Aecon Group Inc T.ARE

LSTK SNC vs Aecon

[Gabriel]

Atkins did well on Friday and their losses on Trillium, Eglinton and the REM were 23.6m for Q4

Aecon is in equal partnership with Atkins on Eglinton and the REM

We are not involved in Trillium which Atkins is performing in Ottawa after the Confederation line LRT which literally derailed in Ottawa,

https://www.tvo.org/article/ottawas-colossal-lrt-debacle-a-brief-ish-history

Our other two are Gordie Howe which claims has been settled for 700m and a 10-month extension,  and Finch which is close to finished.

So if one considers that Gordie Howe is OK and SNC is OK, then Aecon is also OK.

I am expecting to hear this on Wednesday.

The EBITDA of Aecon was 123m in Q3 2023 and 375m LTM excluding divestiture and LSTKs and is heading to 500m per year in the next 12-36 months considering the substantial growth in revenue reported by engineering firms. As you all know, construction follows engineering design.

It will require ~  200m to buyback 11.8M shares of Aecon at a price ranging from 15-20$.This is the time to initiate an NCIB not like Atkins to whom we recommended to buy when it was trading between 17 and 26$ and not at 51$. I am really hoping the new CFO initiates an NCIB ASAP with the full support of the board.

Assuming we do drop the float to 50m shares, the valuation mutliple that the market would grant for an EBITDA of 500m is indeed any smoker's guess.

[Henrye]

Thumbs up response! 

[Gabriel]

I assumed 8x EBITDA (which results in 80$ per share based on the EBITDA and NCIB assumptions) because this is the multiple of Hochtief, Germany which owns the Turner Construction Group, the largest contractor in the US (14,3B revenue) and also that of Fluor based on their projected 600m EBITDA for 2024. https://www.levelset.com/news/biggest-construction-companies-usa/ https://pages.stern.nyu.edu

[JayBanks]

I've mostly been chilling, just watching the messages on this board for a while, I too think $80/share is crazy even tho your maths and theory basis make some sence. It is very 'Pie in the Sky'. I jumped in was adding shares in the lower region mostly using options and have a ACB of $10.66 mind you my position is only 3000 shares so much smaller than others chatting here. I'm

[Henrye]

Jay , I have read every word and even between the lines. love your extremely well articulated point of view . It's so important to hear such well  processed " food for thought " for us all to digest and explore all endless possibilities based on facts, assumptions and realities . It's a puzzle that we all chip away one piece at a time and derive our own conclusions. 

[Dibah420]

Thank you for providing your assumptions delineating a path to your target. Makes all the difference.  And folks can judge for themselves.

[Curious777]

Nice scenery looking a head! isnt a NCIB limited to 10%? https://www.investopedia.com/terms/n/ncib.asp

[Gabriel]

Thanks. Two consecutive then. Now is the time to start.