Atkinsrealis Group Inc T.ATRL

SNC 2021 valuation

[SNC2021]

Gabriel et all you have done a great job here on this board. I would like to do fresh look at 2021 and beyond for SNC. It will be review for you all but I think helpful for others to realize the value in SNC assets and business. There has been sooo much noise here over the last 2 years it is important for people to know what is underneath the hood so to speak.

Gabriel I know you have all these figures handy and would ask for your help to which I will comment and add. Starting with capital how do you get $13 to $15 for your value there. I will contribute so don't think you are doing all the heavy lifting! SNC is a gem which is la double from here to get where their peers are and likely higher after that.
disclosure: I am very long and purchased shares yesterday and likely more today.

thanks

[Gabriel]

Hello,  An offer to purchase 10% of the shares of the 407 held by SNC (out of a total of 16.67%) was made by OMERS on April 5, 2019 for 3.250B. The two other shareholders objected and both wanted those shares. CPPIB paid 3.25B and Cintra sued CPPIB for half the shares sold. This means the market value is at least 3.25B for 10%. So the remaining stake of 6.67% is worth about 2.15B or 12.3

[SNC2021]

  Gabriel...I agree with your numbers as a base but I would argue they are light because interest rates were more than double what they are now when the sale of the 407 was made. This is likely the best asset in the world in a low interest rate environment. In  a world of $18b in negative rates and pension funds and fixed income investors willing to buy bonds these negative yielding

[Nbsk]

Good way of going at it re:valuation. Rates are indeed magnifying value of reliabe income producing assets such as 407. However, at this time with the virus/lockdown/workfromhome, the utilisation/income is reduced. It's temporary, but you would need a forward-looking investor to pay full price currently. On the other hand, the low financing rates are here today. 15$ for capital seems in the

[SNC2021]

Find me a better asset for a pension fund?! SNC underpriced the last deal (it cost them $80m to break the first deal because their partners wanted it badly and one sued for not being able to get in the deal) to make it quick...pension funds do 10 to 20 year forecasts...slow traffic? What slow traffic. So $15... to me is low...but that leaves a margin of safety in my mind.

[Nbsk]

I meant reduced , as in less used = less income, as in shown here: https://407etr.com/en/highway/corporate/usage-statistics.html   it does not hurt to tell it like it is, i'm very bullish and we'll get there anyway  

[SNC2021]

  Yes I know what you meant and I did not mean to offend you. I have my own opinions and I am seeing unprecedented buying of assets trying to squeeze "some" yield. High quality  Royalty portfolio's have never been priced higher because of interest rates...yes traffic has slowed down during COVID  and it has taken down short term earnings...these have little

[SNC2021]

  you do know that we own 100% of a generating station in B.C...and 26% of a gas power plant  in Algeria...the portfolio is world class...and the value is very substantial and perhaps the main piece of SNC' s crazy low evaluation. The market has misinterpreted exiting  LTSK and capital...and the6 believe SNC has sold all of the 407. management needs to step up its

[Nbsk]

Peace, and agree with all you said. If perfect time to monetize remaining share of 407 was now, my guess is it would have been done in 2020 to simplify the story and buy back our undervalued shares. Might be needed to wait a bit to be closer back to routine/trend. Looking forward to the next chapter of your valuation exercise as you seem knowledgable.

[Nbsk]

Better asset for pension fund would be renewable powerplant with take-or-pay long-term inflation-indexed contracts and governement as counterparty, which are producing even in virus recession. But their prices are through the roof. Sorry, felt like venting a bit!

[Gabriel]

Absolutely worth more and I raised this on this message board twice before. Before the pandemic, revenue was growing 7% per year on average since concession agreement was signed because of :1) growth in the GTA, 2) increase in fares and 3) deviated or induced traffic from the increased congestion of the alternate 401 route.   The cost of borrowing was 6% so the discounted net present

[SNC2021]

  okay Gabriel back to valuation let's call it $15 for the royalties. We are paying $8.44 for the rest of SNC. would you run us through the nuclear division at its peers valuations as a standalone unit please.  

[Gabriel]

Nuclear (mostly ex SNC CANDU) is expecting an additional EBITDA of 30m USD for 10 years based on a recent contract, on top of the 100 m USD per year in 2019 -  based on projections of RBC Analyst Sabahat Khan. That is 169m CAD EBITDA for Nuclear only. This values Nuclear on stand-alone basis at 15X EBITDA  (high margins) or 2.535B CAD or 14.5 CAD per share   https://www

[Gabriel]

SNC2021 Add Atkins paid 3.6B in 2017 and it's growth since, and the Infrastructure programs in the US, UK, Canada and Australia.  I am expecting an appreciable increase of the P/E multiples of engineering firms with the increase in projects (demand with limited supply inflates hourly rates and profit margins substantially). Also, while private funding of new infrastructure is

[SNC2021]

  SNC value from your numbers if the units were separated are worth $50 per share... -we agre that the royalty-concessions business is undervalued at $15 - we agree that engineering sector multiple is moving higher ( I would add that industrials and construction are in big bull market right now and moving higher they are cyclical all of these companies trade at 52 week highs). This

[Ronbromleygross]

Welcome aboard SNC2021 You have made quite the splash in your first day posting here or any message board. I along with many here all know and have expressed our disappointment as well.  I have written in to the director of investor relations a few times already too but no response.   I have said a few times that Ian Edwards does not have the "killer attitude" to lead a

[MTLfinecity]

BTW regarding the share buyback. The reason they cannot do it is because CDPQ owns the maximum amount the shares it can legally own. If they buyback now, CDPQ will have to sell cheaply. OOOPPPSSSSS. 

[SNC2021]

  There are many options for ways around ownership issues at CDPQ. They have a few bankers around unlike SNC who needs a banker to look after capital decisions. It these decisions that have really hurt SNC. Kentz was the worst acquisition in history. the 407 sale was botched...cost $81m to get out of it.... new SNC model is great I will give management credit there actually it's

[pierre55]

With all due respect guys, I don't think management forgot the shareholders. The shares were at $34 pre-Covid. If it wasen't for the massive loses in last 3 Q's, this share would be trading at $50. It's not the scandals, Covide and all the rest. Bottom line, this company needs to start making money! Forget selling assets; forget buying back shares or changing the name. Make a

[SNC2021]

  -RBC et all did tax loss selling...that's what hammered the share price after the last quarter. -I don't want the 407 sold...I want to borrow against the $3b asset that is the most prized in the world to buy back shares at 40 cents on the dollar. The shares need to be bought now not at $50 like they did in 2015. If we are able to buy back 10-20 % of the shares than long term

[Megasupreme]

Borrow cheap money to buy back shares is a no brainer!!!

[MTLfinecity]

Hi SNC2021, nice to see someone with a strong opinion on this board.  The sum of the parts might be worth 50$ . However, overall, SNC is still cashflow negative or near breakeven. Considering they still have hundread of millions of fines to pay, it is rather prudent to keep a strong cash position. Be patient. SNC has too many legacy issues.