What has changed 1. My analysis in December 2022 was that Aecon was overly indebted when it was trading at its lows, with substantial losses ahead on its LSTK projects including potential liquidated damages for delays, walking out of the CGL construction site and no time extension granted for the Gordie Howe bridge. I did not buy any stock until Aecon sold 49% of its Bermuda airport concession and the paving unit and its financials changed dramatically. I started my position in April 2023 or so, at about 13$ and kept on buying with an average of around 20$ per share as the prospects were factually improving.
2. What has happened since April 2023:
A significant budget increase and an equally substantial time extension were granted for the Gordie Howe bridge.
Over 6B of collaborative alliance contracts were signed and should start to kick in.
Now, LSTK losses ahead are capped at 150m CAD. This was clear during last Q results.
Adjusted EBITDA Q3 2024 was 126.7B. This is pretty impressive.
Two airports in the VI were added in DBOM mode, feeding concessions.
EBITDA margins of ~ 10% are achieved and likely going higher with the collaborative model. This is factual, non speculative and demonstrated in the literature based on data.
Adjusted EBITDA for 2025 or 2026 should be clearly above 400m considering margin expansion, comparable adjusted previous EBITDAs, and backlog (collaborative), thereby commanding a valuation of 7x EBITDA (peers at 10.6x per TD Cowen - see previous post) or 2.8B (45$ per share).
In conclusion, while I agree with you that we had a great run from ridiculous lows, the stock remains some 35% undervalued as of today based on conservative estimates above, see previous post.
I think the multiple for Aecon will expand further to reach peers at 10x as profit margins improve and predictably as the CEO puts it improves.
I don't see what I am missing here.