Vinci Earnings: Stronger-Than-Anticipated Recovery in Airport Passengers; Raising Our Fair Value 5%

Narrow-moat Vinci reaffirmed the resilience of its business, delivering 13% revenue growth during first-half 2023 driven by a 58% (32% like-for-like) increase in the airport business as passenger numbers increased at a faster pace than expected. The strong recovery in the airport business shouldn't detract from the equally impressive double-digit growth in its energy business, as well as margin expansion for Vinci energies and Cobra IS. We think both businesses can maintain growth rates ahead of gross domestic product, supported by their healthy order books. We marginally raise our fair value estimate to EUR 122 from EUR 116 to reflect a quicker-than-anticipated recovery in airport passenger numbers, which combined with cutting costs during the pandemic have resulted in a significant uplift in profitability. We view management’s unchanged guidance of a slight increase in net income as conservative, especially in light of the 13% increase in net income during the first half. Shares are trading at a 10% discount to our revised fair value.