VINCI is a leading player in concessions and construction, employing more than 194,000 people in around 100 countries. It operates through its two core businesses, namely Concessions and Contracting. Divisions within Concessions include VINCI Airports, VINCI Autoroutes, VINCI Highways, VINCI Railways and VINCI Stadium, whilst those within Contracting include VINCI Energies, Eurovia and VINCI Construction.

We reviewed our model on VINCI post H1 2018 results and maintain our Buy recommendation and Price Target of €96.

We like VINCI because for the following reasons:

• VINCI is the market leader in French toll road concessions where we see upside from traffic growth and new stimulus plans

• The Group reported a very strong performance in H1 2018 and we expect continued strength in H2 2018

• Resilient earnings and structural growth

• FCF and earnings support dividend growth – the shares are trading on an attractive and predictable dividend yield

• Guidance for 2018 was confirmed by management

• Contracting EBIT margins surprised positively and the order book reached €32.7bn

• Concessions remains solid

• It also has the resources to achieve its goals and continue its targeted development, both in airports and concessions, and internationally

Key Risks

• Economic contraction in France

• Higher interest rates

• Value destructive deals

• Political intervention

• Higher oil prices

• Fiscal tightening


Our €96 price target is based on a forward Price-to-earnings ratio of 17x and a discount rate of 10%.

Revenues – we are forecasting an increase in revenues of 6%, 5% and 4% in 2018,20 19 and 2020 respectively. This increase is expected to come from new M&A activities as well as additional business in contracting and concessions.

EBIT margins – we are expecting margins to continue to improve to 10.8%, 11% and 11.25% in 2018, 2019 and 2020 respectively. This is expected to come from lower costs going forward

Earnings per Share – we are forecasting EPS of €5.34, €5.72 and €6.09 in 2018, 2019 and 2020 respectively


We believe VINCI offers an attractive and balanced profile between concessions and contracting activities.