Report by Insight Investment Research

Robert Crimes remains bullish on the Infrastructure sector, citing strong long-term traffic growth, resilient IRRs (averaging 11.3%, +290bps above Insight’s 8.5% Ke) and deep value in listed equities trading ~40% below NAV, despite private market transactions averaging just -3% below NAV over the past decade. Towers top the table with +136% weighted average upside, with Robert favouring Cellnex over Inwit. Railroads rank second at +113% average upside, favouring Canadian National Railway over Union Pacific and Canadian Pacific Kansas City. Contractors offer +74% upside, with Ferrovial standing out vs. Eiffage and Vinci. Airports offer +42% upside but stronger opportunities are seen in Europe with ADP, Aena and FH Zurich all offering 60%+ upside. In Toll Roads, average upside is only +19% but stock selection is key, with Salik Robert’s preferred pick.

Report by Insight Investment Research

Robert Crimes remains bullish on the Infrastructure sector, citing strong long-term traffic growth, resilient IRRs (averaging 11.3%, +290bps above Insight’s 8.5% Ke) and deep value in listed equities trading ~40% below NAV, despite private market transactions averaging just -3% below NAV over the past decade. The sector shows a weighted average upside of +78%, with notably higher upside in North America (+102%) and Europe (+73%) versus South America (-5%). Credit risk is not a concern, as leverage is manageable, bond yields have plateaued after a sharp 2022 rise and most debt remains fixed at low rates with long durations. Robert's top picks are Ferrovial, Canadian National Railway and Cellnex, each offering over +110% upside.

Industrials

Report by Insight Investment Research

The companies covered by Insight offer an average upside of 90%. Their top 3 names are: 1) Ferrovial (TP €82) - US Managed Lanes EBITDA growing rapidly on good transactions growth and excellent toll increases. 2) Canadian National Railway (TP C$354) - mostly unregulated pricing and limited cyclicality of EBITDA. Strong recurring FCF growth, High ROIC and shareholder remuneration to grow at >6% CAGR to 2050E. 3) Cellnex (TP €75) - pan European tower platform with strong market positions and inflation linked contracts. Paused acquisition strategy will see rapid deleverage, stronger grade credit rating, then enhanced shareholder remuneration.

Industrials

Report by Insight Investment Research

Reliable demand, strong unregulated pricing, high capital barriers and excellent returns - Robert Crimes initiates coverage with a Buy rating and TP of C$360 (100%+ upside). Insight’s key value added vs. The Street is application of their Global Infrastructure specific valuation framework focused on DCF and IRR, their assessment of long-term volumes, pricing and FCFs and their ability to rate CNR vs. the other Global Infrastructure stocks in their universe, rather than other North American transportation stocks. CNR enters at 4th of 24 on the Insight Stock Ranking System, after Ferrovial, Cellnex and Getlink.