EGL PL PSI20 Index ©lias_2011.pdf¢  The present report aims to value Mota-Engil, SGPS, S.A. The following

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Text of EGL PL PSI20 Index ©lias_2011.pdf¢  The present report aims to value Mota-Engil,...

  • THIS DOCUMENT IS NOT AN INVESTMENT RECOMMENDATION AND SHALL BE USED EXCLUSIVELY FOR ACADEMIC PURPOSES (SEE DISCLOSURES AND DISCLAIMERS AT END OF DOCUMENT)

    See more information at WWW.NOVASBE.PT Page 1/33

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     After analysing Mota-Engil and its market, the price target

    FY 11 is €2.47 per share therefore, the recommendation is to buy.

     The presence of the IMF in Portugal has been raising

    concerns on future public projects. The Portuguese government

    postponed infrastructural projects, such as TGV and the new

    Lisbon airport. Consequently, Mota-Engil’s revenues are expected

    to decrease 1.7%. Moreover, the national Sovereign Debt is

    causing financing difficulties in this division.

     Internationalization, both in Africa and Latin America, may

    be the key for the Engineering & Construction division. Despite

    the Portuguese crisis, Mota-Engil may benefit from foreign

    economic growth which may have a positive impact on its

    revenues. We expect revenues to grow 25% and 2%, respectively.

     In order to diversity from its core business, Mota-Engil will

    continue to invest in Environment & Services. In line with this, the

    company is planning to expand its market share in Africa,

    especially in Angola, due to the country’s strategic plan regarding

    sanitation services. Nevertheless, logistics will be the main sub-

    division. Privatizations might increase the company’s activity in

    Portugal. In 2011, we expect an EBITDA growth higher than 1.3 %.

     Mota-Engil changed the transports concession’s division

    accounting method from full consolidation to equity consolidation.

     The recent increase in the Portuguese Sovereign Debt

    might raise the company’s financing costs.

    MOTA-ENGIL COMPANY REPORT

    CONSTRUCTION 06 JUNE 2011

    ANALYST: PEDRO CONTUMÉLIAS Mst16000281@novasbe.pt

    The future behind the curtain

    Internationalization will be the key

    Recommendation: BUY

    Vs Previous Recommendation BUY

    Price Target FY11: 2.47 €

    Vs Previous Price Target 4.00€

    Price (as of 02-Jun-11) 1.68 €

    Reuters: EGL.LS, Bloomberg: EGL PL

    52-week range (€) 2.73-1.64

    Market Cap (€m) 353.82

    Outstanding Shares (m) 204.636

    Source: Bloomberg.

    Source: Bloomberg.

    (Values in € millions) 2010 2011E 2012F

    Revenues 2004 2210 2351

    EBITDA 237 261 278

    EBITDA mg 11.83 11.81 11.84

    Net Profit 36 31 33

    EPS 0.19 0.14 0.16

    P/E 8.84 12 10.5

    Net Debt/EBITDA 5.13 4.25 4.5

    Debt/Equity 2.53 2.2 2.3

    EBITDA Margin 11.83% 11.83% 11.83%

    Source: Company Report Data. Analyst Estimates

    EGL PL PSI20 Index

    Company Description: Mota-Engil SGPS, SA is a Portuguese industrial conglomerate. The company operates in three business divisions: engineering and construction; environment and services and transport concessions. The company operates in Europe, Africa and America.

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  • MOTA-ENGIL COMPANY REPORT

    THIS DOCUMENT IS NOT AN INVESTMENT RECOMMENDATION AND SHALL BE USED EXCLUSIVELY FOR ACADEMIC PURPOSES (SEE DISCLOSURES AND DISCLAIMERS AT END OF DOCUMENT)

    PAGE 2/33

    EXECUTIVE SUMMARY ........................................................................................................................................... 3

    VALUATION ............................................................................................................................................................... 3

    COST OF CAPITAL: .......................................................................................................................................................... 4 DISCOUNT RATES: ........................................................................................................................................................... 4

    MACROECONOMIC SITUATION ............................................................................................................................ 7

    COMPANY OVERVIEW ............................................................................................................................................ 8

    COMPANY DESCRIPTION .................................................................................................................................................. 8 SHAREHOLDER STRUCTURE ............................................................................................................................................ 9

    CONSTRUCTION SECTOR ..................................................................................................................................... 9

    MARKET ENVIRONMENT ................................................................................................................................................... 9 PORTUGAL ..................................................................................................................................................................... 10 EASTERN EUROPE ......................................................................................................................................................... 11 AMERICA ........................................................................................................................................................................ 12 AFRICA ........................................................................................................................................................................... 12 VALUATION .................................................................................................................................................................... 14

    ENVIRONMENT & SERVICES ............................................................................................................................... 14

    WASTE MANAGEMENT ................................................................................................................................................... 16 WATER DISTRIBUTION ................................................................................................................................................... 17 LOGISTICS ...................................................................................................................................................................... 18 MULTI-SERVICES ........................................................................................................................................................... 19 VALUATION E&S DIVISION ............................................................................................................................................. 19

    ASCENDI .................................................................................................................................................................. 20

    MARTIFER ............................................................................................................................................................... 23

    VALUATION MARTIFER ................................................................................................................................................... 25

    FINANCIAL STATEMENTS .................................................................................................................................... 26

    APPENDIX – CASH FLOW STATEMENTS ......................................................................................................... 28

    E&C ........................................................................................................................................................................... 28

    E&S ........................................................................................................................................................................... 29

    ASCENDI .................................................................................................................................................................. 29

    MARTIFER ............................................................................................................................................................... 30

    APPENDIX – PORTUGUESE MARKET RISKS ................................................................................................... 30

    APPENDIX – PORTUGUESE SOVEREIGN PUBLIC DEBT............................................................................... 31

    APPENDIX – STRATEGIC PLAN 2009-2013 ....................................................................................................... 31

    APPENDIX – MARTIFER ........................................................................................................................................ 32

  • MOTA-ENGIL COMPANY REPORT

    THIS DOCUMENT IS NOT AN INVESTMENT RECOMMENDATION AND SHALL BE USED EXCLUSIVELY FOR ACADEMIC PURPOSES (SEE DISCLOSURES AND DISCLAIMERS AT END OF DOCUMENT)

    PAGE 3/33

    Executive summary

    The present report aims to value Mota-Engil, SGPS, S.A. The following

    paragraphs intend to stress the threats and opport