Vinci boosts targets, tops market estimates

Investing.com — Vinci (EPA:SGEF) on Friday issued a new set of divisional guidance for its Energies segment, surpassing existing market expectations. 

The company’s Energies division aims for a 7.5% operating margin by 2030 and 100% average cash conversion from 2024-30.

This marks an improvement over current consensus forecasts, which assumed a modest compound annual growth rate of 3.3% and largely stagnant margins over the next few years. 

“We think the quality of Vinci ‘s contracting business is continuing to increase (supported by the energy transition), and think potential Gatwick expansion (not long after the Aerodom extension) could reinforce confidence in Vinci’s ability to create value in its existing portfolio,” said analysts from RBC Capital Markets in a note.

The engineering and construction giant estimates the valuation of Vinci Energies to be more than €20 billion, which surpasses the consensus sell-side valuation of less than €16 billion.

Jefferies pointed to Vinci’s ambitions for international expansion, aiming to boost international revenues to 65% of the group’s total by 2030 from 58% in 2023. 

This direction is supported by a consistent focus on bolt-on deals, which have historically contributed 2-5% to annual sales growth. 

“Similar to that of the Cobra IS CMD this time last year, we expect a deep dive into the Energies business, looking out for profitability tailwinds from the improving mix of business within the overall division,” said analysts at Jefferies in a note.