Vinci Delivers Another Strong Quarter; Shares Look Attractive

Narrow-moat Vinci continued its strong momentum in 2022, reporting 12% like-for-like revenue growth, or 26% including acquisitions during the third quarter. We believe the market is underestimating the group’s outlook due to macroeconomic uncertainty, which provide investors with an opportunity to acquire shares at a 16% discount to our EUR 106 fair value estimate. We anticipate the group is on track to deliver close to EUR 4 billion in annual free cash flow, which translates into an attractive 7% free cash flow yield at current levels. We expect free cash flow will remain resilient due to the defensive characteristics of its toll-road business, which has inflationary-linked cash flows, further upside in the recovery at its airport, and a healthy contracting order book, which provides 15 months of visibility.