Sectors > Top Reports > Salini Memo 250719

Salini Memo 250719

Rally overdone, risks underappreciated. Avoid senior unsecured bonds and equity
PUBLISHED: 25 July 2019
SUBMARKET: Salini, Top Reports, Top Reports,


Why Read?

  • Understand Salini’s negative FCF and working capital movement
  • Understand the background behind poor performance in Italy
  • Understand Salini’s proposed equity raise and acquisition of Astaldi
  • Understand CDP Equity
  • Understand Salini’s liquidity
  • Understand Salini’s cost over-runs including by individual contracts
  • Understand backlog concentration
  • Understand the value of Salini’s concession assets
  • Understand Salini’s valuation sensitivity to working capital, new orders, EBITDA margins in each of its Italy, Lane (US) and “Abroad” segments and cost of capital in terms of equity cushion and debt coverage


What’s New?

  • Evaluation of the proposed equity raise and acquisition of Astaldi
  • Valuation of the business and sensitivity to key drivers
  • Analysis of the key working capital drivers
  • Assessment of potential shocks to the operating model going forward
  • Assessment of the track record of potentially interested parties to Project Italy


Questions Answered

  • To what extent are risks at Salini under appreciated – liquidity risk; cost over-runs; negative margins in Italy and the US?
  • What is our base case valuation of Salini and its key sensitivities?
  • What are appropriate stress and bull cases for Salini?
  • How will leverage be impacted by both operational performance and the equity raise / Astaldi acquisition plans? 

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