. As from 2011, we do not include new projects
thus we estimate less investments and hence higher cash flow,
therefore the estimates are not easily comparable. We must observe
that both consensus and our forecasts are far from Abengoa’s
estimated EUR1,500 m in 2013 (specifically speaking, 15% to
20%)..
Financial Estimates on Abengoa EUR m Caja Madrid Bolsa’s
Estimates Consensus 2010e 2011e 2012e 2013e 2010e 2011e 2012e 2013e
Sales 5,928.9 7,119.6 7,555.2 7,878.8 5,535 6,366 6,935 7,555 %
var. 20.1% 6.1% 4.3% 15.0% 8.9% 8.9% EBITDA 978.3 1,112.2 1,212.5
1,258.3 853 998 1,101 1,282 % var. 13.7% 9.0% 3.8% 17.0% 10.3%
16.4% Net Profit 204.2 222.1 299.0 349.5 203.1 240.3 249.7 294.8 %
var. 8.8% 34.6% 16.9% 18.3% 3.9% 18.1%
Source: FactSet
Difference Between Consensus & CMB Estimates 2010e 2011e
2012e 2013e Sales 7.1% 11.8% 8.9% 4.3% EBITDA 14.7% 11.4% 10.1%
-1.8% Net Profit 0.5% -7.6% 19.7% 18.6%
Source: FactSet
The following graphs show how consensus increased estimated
sales and EBITDA for upcoming years. Despite this, as mentioned, we
believe the estimates will have to be revised up. The improving
outlook could take place after 2010 results (February 24).
Revision of Consensus’ Sales on Abengoa Revision of Consensus’
EBITDA on Abengoa
500
600
700
800
900
1,000
1,100
1,200
Aug-
07Oc
t-07
Jan-
08Ma
r-08
May-0
8Ju
l-08
Sep-
08No
v-08
Jan-
09Ma
r-09
May-0
9Ju
l-09
Sep-
09No
v-09
Jan-
10Ma
r-10
May-1
0Ju
l-10
Sep-
10No
v-10
Jan-
1145
Day
s
2010 2011 2012
4,000
4,500
5,000
5,500
6,000
6,500
7,000
7,500
Aug-
07Oc
t-07
Jan-
08Ma
r-08
May-0
8Ju
l-08
Sep-
08No
v-08
Jan-
09Ma
r-09
May-0
9Ju
l-09
Sep-
09No
v-09
Jan-
10Ma
r-10
May-1
0Ju
l-10
Sep-
10No
v-10
Jan-
1145
Day
s
2010 2011 2012 Source: FactSet Source: FactSet
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Abengoa
Page 19
Valuation: Buy; Upside Potential 30% We value Abengoa via the
DCF and sum of the parts methods. The average of the two results in
a fair value of EUR 27.4/share. The implied ratios to this fair
value are 7.5x EV/EBITDA 11e and 11x P/E11e, below the company’s
trailing ratios (average 10 years) of 8.2x and 15x respectively.
Abengoa currently trades at an EV/EBITDA ratio of 6.9x and P/E
8.6x.
Sum of the Parts Valuation
Our sum of the parts valuation results in EUR 27.65/share. The
heavy weight division in EV is Concessions followed by E&C and
then Commodities. Below we include the EV breakdown.
EV Breakdown per Division Sum of the Parts
Concessions40%
E&C34%Commodity
26%
Concessions 3,328 High voltage lines 1,517 Solar electricity
generation 1,612 Desalination plants 200Commodities 2,204
Bioethanol 1,404 Recycling de residuos industriales 800E&C
2,893 E&C Engineering 1,803 E&C Befesa 211 Telvent 879
E&C Solar 913EV Total 8,425- Debt Net 5456- Others 468Market
Cap 2,501Nº shrs. 90.47Target price 27.65
Source: Caja Madrid Bolsa Source: Caja Madrid Bolsa
Valuation of the Concessions Division
In the Concessions Division, the high voltage lines and solar
energy generation practically makes up 95% of the EV. The rest
comes from desalination plants.
We value solar electricity generation via the DCF on a 50 MW
thermosolar plant, with 65% leverage, 2.5% annual growths, EBITDA
margin above 75% and 7.3% WACC (for further details see Annex I:
IRR of a thermosolar project). Applying the result on thermosolar
plants included in our estimates, the EV comes to EUR 1,612 m.
EV Solar 50 MW 312.94 MW Part. ABG MW ABG PS-10 11 100% 11 PS-20
20 100% 20 Solnova 1 50 100% 50 Solnova 2 50 100% 50 Solnova 4 50
100% 50 Algeria 150 51% 77 Total MWs owned 258 EV generation solar
1,612
Source: Caja Madrid Bolsa
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Abengoa
Page 20
Our estimates include all the high voltage lines to be completed
in 2011 (those globally
consolidated or equity accounted). With this hypothesis we reach
an EV of EUR 1,517 m from the concessions activity, which equals
EV/EBITDA 11e 8.8x.
To carry out this analysis we realised a DCF on each concession
using: 4% risk premium, 4.5% risk free premium and 10% cost of debt
(further details in Annex I: IRR on high voltage lines). We do not
estimate a terminal value, although we expect Abengoa to continue
managing the lines (in Peru the lines belong to Abengoa) as we
prefer to be cautious and foresee management of the lines to end at
the end of the start up period.
On the other hand, on the Brazilian concessions we apply a 40
year amortisation on assets and 34% tax rate, in Chile 25 years of
amortisation and 17% tax rate, and in Peru 30 years amortisation
and 30% tax rate.
We also estimate the possible sale of equity accounted
concessions in Peru and Chile in 2011, as the company had done at
the end of 2010 in Brazil.
Valuation of High Voltage Lines EV IRR NTE 144 19.5% STE 76
17.3% ATE 291 16.7% ATE II 443 10.1% ATE III 228 7.8% ATE IV-VII
133 2.3% Palmucho 6 6.1% ATN 168 4.5% Total Global Consolidation
global 1488 11.4% Redesur 17.0 12.5% Trasam 11.7 13.2% Total Equity
Accounted 29 12.8% TOTAL Lines Start Up 1,517 12.1%
Source: Caja Madrid Bolsa We value the desalination plants via
the DCF method, on a base 100,000 m3 plant, with 80% leverage, 2%
annual growth, 60% EBITDA margin and 5.5% WACC (more details in
Annex I: IRR desalination plants). Applying the result on the 3
plants included in our estimates (Skikda and Honaine globally
consolidated) and Chennai (equity accounted) results in EV EUR
199.6 m.
Valuation of Desalination Plants EV per 100,000 m3 (EUR m) 180
m3/day Part. ABG m3/day ABG Skkida 100,000 34% 34,000 Chennai
100,000 25% 25,000 Honaine 200,000 26% 52,000 Tenes 200,000 Qingdao
100,000 TOTAL owned BMA 111,000 EV Concessions 199.6
Source: Caja Madrid Bolsa
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Abengoa
Page 21
The rest of the activities included in the Commodities and
E&C Divisions, are valued via
comparatives:
• Industrial Waste Recycling: Comparatives are: Interseroh,
Schnitzer, and Sims, applying 8x EV/EBITDA’11e.
• Bioethanol: Peers Agrana, ADM, Biofuel, Biopetrol, Clean
Energy Brazil, CropEnergies, Pacific Etanol, and Verbio applying
7.5x.
• In E&C Engineering 7x EV/EBITDA.
• In E&C Befesa we use the average between: 1) comparison
with Hyflux and 50% discount due to size (EV/EBITDA 8.6x) and 2)
sale of E&C Befesa to Abengoa
• Telvent: Valued as the average between market prices and
recent transactions realised by the company on DTN at a discount
(EV/EBITDA 6.5x).
• E&C Solar: We apply a slightly higher ratio than that used
for E&C Engineering (7.5x EV/EBITDA).
Valuation EV Valuation Industrial Waste Recycling 800
Comparative Bioehtanol 1404 Comparative E&C Engineering 1803
Comparative E&C Befesa 211 Comparative, recent transactions
Telvent 879 Comparative, recent transactions, market price E&C
Solar 913 Comparative
Source: Caja Madrid Bolsa
Valuation via DCF
Our DCF valuation shows a fair value of EUR 27.1/share. To reach
this result, we applied g = 0%, WACC 10.8% (risk free interest rate
of 4.5%, 4% risk premium and beta 1.5).
Valuation on Abengoa CASH FLOW (EUR m) 2009 2010e 2011e 2012e
2013e 2014e 2015e VREBIT 431 735 845 938 975 1011 1044
1044Normative Tax Rate 22% 15% 20% 20% 20% 20% 20% 20%NOPLAT 335
625 676 750 780 809 835 835Depreciation&other provisions 201
244 267 275 283 291 299Gross Operating Cash Flow 536 868 943 1025
1063 1100 1135Capex -2142 -1440 -791 -271 -274 -276 -278Change in
Net Working Capital 219 -832 244 -204 39 40 44Cash Flow to be
discounted -1387 -1404 395 551 828 864 901 835
DCF VALUATION (EUR m)WACC 10.8% 10.8% 10.8% 10.8% 10.8% 10.8%
10.8% 10.8%Discount Rate factor 1.00 0.90 0.81 0.74 0.74Discounted
Cash Flow 551 748 704 663Cumulated DCF 551 1,298 2,003 2,666
WACC & DCF ANALYSISFree Risk Rate (10y Bonds) 4.5% Cumulated
DCF 2,666 - Net Financial Debt 5,456Beta 1.50 Perpetual Growth (g)
0.0% - Minorities 468Risk Premium 4.0% Normalised Annual CF 835 +
Associates 0Cost of Equity 10.5% Terminal Value 7,756 0Cost of Debt
12.0% Disc. Rate of T.Value 0.74 0Debt Tax Rate 8% Discounted T.
Value 5,707Cost of Debt net 11.0% Market Value (EUR m) 2,448Target
Gearing (D/E) 50% Financial assets 0.0 Number of shares (m) 90.47%
Ke 50% Enterprise Value (EUR m) 8,372 Fair Value (EUR/sh.)
27.1Normative Tax Rate 20%WACC 10.8%Source: Caja Madrid Bolsa
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Abengoa
Page 22
Annex I: Concessions Division
Abengoa’s High Voltage Lines in Brazil
Brazil is Abengoa’s most important region when referring to high
voltage lines concessions. Currently there are 9 in force
(following the sale of 2 that were equity accounted at the end of
2010) with 2,981 kms and 3 under construction (3,948kms). During
2012 2 concessions of 1,500 kms will start up and the largest of
Abengoa’s concessions, Norte Brasil, of 2,375 kms will start up in
2013.
Lengths
(Km) ABG’s Stake
Total Invest. (EUR m)
ABG’s Invest. (EUR m)
Partners Start Up
Expansion* 575 25% 119 30 Cobra, Elecnor, Isolux Dec-02 NTE 386
50% 125 63 Dragados Jan-04 ETIM* 212 25% 62 16 Cobra, Elecnor,
Isolux Jul-04 STE 366 50% 71 36 Dragados Jul-04 ATE 370 75% 146 110
Oct-05 ATE II 937 100% 344 344 Dec-06 ATE III 459 100% 222 222
Nov-08 ATE IV 85 100% 77 77 Aug-10 ATE V 132 100% 61 61 Nov-09 ATE
VI 131 100% 82 82 Jul-09 ATE VII 115 100% 42 42 Aug-09 Manaus 586
51% 364 186 Electronorte, Chesf 1Q12 Norte Brasil 2,375 51% 622 317
Electronorte, Electrosul 1Q13 Linha Verde 987 51% 182 93
Electronorte, CTEEP 1Q12 TOTAL 7,716 2,519 1,676
Source: Abengoa *Sold in October 2010
Abengoa’s High Voltage Lines in Peru & Chile
Abengoa holds electricity transmission line concessions in Peru
and Chile. The length of the concessions in Chile is only 305 kms
and there are no projects in portfolio. However, in Peru Abengoa
participates in a 575 km long concession (although only with 24%),
and in 2011 will inaugurate ATN, the first concession in Peru in
which it will hold 100% as well as ATS in 2014 reaching a total of
1,973 kms in the country. In 2013 Peru will represent around 20% of
Abengoa’s concessions in Latin America.
We must consider that the construction of transmission lines in
Peru is more difficult than in other regions because the Andes
divide the country in three different geographic regions: coast,
mountain range and jungle. Therefore there are transmission lines
in areas above 4,800 metres.
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Abengoa
Page 23
Length (Km) ABG’s Stake Total Investment
(EUR m) ABG’s Investment
(EUR m) Partners Start Up
Peru Redesur 575 24% 49 12 REE, ACS Mar-01 ATN 670 100% 209 209
Nov-10 ATS 872 100% 318 318 Jul-13 TOTAL Peru 1,973 576 539 Chile
Trasam 295 20% 39 8 GE, EFS 1996/2003 Palmucho 10 100% 6 6 Nov-07
TOTAL Chile 305 45 14
Source: Abengoa
The IRR of an Electricity Transmission Concession
We estimate the IRR of an electricity transmission concession to
be just above 12%. To reach this conclusion we realised an analysis
on a 100 km concession, with an average investment of EUR 0.39 m
per kilometre (average investment per km in concessions in force
owned by Abengoa and globally consolidated), 59% leverage (average
leverage of the concessions operated by Abengoa and globally
consolidated), 30% tax rate (in Brazil 34% and Chile 17%) and CPI
2% (average between the US estimated HCPI and CPI).
Hypotheses Number of Kms 100 Invesment / km 0.39 Investment (EUR
m) 39.39 Leverage 59.2% Tax rate 30.0% CPI 2.0% Source: Caja Madrid
Bolsa
We estimate EUR 7.3 m revenues per 100 kms (average of 2010e
sales and kms in operating lines at 2011) and the 2% growth rate
(in Abengoa’s transmission lines, i.e. in Brazil and Peru, these
are updated via HCPI in Brazil and US inflation in Peru’s case)
during the next 30 years. We do not estimate changes to the forex
rate.
EBITDA margin of 75% estimated, similar to the average margins
in Abengoa’s globally consolidated concessions, 30 year
amortisation (concession life span) although it can be extended. In
Brazil concessions are for 40 years and in Chile for 20 years)
resulting in over 56% EBIT margin. Estimating a 30% tax rate (34%
in Brazil, 17% in Chile) and 30 years cash flow, not considering
the terminal value, the IRR on the project would be 12.1%. This IRR
will obviously vary according to the promoters experience, where
the concession is built, CPI fluctuations, technological aspects,
maintenance costs….
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Abengoa
Page 24
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9
Year 10 Nº Kms 100 100 100 100 100 100 100 100 100 100 Sales per Km
0.07 0.07 0.08 0.08 0.08 0.08 0.08 0.08 0.09 0.09 Revenues 7.32
7.47 7.62 7.77 7.92 8.08 8.24 8.41 8.58 8.75 % var. 2.0% 2.0% 2.0%
2.0% 2.0% 2.0% 2.0% 2.0% 2.0% EBITDA 5.50 5.61 5.72 5.84 5.96 6.07
6.20 6.32 6.45 6.58 % var. 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
2.0% % margin 75.2% 75.2% 75.2% 75.2% 75.2% 75.2% 75.2% 75.2% 75.2%
75.2% EBIT 4.19 4.30 4.41 4.53 4.64 4.76 4.88 5.01 5.13 5.26 Tax on
EBIT -1.26 -1.29 -1.32 -1.36 -1.39 -1.43 -1.46 -1.50 -1.54 -1.58
NOPLAT 2.93 3.01 3.09 3.17 3.25 3.33 3.42 3.51 3.59 3.68
Amortisation -1.31 -1.31 -1.31 -1.31 -1.31 -1.31 -1.31 -1.31 -1.31
-1.31 Free Cash Flow 4.25 4.32 4.40 4.48 4.56 4.65 4.73 4.82 4.91
5.00 30 year IRR 12.06%
Source: Caja Madrid Bolsa
The Situation of the Solar Plants
As mentioned in this report, Abengoa has 181 MWs in production.
Despite the fact we only include the new MWs to begin production in
2011, i.e. 200 MW (50 MW in Spain and 150 MW in Algeria), the
company has another 5 plants fully financed in Spain (250 MW), one
in US (280 MW) and another one in Abu Dhabi (20 MW), to start up in
the next couple of years. We expect another 200 MWs to be financed
in Spain in 2011 and at the end of the current year or beginning of
2012 another plant in US (California 250 MW).
Capacity (MW) Abengoa (%) Location Start Up Finance Partner
Spain Solnova 1 50 100 Seville 2Q10 European Banks Solnova 3 50 100
Seville 2Q10 European Banks Solnova 4 50 100 Seville 3Q10 European
Banks Helionergy 1 50 50 Ecija 4Q11 Financed E.On at 50% Helionergy
2 50 50 Ecija 1Q12 Financed E.On at 50% Solacor 1 50 74 El Carpio
(Córdoba) 1Q12 Financed JGC Corporation Solacor 2 50 74 El Carpio
(Córdoba) 2Q12 Financed JGC Corporation Solaben 1 50 70 Cáceres
4Q12 Financed Itochu 30% Solaben 2 50 70 Cáceres 4Q12 Financed
Itochu 30% Helios 1 50 Ciudad Real Expected 2011 Helios 2 50 Ciudad
Real Expected 2011 Solaben 3 50 Cáceres Expected 2011 Solaben 6 50
Cáceres Expected 2011 Algeria Hassi R´mel 150 51 Algeria 1Q11 Local
Banks Abu Dhabi Shams 1 100 20 Abu Dhabi 3Q12 Financed Total 20%,
Masdar 60% EEUU Arizona 250 100 US 4Q13 Financed California 250 US
Expected 2011ye
Source: Abengoa &: Caja Madrid Bolsa
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Abengoa
Page 25
Thermosolar Regulation in Spain
At the end of 2010 the Government approved the new thermosolar
regulation. The tariffs were maintained, but stipulated the
obligation to adhere to the fixed tariff option during the plants
first production year (i.e. the option to adhere to the premium
regime was excluded). There is also a limit on the number of hours
with premium rights, considering the various technologies and
situation.
The thermosolar tariff regulation in Spain is set for the first
25 years of life, reducing as from this point. For the first
tranche the fixed rate is EUR 285/MWh, and reaching a maximum - if
a variable tariff is chosen - of EUR 363.9/MWh.
First 25 years After 25 years Variable Tariff Pool Price +
Premium Pool Price + Premium Maximum: EUR 363.9/MWh Minimum: EUR
268.8/MWh Fixed Tariff (EUR/MWh) 285 228 Tariff 2010, adjusted CPI
-0.25% until 2012. Then CPI -0.5%
Source: Ministry of Industry
The main players in the Spanish thermosolar market in term of
size and per number of plants awarded in the pre-registration are:
Abengoa, Acciona, ACS and Iberdrola. All have plans to increase
installed capacity before 2013. Abengoa presents an advantage which
is its R+D and Engineering division, the later capable of building
plants more rapidly (less than 2 years).
Main Players in the Thermosolar Market (installation capacity
until 2013) Abengoa 650 ACS 300 Acciona 250 Renovalia/Infinia 171
Elecnor/Aries/Eiser 150 Iberdrola 100 FCC 100
Ibereolica/Inveravante 100 OHL & Fotowatio 100 Sener 100
Source: Ministry of Industry
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Abengoa
Page 26
IRR on Thermosolar Projects
We estimate the IRR on a thermosolar project without storage
between 9.5% and 10%. To reach this level we realised an analysis
on a 50 MW plant with investments of EUR 4.5m/MW, efficiency of
2,100 hours per year (which would generate a net energy production
of 100 GWh) and 65% leverage. With these hypotheses the EV comes to
EUR 6.3m/MW, which implies creating value of EUR 1.8m/MW. We do not
expect many changes in the return on these, although regulation
could reduce tariffs on the new plants to start up as from 2012, we
believe that the costs and yields should also improve, maintaining
returns stable in the future.
Hypotheses Installed Capacity (MW) 50 Investment / MW (EUR m)
4.5 Investment (EUR m) 225 Efficiency (hours /year) 2100 Leverage
65.0% Tax rate 30.0% CPI 2.5%
Source: Caja Madrid Bolsa
We estimate that 50 MW generates around 100,000 MWh net
electricity, i.e. considering self-consumption and losses.
Estimating EUR 45/MWh pool price during the first year (2010)
reaching EUR 60MWh in 2015 (maintained during 35 years) and a
premium of EUR 268.7 MWh in year 1, updated annually according to
CPI (estimating an average annual rise of 2.1% in CPI during the
next 35 years), we reach revenues of EUR 31.8 m during the first
year, with CAGR of 1.9% for the next 35 years. We estimate an
EBITDA margin around 75% considering the plants built by Abengoa
have a gas cycle for self-consumption (this is a back up for cloudy
days therefore the plant continuously feeds electricity to the
system). We estimate the plant to be amortised in 35 years
resulting in an EBIT margin of 55%. Estimating a 30% tax rate and
cash flow for 35 years, not including the terminal value, the IRR
on a project would be 9.68%. This yield obviously varies according
to the promoter’s experience, the location of the plant, the
electricity price fluctuations, technological factors, maintenance
costs….
EUR m Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8
Year 9 Year 10 Pool Price (EUR/MWh) 45 50 55 56 59 60 60 60 60 60
Premium (EUR/MWh) 268.7 274.8 280.9 287.3 293.7 300.3 306.3 312.5
318.7 325.1 Price (EUR / MWh) 315.3 326.4 337.6 344.9 354.4 362.1
368.1 374.3 380.6 387.0 Net Energy Generated (MWh) 100800.0
100800.0 100800.0 100800.0 100800.0 100800.0 100800.0 100800.0
100800.0 100800.0 Revenues 31.8 32.9 34.0 34.8 35.7 36.5 37.1 37.7
38.4 39.0 EBITDA 24.0 25.0 26.0 26.5 27.3 27.9 28.4 28.8 29.3 29.7
% margin 75.6% 76.0% 76.3% 76.3% 76.5% 76.6% 76.5% 76.4% 76.3%
76.3% EBIT 17.6 18.6 19.5 20.1 20.9 21.5 22.0 22.4 22.9 23.3 Taxes
on EBIT -5.3 -5.6 -5.9 -6.0 -6.3 -6.5 -6.6 -6.7 -6.9 -7.0 NOPLAT
12.3 13.0 13.7 14.1 14.6 15.1 15.4 15.7 16.0 16.3 Depreciation -6.4
-6.4 -6.4 -6.4 -6.4 -6.4 -6.4 -6.4 -6.4 -6.4 Free Cash Flow 18.7
19.4 20.1 20.5 21.1 21.5 21.8 22.1 22.4 22.8 IRR 35 years 9.68%
Source: Caja Madrid Bolsa
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Abengoa
Page 27
IRR on a Desalination Plant
The base analysis on the desalination plant results in an IRR of
11%. For our hypotheses we use the following data: 100,000 m3/day,
which is equal to 36.5 m3 per year, EUR 100 m investments, 80%
leverage, CPI 2% and 20% tax rate. This results in generating sales
of around EUR20m and EBITDA of EUR12m, obviously this varies
according to the country.
Hypotheses Treatment (m3/day) 100,000 Treatment (m3/day) 100,000
Investment (EUR m) 100 Sales 20.0 Leverage 80.0% EBITDA 12.0 Tax
rate 20.0% % margin 60.0% CPI 2.0% EBIT 8.0
Source: Caja Madrid Bolsa
Using the mentioned hypotheses, and estimating an average water
price of EUR 0.55/m3 (the price varies greatly according to the
country) we reach EUR 20 m sales, estimating EBITDA margin of 60%
which is equal to EBITDA of EUR 12 m. Bearing in mind the 25 year
amortisation, cost of debt at around 6% (depending on the country
and the projects, for example Befesa’s project in Algeria it is
3.75%) and a 20% – 35% tax rate, we reach an IRR ranging between
11% and 9.5%.
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9
Year 10 Price (EUR / m3) 0.55 0.56 0.57 0.58 0.59 0.60 0.62 0.63
0.64 0.65 Annual Treatment (m3) 36,500,000 36,500,000 36,500,000
36,500,000 36,500,000 36,500,000 36,500,000 36,500,000 36,500,000
36,500,000 Revenues (EUR m) 20.0 20.4 20.8 21.2 21.6 22.1 22.5 23.0
23.4 23.9 EBITDA 12.0 12.2 12.5 12.7 13.0 13.2 13.5 13.8 14.1 14.3
% margin 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0%
60.0% EBIT 8.0 8.2 8.5 8.7 9.0 9.2 9.5 9.8 10.1 10.3 Taxes on EBIT
-1.6 -1.6 -1.7 -1.7 -1.8 -1.8 -1.9 -2.0 -2.0 -2.1 NOPLAT 6.4 6.6
6.8 7.0 7.2 7.4 7.6 7.8 8.0 8.3 Depreciation -4.0 -4.0 -4.0 -4.0
-4.0 -4.0 -4.0 -4.0 -4.0 -4.0 Free Cash Flow 10.4 10.6 10.8 11.0
11.2 11.4 11.6 11.8 12.0 12.3 IRR 11.1%
Source: Caja Madrid Bolsa
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Abengoa
Page 28
Annex II: Commodities Division
Steel Waste Recycling Process
The productive process in recycling carbon steel (practically
the total sales from recycling steel wastes) is based on recovering
wastes proceeding from steel plants and smelting plants containing
zinc and lead (from a legal point of view, classified as dangerous
toxic wastes), submitted to a process and producing waelz oxide.
This product is later used by the zinc industry. Befesa manages the
entire recycling process up to its conversion to a product later
sold to clients in the zinc electrolysis industry (half of the
galvanized zinc production is estimated to be used in manufacturing
automobiles). Therefore, Befesa, within the production process,
charges steel companies (mainly Mini Mills) for the waste
collection (considered toxic) proceeding from steel production,
treats the waste and then sells the resulting product (waelz oxide)
to zinc producers. In Spain Befesa has no direct competitor;
whereas internationally speaking the main competitors are
Pontenossa, Harz Metall and Porto Vesme. The steel waste recycling
process has two revenues sources (see graph below):
• Recollection: 1) Recurrent revenues; 2) EUR50/60 per ton
(including transport costs); and 3) Long term relationship with
steel producers (Mini Mills). Befesa charges a price per ton for
collecting steel dust from steel producers. The contracts are
annual and are not correlated to the price of zinc. The main
clients are the large steel producers, that is: Arcelor Mittal,
Thyssen, Acerinox, Outokumpu, Asturiana de Zinc….
• Sale of waelz oxide: 1) prices move according to the zinc
market (revised annually); 2) Befesa has hedged zinc prices to
mitigate fluctuations; 3) long term contracts (1 to 3 years) with
zinc producers. The main clients are Boliden, Nystar, Korea Zinc,
Strada.
Steel Waste Recycling Model
Source Befesa * Mini Mills: steel plants that melt scrap
recycled steel to generate basic steel products.
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Abengoa
Page 29
Production plants are distinguished according to the following
activities:
• Common/carbon steel recycling plants: 4 plants: 2 operating in
Duisburg and Freiberg in Germany, the Erandio plant in Spain and
the participated (50%) Recytech in France, make up the group’s
operations in the common steel waste recycling process. The
industrial process developed in these plants includes a double
environmental benefit: avoids contaminating lands and the phreatic
layers originated by steel dust and on the other hand is a
never-ending source of metals vs. mining, which is constantly
exhausting the planet’s natural resources.
• Stainless steel recycling plants: Befesa has 2 plants with
sufficient volume to treat all the steel dust produced in Europe,
reinforcing its stance as a strategic ally for the treatment of
these wastes. The business model varies to carbon steel, because in
this case Befesa only charges a fee to collect the wastes,
processes it and returns the treated product (nickel and chrome) to
the stainless steel companies.
• Galvanization plants: Befesa Zinc Sondika and Befesa Zinc
Amorebieta are the companies focused on recycling and valorization
of high zinc content wastes. The main activities are to produce
oxide zinc (ZnO), to be used by the cork and ceramics industries,
as well as produce secondary zinc ingots for heat
galvanization.
Location of Steel Waste Recycling Plants Capacity Utilisation of
Befesa’s Plants
Source: Befesa Source: Befesa
The following table includes the data on Befesa’s main steel
recycling plants. We must distinguish between the carbon steel and
stainless steel plants. The recycling process of the carbon steel
wastes has been covered (pg 28), charging a fee to collect wastes
and sale of the resulting final product (waelz oxide) to zinc
producers. However, in the stainless steel recycling process Befesa
only charges a toll fee i.e. wastes are collected and the resulting
product (nickel and chrome) are returned to stainless steel
producers. Therefore the main activity in the steel dust recycling
activity is based on carbon steel producers or Mini Mills.
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Abengoa
Page 30
Steel Dust Plants
Location Freiberg Germany
Duisburg, Germany
Landskrona, Sweden
Bilbao, Spain
Fuquières-lez-lens, France
Gravelines, France
Treated Product Carbon Steel
Wastes Carbon Steel
Wastes Stainless Steel
Wastes Carbon Steel
Wastes Carbon Steel
Wastes Stainless Steel
Wastes Employees 87 47 72 63 44 80 Capacity (Tn) 200,000 95,000
64,000 160,000 110,000 110,000 Capacity (Tn) / Employee 2,299 2,021
889 2,540 2,500 1,375 Main Clients Steel Producers Steel Producers
Stainless Steel Steel Producers Steel Producers Stainless Steel
& Zinc Producers & Zinc Producers Producers & Zinc
Producers & Zinc Producers Producers
Source: Befesa
Aluminium Recycling Process This division, despite representing
31% of the industrial waste recycling activities’ sales, only
contributes 4% to EBITDA (not including non-recurrent revenues).
The aluminium waste recycling activity recovers aluminium contained
in various wastes and scraps. To carry out this activity, Befesa
collects and transports, recovers aluminium wastes and scraps and
produces and commercialises secondary aluminium alloy. The most
important destination for recycled aluminium wastes are for the
production and sale of alloys to the automobile and construction
sectors.
From the aluminium production process, salt slags are created (a
dangerous and toxic waste). The correct recycling is essential to
totally close the recycling circle and take advantage of wastes
containing aluminium. From the salt slags, concentrated aluminium,
salts and aluminium oxide are attained. The main clients are the
cement, automobile, steel and construction sectors. In the
aluminium recycling process we must distinguish between two
production processes: 1) that included in the following graph,
where Befesa acquires aluminium scraps and once processed sells the
secondary alloy; and 2) salt slags, which is similar to the carbon
steel recycling process in which Befesa charges a fee to collect
the salt slags and then sells the resulting product (aluminium and
aluminium oxide) to treat these slags. In both cases the final
client is mainly the automobile industry as well as electronic
household appliances (main clients: Fagor, SEAT, Cie, Ferrolli)
representing 36% revenues and 60% of the sales to domestic
clients.
Recycling of Aluminium & Salt Slags
Source: Befesa
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Abengoa
Page 31
Abengoa: Summary tables PROFIT & LOSS (EURm ) 12/2007
12/2008 12/2009 12/2010e 12/2011e 12/2012eSales 3,214 3,769 4,147
5,929 7,120 7,555Cost of Sales & Operating Costs -2,831 -3,228
-3,397 -4,951 -6,007 -6,343Non Recurrent Expenses/Income 0.0 0.0
0.0 0.0 0.0 0.0EBITDA 383 541 750 978 1,112 1,212EBITDA (adj.)* 383
541 750 978 1,112 1,212Depreciation -97.4 -178 -201 -244 -267
-275EBITA 286 363 549 735 845 938EBITA (adj)* 286 363 549 735 845
938Amortisations and Write Dow ns 0.0 0.0 0.0 0.0 0.0 0.0EBIT 286
363 431 735 845 938EBIT (adj.)* 286 363 431 735 845 938Net
Financial Interest -140 -253 -249 -447 -516 -513Other Financials
0.0 -61.0 67.8 0.0 0.0 0.0Associates 0.0 0.0 0.0 0.0 0.0 0.0Other
Non Recurrent Items 4.2 9.2 11.2 11.2 11.2 11.2Earnings Before Tax
(EBT) 150 58.1 261 299 340 436Tax -14.3 108 -58.1 -44.9 -68.0
-87.2Tax rate 9.5% nm 22.3% 15.0% 20.0% 20.0%Discontinued
Operations 0.0 0.0 0.0 0.0 0.0 0.0Minorities -15.4 -25.4 -32.4
-50.0 -50.0 -50.0Net Profit (reported) 120 140 170 204 222 299Net
Profit (adj.) 120 140 170 204 222 299
CASH FLOW (EURm ) 12/2007 12/2008 12/2009 12/2010e 12/2011e
12/2012eCash Flow from Operations before change in NWC 233 344 404
498 539 624Change in Net Working Capital 128 553 219 -832 244
-204Cash Flow from Operations 361 897 622 -334 782 420Capex -226
-581 -2,142 -1,440 -791 -271Net Financial Investments -140 -253
-249 -447 -516 -513Free Cash Flow -6.0 63.1 -1,769 -2,221 -525
-363Dividends -14.5 -15.4 -16.3 -17.2 -18.1 -19.0Other (incl.
Capital Increase & share buy backs) -918 -809 969 918 505
501Change in Net Debt -938 -761 -816 -1,321 -38 119NOPLAT 259 1,034
335 625 676 750
BALANCE SHEET & OTHER ITEMS (EURm ) 12/2007 12/2008 12/2009
12/2010e 12/2011e 12/2012eNet Tangible Assets 1,648 2,399 4,024
4,767 4,955 4,715Net Intangible Assets (incl.Goodw ill) 2,088 1,943
2,954 3,076 3,056 2,928Net Financial Assets & Other 416 766
1,015 1,015 1,015 1,015Total Fixed Assets 4,153 5,107 7,994 8,859
9,027 8,659Net Working Capital -656 -1,209 -1,428 -596 -839 -636Net
Capital Invested 3,496 3,898 6,566 8,263 8,188 8,023Group
Shareholders Equity 797 627 1,171 1,407 1,660 1,989o/w own
Shareholders Equity 617 407 803 989 1,192 1,471Net Debt 2,520 3,281
4,097 5,418 5,456 5,336Provisions 132 199 144 144 144 144Other Net
Liabilities or Assets 47 -209 1,154 1,294 928 553Net Capital Em
ployed 3,496 3,898 6,566 8,263 8,188 8,023
GROWTH & MARGINS 12/2007 12/2008 12/2009 12/2010e 12/2011e
12/2012eSales growth 20.1% 17.3% 10.0% 43.0% 20.1% 6.1%EBITDA
(adj.)* growth 33.2% 41.2% 38.7% 30.4% 13.7% 9.0%EBITA (adj.)*
growth 30.4% 26.9% 51.4% 33.7% 15.0% 10.9%EBIT (adj)*growth 30.4%
26.9% 18.8% 70.5% 15.0% 10.9%Net Profit growth 19.5% 17.1% 21.3%
19.9% 8.8% 34.6%EPS adj. growth 19.5% 17.1% 21.3% 19.9% 8.8%
34.6%DPS adj. growth 6.3% 5.9% 5.6% 5.3% 5.0% 4.8%EBITDA margin
11.9% 14.4% 18.1% 16.5% 15.6% 16.0%EBITDA (adj)* margin 11.9% 14.4%
18.1% 16.5% 15.6% 16.0%EBITA margin 8.9% 9.6% 13.2% 12.4% 11.9%
12.4%EBITA (adj)* margin 8.9% 9.6% 13.2% 12.4% 11.9% 12.4%EBIT
margin 8.9% 9.6% 10.4% 12.4% 11.9% 12.4%EBIT (adj)* margin 8.9%
9.6% 10.4% 12.4% 11.9% 12.4%
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Abengoa
Page 32
Abengoa: Summary tables RATIOS 12/2007 12/2008 12/2009 12/2010e
12/2011e 12/2012eNet Debt/Equity 3.2 nm 3.5 3.9 3.3 2.7Net
Debt/EBITDA 6.6 6.1 5.5 5.5 4.9 4.4Interest cover
(EBITDA/Fin.interest) 2.7 2.1 3.0 2.2 2.2 2.4Capex/D&A 232.4%
325.7% 1065.7% 591.4% 296.5% 98.5%Capex/Sales 7.0% 15.4% 51.6%
24.3% 11.1% 3.6%NWC/Sales -20.4% -32.1% -34.4% -10.0% -11.8%
-8.4%ROE (average) 23.8% 27.4% 28.2% 22.8% 20.4% 22.5%ROCE (adj.)
8.4% 33.0% 6.0% 8.6% 9.4% 10.7%WACC 10.8% 10.8% 10.8% 10.8% 10.8%
10.8%ROCE (adj.)/WACC 0.8 3.1 0.6 0.8 0.9 1.0
PER SHARE DATA (EUR)*** 12/2007 12/2008 12/2009 12/2010e
12/2011e 12/2012eAverage diluted number of shares 90.5 90.5 90.5
90.5 90.5 90.5EPS (reported) 1.33 1.55 1.88 2.26 2.45 3.30EPS
(adj.) 1.33 1.55 1.88 2.26 2.45 3.30BVPS 6.82 4.50 8.87 10.93 13.17
16.26DPS 0.17 0.18 0.19 0.20 0.21 0.22
VALUATION 12/2007 12/2008 12/2009 12/2010e 12/2011e
12/2012eEV/Sales 1.5 1.2 1.5 1.2 1.1 1.0EV/EBITDA 12.6 8.2 8.4 7.5
6.9 6.3EV/EBITDA (adj.)* 12.6 8.2 8.4 7.5 6.9 6.3EV/EBITA 16.9 12.2
11.5 10.0 9.1 8.2EV/EBITA (adj.)* 16.9 12.2 11.5 10.0 9.1
8.2EV/EBIT 16.9 12.2 14.7 10.0 9.1 8.2EV/EBIT (adj.)* 16.9 12.2
14.7 10.0 9.1 8.2P/E (adj.) 18.2 7.6 12.0 8.1 8.6 6.4P/BV 3.5 2.6
2.5 1.7 1.6 1.3Total Yield Ratio 0.7% 1.5% 0.9% 0.9% 1.0%EV/CE 1.6
1.4 1.1 1.0 1.1 1.1OpFCF yield 13.4% 74.9% 24.2% -31.0% 28.8%
-17.0%OpFCF/EV 6.1% 18.1% 7.8% -7.0% 7.1% -4.2%Payout ratio 12.8%
11.6% 10.1% 8.9% 8.6% 6.7%Dividend yield (gross) 0.7% 1.5% 0.9%
0.9% 1.0% 1.0%
EV AND MKT CAP (EURm) 12/2007 12/2008 12/2009 12/2010e 12/2011e
12/2012ePrice** (EUR) 24.2 11.8 22.6 18.4 21.1 21.1Outstanding
number of shares for main stock 90.5 90.5 90.5 90.5 90.5 90.5Total
Market Cap 2,188 1,068 2,045 1,662 1,909 1,909Net Debt 2,520 3,281
4,097 5,418 5,456 5,336o/w Cash & Marketable Securities (-)
-1,698 -1,334 -1,546 0.0 0.0 0.0o/w Gross Debt (+) 4,218 4,615
5,643 5,418 5,456 5,336Other EV components 125 63 197 272 347
422Enterprise Value (EV adj.) 4,832 4,411 6,338 7,352 7,712
7,667Source: Company, Caja Madrid Bolsa estimates.
Notes* Where EBITDA (adj.) or EBITA (adj) or EBIT (adj.)= EBITDA
(or EBITA or EBIT) +/- Non Recurrent Expenses/Income**Price (in
local currency): Fiscal year end price for Historical Years and
Current Price for current and forecasted years***EPS (adj.)
diluted= Net Profit (adj.)/Avg DIL. Ord. (+ Ord. equivalent) Shs.
EPS (reported) = Net Profit reported/Avg DIL. Ord. (+ Ord.
equivalent) Shs. Sector: Renew able Energy/Renew able Energy
EquipmentCompany Description: Abengoa is a w ell-diversif ied
company, comprising of three business divisions offering strong
grow th potential:Contracted off take (26% of 2011 EBITDA), E&C
(48%), and Commodities (26%).
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Abengoa
Page 33
ESN Recommendation System The ESN Recommendation System is
Absolute. It means that each stock is rated on the basis of a total
return, measured by the upside potential (including dividends and
capital reimbursement) over a 12 month time horizon.
The ESN spectrum of recommendations (or ratings) for each stock
comprises 5 categories: Buy, Accumulate (or Add), Hold, Reduce and
Sell (in short: B, A, H, R, S).
Furthermore, in specific cases and for a limited period of time,
the analysts are allowed to rate the stocks as Rating Suspended
(RS) or Not Rated (NR), as explained below.
Meaning of each recommendation or rating:
• Buy: the stock is expected to generate total return of over
20% during the next 12 months time horizon
• Accumulate: the stock is expected to generate total return of
10% to 20% during the next 12 months time horizon
• Hold: the stock is expected to generate total return of 0% to
10% during the next 12 months time horizon.
• Reduce: the stock is expected to generate total return of 0%
to -10% during the next 12 months time horizon
• Sell: the stock is expected to generate total return under
-10% during the next 12 months time horizon
• Rating Suspended: the rating is suspended due to a capital
operation (take-over bid, SPO, …) where the issuer of the document
(a partner of ESN) or a related party of the issuer is or could be
involved or to a change of analyst covering the stock
• Not Rated: there is no rating for a company being floated
(IPO) by the issuer of the document (a partner of ESN) or a related
party of the issuer
Caja Madrid Ratings Breakdown
History of ESN Recommendation System Since 18 October 2004, the
Members of ESN are using an Absolute Recommendation System (before
was a Relative Rec. System) to rate any single stock under
coverage. Since 4 August 2008, the ESN Rec. System has been amended
as follow. • Time horizon changed to 12 months (it was 6 months) •
Recommendations Total Return Range changed as below:
BEFORE
-15% 0% 5% 15%SELL REDUCE HOLD ACCUMULATE BUY
TODAY
-10% 0% 10% 20%SELL REDUCE HOLD ACCUMULATE BUY
BEFORE
-15% 0% 5% 15%SELL REDUCE HOLD ACCUMULATE BUY
BEFORE
-15% 0% 5% 15%SELL REDUCE HOLD ACCUMULATE BUY
TODAY
-10% 0% 10% 20%SELL REDUCE HOLD ACCUMULATE BUY
TODAY
-10% 0% 10% 20%SELL REDUCE HOLD ACCUMULATE BUY
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Abengoa
Page 34
Recommendation history for ABENGOA
Date Recommendation Target price Price at change date08-Feb-11
Buy 27.36 21.1005-Jan-11 Buy 27.54 18.0521-Apr-10 Buy 27.54
20.2311-Feb-10 Buy 22.00 19.5329-Oct-09 Buy 22.00 18.5801-Sep-09
Reduce 18.00 17.9107-May-09 Reduce 15.41 15.7522-Apr-09 Buy 15.41
11.5220-Feb-09 Buy 16.26 11.6313-Nov-08 Buy 16.71 11.50
Source: Factset & ESN, price data adjusted for stock splits.
This chart shows Caja Madrid Bolsa continuing coverage of this
stock; the current analyst may or may not have covered it over the
entire period. Current analyst: Sergio Ruiz Martin (since
23/04/2008)
12
14
16
18
2 0
2 2
2 4
2 6
2 8
Fe b10
M a r10
Apr10
M a y10
J un10
J ul10
Aug10
S e p10
Oc t10
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Buy Accumul at Hol d Reduce Sel l Not r at ed
P r i ce hi st or y T ar get pr i ce hi st or y
Information regarding Market Abuse and Conflicts on Interests
available on our web page: www.cajamadridbolsa.es and our
offices.
The information and opinions contained in this document have
been compiled by Caja Madrid Bolsa, S.V., from sources believed to
be reliable. This document is not intended to be an offer, or a
solicitation to buy or sell relevant securities. Caja Madrid Bolsa,
S.V., will not take any responsibility whatsoever for losses which
may derive from use of the present document or its contents, CMB
can occasionally have positions in some of the securities mentioned
in this report, through its trading portfolio or negotiation.
Additionally, there can exist a commercial relation between CMB,
Caja Madrid and the mentioned companies
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