Bouygues (1K) | Hold | All eyes on telecom consolidation and Equans

Research evidence excerpt

Bouygues (1K) | Hold | All eyes on telecom consolidation and Equans

Bouygues Hold | Target Price: EUR53.00

Company description Management

Bouygues is a French multinational group operating in construction, energy services, Martin Bouygues, Chairman

telecoms and media. In construction it is involved in building, civil engineering, real Olivier roussat, CEO Steéphane Stoll, CFO

estate and transport infrastructure activities, in energy services, it specialises in

infrastructure, industrial maintenance, and sustainable solutions, in telecoms, it Key shareholders

provides mobile, internet, and television services, and in media, the group holds a Free float 49.50% Employees 21.90%

majority stake in TF1, France's national leader. SCDM 27.50%

Treasury shares 1.10%

Investment case Valuation methodology

n Although we expect moderate top-line development in the n We value Bouygues based on a SOP approach, where we

long term, Bouygues's efforts to optimise profitability should perform 5-year DCFs for its divisions, with the exception of

pave the way for bottom-line growth in the double-digits. TF1, where we assume our in-house TP, and the parent

n The healthy financial development, together with its company, where we use a 10x EV/EBIT approach.

disciplined capital allocation strategy, should allow for solid n We use different WACC assumptions for our segments'

cash flows and dividends. valuation to factor in the international exposure and the

n We believe investors will remain focused on industry leaders, cyclicality of some of the activities.

favouring infrastructure developers with a more integrated n We apply a 20% holding discount.

business model and better geographic positioning.

Risks to our rating

Catalysts n Weak economic context longer than initially expected.