Hochtief: Secular Growth Meets Near-Term Headwinds

2025-04-08 12:02:00 ET

Summary

• Hochtief benefits from data center growth with a global order backlog of around €8 billion (over 13% of total backlog) as of FY 2024 that's growing rapidly.
• Analysts expect data center capacity to grow double digits through 2030 with hyperscaler capacity potentially doubling.
• Personally, I think data center capacity could grow 50%+ per year in the next decade.
• Hochtief faces near-term headwinds given it is in a very economically sensitive sector of infrastructure construction, and the April 2 tariffs could increase the odds of a global economic slowdown.
• Given the company operates in a very economically sensitive sector, I rate Hochtief a 'Hold' for now until there's more reassurance in the macroeconomic climate.

HOCHTIEF Aktiengesellschaft ( HOCFF ) is a German construction and engineering conglomerate that is majority owned by Spain's ACS , which gradually built up its stake in Hochtief, securing a majority position in 2011 .

Although it is German, most of Hochtief's revenues are from outside Germany.

In terms of sales by region in FY 2024, the Americas accounted for 64% of Hochtief's sales , the Asia Pacific accounted for 31%, and Germany only accounted for 3%....

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