Cellnex (CLNX SM) Spain
Industrials
Focus on organic growth opens a new chapter in the equity story of CLNX - Alex Dwek believes the telecom giant is well positioned to benefit from its strong position within the European 5G ecosystem. Now that BTS and expansion capex are being reduced, organic growth will allow for CLNX’s tenancy ratio to increase (from 1.36x) and be more in line with peers such as Inwit (2.16x) and Vantage Towers (1.45x). Shorter-term catalysts such as the appointment of a new CEO (Marco Patuano), a significant deleveraging (from 6.5x net debt/EBITDA) and a strong cash flow generation, as well as reaching investment grade should also support the fundamentals. TP €56 (50% upside).
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Edition: 162
- 09 June, 2023
Communications
Announces its long-awaited Vantage Towers transaction - selling down 32-50% of its stake for cash at 24x EBITDA, or €32/share, a 33% premium to the 2021 IPO price. New Street analysts see this deal as transformational for VOD’s balance sheet with the potential to take leverage below 2.5x for the first time since 2019 and this should open the door to having excess capital for potential distribution. In this note, they run through the full balance sheet implications for VOD and the read across for other EU tower names. TP £1.75 (65% upside).
Edition: 148
- 11 November, 2022
Communications
Has been linked to numerous potential M&A deals and New Street’s latest piece shows that sensible assumptions could allow for a significant €47bn value unlocking if management is willing to execute. In turn, this could allow considerable cash returns through buybacks and incremental dividends and valuing the stock on a sector multiple could lead to values as high as 240p/share, more than double the current price. These deals could all act as catalysts but in the near-term, the Hungary disposal and a sell-down of Vantage Towers could take leverage below 2.2x (below management’s 2.5x threshold) and be the start of incremental cash returns.
Edition: 143
- 02 September, 2022
Orange (ORA FP) France
Communications
Squeezing the juice - consensus is not pricing in peak capex. Market scepticism over weak dividend cover should dissipate as FCF doubles by ’24E, with further potential upside from Masmovil JV. The possibility of Totem merging with Vantage Towers is ORA’s €9bn hidden gem, which further fuels the positive train. Meanwhile, the French outlook remains bullish and should the possibility of consolidation become a reality, this will also play in ORA’s favour. TP increased to €16 with a 57% TSR by YE23E (excluding potential for special dividends).
Edition: 139
- 08 July, 2022
Vantage Towers (VTWR GR) Germany
Industrials
Strong, high visibility FCF with rising tenancy ratio - Robert Crimes increases his TP to €56 (90% upside). Revenues +7% CAGR (2022-26E), driven by inflation escalators, new organic POP growth on existing sites and BTS sites. While Robert expects some near term margin pressure this year, he forecasts a swift recovery in FY24. Dividend yield to increase from 2.9% to 7.8% (FY26E). There is also plenty of firepower for acquisitions with Inwit seen as an attractive target given its FCF growth, strong market position and undervaluation.
Edition: 136
- 27 May, 2022
Entering the end game of 3 independent TowerCos in Europe
Industrials
Robert Crimes’ 16-page report details how the European Towers market is to undergo a final phase of consolidation with several large transactions resulting in 3 dominant TowerCos - Cellnex, Vantage Towers and American Tower Europe. He notes that it is significantly more efficient for MNOs to share passive infrastructure while Tower transaction valuations have recently risen allowing MNOs to generate large capital releases to fund investment in 5G and de-lever balance sheets (potential to monetise a further €85bn of Tower assets in Europe). Robert’s preferred stock is Cellnex (well placed to continue to grow acquisitively, raise tenancy and returns); TP €106 (+145%).
Edition: 127
- 21 January, 2022
Insight’s Global Infrastructure Stocks Offer Massive Upside
Industrials
Strong recovery from Covid, high lifetime FCF & IRR.s intact - companies covered by Robert Crimes offer an average upside of 73%. Europe (+98%) leads the way, followed by Asia Pacific (+51%) and South America (+43%). Highest average upside for Towers (+98%); prefers Inwit (+130%) to Vantage Towers and Cellnex. Airports (+81%); top pick is Aena (+131%). Stock selection in Toll roads is crucial - favours PINFRA & Aleatica in Mexico, offset by no upside for CCR in Brazil. In Contractors, Robert's top pick (and his No.1 ranked stock) is Ferrovial (+143%).
Edition: 119
- 17 September, 2021