Desjardins 2 years ago - November 2021 Aecon Group (ARE, $17.16): Desjardins analyst reassured about REM's impact Aecon Group (ARE, $17.16): Desjardins analyst reassured about REM's impact A good relationship between the Toronto-based construction firm and the Caisse de dpt reassures Desjardins analyst Benoit Poirier about the success of the work. During a visit to the very heart of the Montreal electric train (REM) project with Aecon president Lean-Louis Servranckx and several members of the consortium, the analyst was able to appreciate the quality of the team in place, as well as the site's progress to date. Although they have had to overcome a number of obstacles, the team confirms that the first section of the project - the section between Brossard and Central Station - will be operational by spring or summer 2022 at the latest. The entire project will be completed by the end of 2024. The relationship with the Caisse de dpt is helping us to overcome the challenges we face, most notably the exceptional events surrounding the tunnel under Mont-Royal, productivity losses related to COVID-19, and supply chain disruptions.
The Caisse has provided additional financing of $350 million, which reassures the analyst that the group is capable of resolving the problems encountered in the interests of all participants involved in the project.
For Aecon, the expertise gained from the current project will position it well for the $10 billion REM de l'Est project, for which contracts will be awarded in 2023, notes the analyst. However, the company's management is confident that the bidding process will be competitive. The analyst reiterates his Buy recommendation for the stock, given that the visit positively reinforced his opinion of the quality of Aecon's management. He maintains his price target at $25.