Vinci: Relative Value Case, But They Are Still Sinking Cash For Growth

2025-02-17 06:46:18 ET

Summary

• Vinci SA remains attractive based on valuation, despite increased capital commitments and continuing growth path, which hides underlying earnings yield of the business.
• There are some tailwinds possibly from data center and related electrical supply engineering that is associated with the AI boom.
• Moreover, they are growing their businesses on highways with new concessions, and growth is proceeding as expected in their renewable area.
• Airports are also fine though growth is expected to decelerate, and they have already taken the hit as of now for the tax impacts on the autoroutes business.
• The issue is just that if the value case isn't being realised yet, they may have to arrive at the end of their capital deployment arc before they get recognised for their greater value than the market is crediting them.

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