Sectors > Top Reports > OHL Memo 310519

OHL Memo 310519

Buy Senior Unsecured € 7.625% 2020 – c. 19% Yield. Buy Equity – c. 50% Upside, Potentially c. 120% Achievable
PUBLISHED: 31 May 2019
PAGES: 37
PRODUCT CODE: OHL0001
SUBMARKET: OHL, Top Reports,

£1,470.00

Categories: , ,

Why Read?

  • Understand the background behind OHL’s challenging 2018 and the precipitous drop in bond price
  • Understand the impact of cost over-runs and contract review on cash flows
  • Understand the possibility of successful claims against OHL’s customers
  • Understand valuation of OHL’s real estate development projects and importance for OHL liquidity and valuation going forward
  • Understand the working capital cycle and how it impacts FCF generation
  • Understand catalysts and risks for the long thesis
  • Understand mitigants to these risks
  • Understand options available to the company in order to meet bond maturities
  • Understand OHL’s sensitivity to regional EBITDA margins, working capital, new orders and cost of capital in terms of equity cushion and valuation and debt coverage.
  • Understand the real estate developments business within OHL

What’s New?

  • Assessment of value within OHL’s real estate development projects
  • Assessment of OHL’s available liquidity (with and without current financial assets in escrow and cash in temporary subsidiaries) and projection thereof
  • DCF valuation of OHL using its high cost of equity
  • Valuation sensitivity analysis – impact of regional EBITDA margins, working capital, new orders and cost of capital

Questions Answered

  • What is our base case and sensitised valuation of OHL?
  • Can OHL generate sufficient FCF to meet bond maturities in 2020, 2022 and 2023?
  • How much equity upside is there and how does this break out between the current net cash position, real estate development and improvement in the core construction business?


  1. View, Variant Perception & Recommendations

  2. Business Overview

  3. Key Events

  4. Real Estate Developments Explained

  5. Risks To Investment Thesis

  6. Model Assumptions & Valuation

  7. Sensitivity Analysis

  8. Conclusion

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