Research: Industrials
Industrials | Update
AVAX — Significant year-on-year growth expected
In this note, we show revisions to our forecasts and our updated valuation of AVAX ahead of the company’s FY24 results (expected April 2025). AVAX’s H124 revenues and EBITDA were up 50.4% and 97.5% y-o-y, on the back of a raft of contract wins over the previous few years. The company has also guided that its €3.2bn project backlog is at a superior margin to its current revenues, implying that margins have improved and should continue to do so. We had reflected this in our prior estimates, but the mix between older and newer (higher-margin) projects has been slower than we had expected. We have trimmed FY24e revenues by 11.7% to €648m and raised our adjusted EBITDA estimate by 19.8% to €103m to reflect the updated sales mix. We expect further strong improvement in the margin, driven by recent high-margin wins.
AVAX – Αναμένεται σημαντική ετήσια αύξηση
Σε αυτό το σημείωμα, παρουσιάζουμε αναθεωρήσεις των προβλέψεών μας και την επικαιροποιημένη αποτίμησή μας για την AVAX ενόψει των αποτελεσμάτων της εταιρείας για το οικονομικό έτος 24 (αναμένεται τον Απρίλιο του 2025).
Τα έσοδα και τα EBITDA της AVAX για το H124 αυξήθηκαν κατά 50,4% και 97,5% σε ετήσια βάση, χάρη σε μια σειρά από συμβάσεις που κερδήθηκαν τα προηγούμενα χρόνια. Η εταιρεία έχει επίσης καθοδηγήσει ότι το ανεκτέλεστο υπόλοιπο έργων ύψους 3,2 δισ. ευρώ έχει ανώτερο περιθώριο από τα τρέχοντα έσοδά της, γεγονός που σημαίνει ότι τα περιθώρια κέρδους έχουν βελτιωθεί και θα πρέπει να συνεχίσουν να βελτιώνονται.
Το είχαμε αντανακλάσει αυτό στις προηγούμενες εκτιμήσεις μας, αλλά ο συνδυασμός μεταξύ παλαιότερων και νεότερων (υψηλότερου περιθωρίου κέρδους) έργων ήταν πιο αργός από ό,τι περιμέναμε.
Μειώσαμε τα έσοδα του FY24e κατά 11,7% στα €648 εκατ. και αυξήσαμε την εκτίμησή μας για το προσαρμοσμένο EBITDA κατά 19,8% στα €103 εκατ. για να αντικατοπτρίσουμε το επικαιροποιημένο μείγμα πωλήσεων. Αναμένουμε περαιτέρω ισχυρή βελτίωση του περιθωρίου κέρδους, λόγω των πρόσφατων αναθέσεων υψηλού περιθωρίου κέρδους.
Written by Andy Murphy (Director of content, industrials)
| Year end | Revenue (€m) | PBT (€m) | EPS (€) | DPS (€) | P/E (x) | Yield (%) |
|---|---|---|---|---|---|---|
| 12/22 | 402.7 | 25.1 | 0.13 | 0.07 | 17.3 | 3.0 |
| 12/23 | 453.5 | 21.8 | 0.10 | 0.03 | 22.1 | 1.3 |
| 12/24e | 648.1 | 62.5 | 0.31 | 0.08 | 7.5 | 3.5 |
| 12/25e | 774.6 | 72.4 | 0.35 | 0.08 | 6.6 | 3.5 |
FY24 results preview
Revenue in FY24 looks set to grow strongly. H124 revenue was up 50.4%, and we see continued strength in H2 to take full-year revenue to €648m, up 43% y-o-y. We have trimmed our FY24e revenue growth slightly (down 11.7% to €648m from €734m) to reflect the potential timing of construction activity, although this remains uncertain. AVAX is seeing significant growth as delays to its project pipeline related to budgetary negotiations in a period of high inflation are overcome. The company continues to have a strong work-in-hand position (€2.99bn at end-H124, increasing to €3.23bn when Q3 contracts and tenders where AVAX was declared the lowest or preferred bidder are included).
Προεπισκόπηση αποτελεσμάτων FY24
Τα έσοδα του FY24 φαίνεται ότι θα αυξηθούν σημαντικά. Τα έσοδα του H124 αυξήθηκαν κατά 50,4%, και βλέπουμε να συνεχίζεται η ενίσχυση στο H2, ώστε τα έσοδα για το σύνολο του έτους να ανέλθουν σε €648 εκατ., αυξημένα κατά 43% σε σχέση με το προηγούμενο έτος.
Έχουμε μειώσει ελαφρώς την αύξηση των εσόδων του FY24e (κατά 11,7% σε €648 εκατ. από €734 εκατ.) για να αντανακλάσουμε τον πιθανό χρόνο της κατασκευαστικής δραστηριότητας, αν και αυτό παραμένει αβέβαιο.
Η AVAX σημειώνει σημαντική ανάπτυξη, καθώς ξεπερνιούνται οι καθυστερήσεις στον προγραμματισμό των έργων της που σχετίζονται με τις δημοσιονομικές διαπραγματεύσεις σε μια περίοδο υψηλού πληθωρισμού.
Η εταιρεία συνεχίζει να έχει ισχυρή θέση σε εξέλιξη (2,99 δισ. ευρώ στο τέλος του 124ου εξαμήνου, η οποία αυξάνεται σε 3,23 δισ. ευρώ όταν περιλαμβάνονται οι συμβάσεις και οι διαγωνισμοί του τρίτου τριμήνου όπου η AVAX ανακηρύχθηκε προτιμώμενη προσφορά).
Concessions set for further growth
Concessions accounted for c 50% of adjusted EBITDA in H1 and we view further development in this area as the key to earnings growth (we have increased our adjusted EBITDA by 19.8% to €103.1m for FY24e and by 8.7% to €113.6m for FY25e). AVAX does not consolidate the majority of its concessions interests (and these are therefore not reflected in consolidated revenue), and only proportionally consolidates its pre-tax results. The concession contract for the Athens Ring Road ran out in October 2024, but the Olympia and Aegean motorways are now both in operation and distributing dividends.
Valuation: Increased to €4.0/share
Based on the combination of a DCF enterprise value of €446m (previously €299m) for subsidiaries (construction) and a value for associates (concessions) of €421m (unchanged), we value AVAX at €4.0/share (€3.0/share previously). The main reason for the uplift is an increase in our long-run EBITDA margin assumptions. We note that there is still room for further upside as higher-margin projects develop and the fair value of the concessions business potentially increases.
Changes to FY24 and FY25 estimates
| Exhibit 1: Changes to forecasts |
 |
| Source: Edison Investment Research |
We have trimmed our FY24 and FY25 revenue forecasts by 11.7% and 7.2%, respectively, to €648m and €775m, to reflect potential delays in construction activity, however timing remains uncertain. We have raised our forecasts for FY24 adjusted group EBITDA by 19.8% to €103.1m (previously €86.1m), and by 8.7% to €113.6m (previously €104.5m) for FY25. This is on the back of the significant improvement in the performance of the company’s construction segment at H124 (with group EBITDA margins increasing to 18.7% at H124, taking our FY24e EBITDA margin to 15.9%, up from 12.3% in 2023) and its concession segment, which despite the completion of the Athens Ring Road in Q424, will continue to have substantial contributions from existing concessions and new contracts pursued by the group. Our new FY24 EPS forecast is €0.31 (up from €0.23 previously). This is a c 33.7% increase compared to our previous EPS estimate, and represents a year-on-year increase of c 207% on an FY23 basis.
Valuation and assumptions
The company trades at FY24e P/E of 7.5x, which implies a material 42% discount to peers. Our revised DCF valuation of €4.0/share (from €3.0/share) represents c 73% upside to the current share price. The main reason for the uplift in our valuation is an increase in our long-run EBITDA margin assumptions. AVAX’s current portfolio of landmark projects makes up almost 90% of its total project backlog (€3.2bn). While the majority of these projects are at very early stages, they will underpin a large share of the company’s longer-term revenues. This backlog provides greater flexibility for AVAX moving forward regarding the profitability of future projects. AVAX also works with in-house resources at higher percentages than its relative peer group, enabling the company to have greater control over its effective costs moving forward.
Our DCF valuation assumptions remain unchanged. We have used a weighted average cost of capital (WACC) of 9.4%, with our risk-free rate, equity risk premium and beta remaining unchanged at 3.7%, 10.5% and 1.0, respectively. Our three-stage tapered valuation revenue growth assumptions remain unchanged at 2% in the first two years after our forecast period, 1% in the final five years and a conservative 0% terminal growth. We value the majority of AVAX’s associates based on FY23 fair value (and will update this using FY24 numbers once published). The fair value of associates therefore remains unchanged at €421.3m (€2.84/share).
| Exhibit 2: Financial summary |
 |
| Source: AVAX, Edison Investment Research |
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