Ferrovial (AO) | Buy | US managed lanes in the spotlight

Research evidence excerpt

Ferrovial (AO) | Buy | US managed lanes in the spotlight

finalise the project (for example, fire and

safety installations). Management explained that in projects of this complexity, it is not at all unusual to see minor delays.

Pricing power in Ferrovial's US Managed Lanes

When asked about the pricing potential of Managed Lanes assets, management explained that, in Texas, there is further upside in

the short term on account of the technology enhancements implemented last year to improve vehicle classification. Over the

long term, mandatory mode events in these assets should be the key drivers of pricing growth. The company was not able to shed

light on the magnitude or timeframe of this dynamic in future years due to its significant complexity.

Management confirmed that the company intends to implement promotions also in US Managed Lanes, but could not provide

details on what they could entail, as the information is commercially sensitive in the context of the current wave of new asset

tenders. The company highlighted that the key objective of promotions is to get direct interaction with customers.

The US managed lanes pipeline: competition and risk management

Management believes that competitors should be assumed to be rational but also potentially aggressive in future managed lanes

tenders, given the high level of interest in the space. However, the higher capital requirements and interest rates cannot be

ignored in these markedly complex projects. The CFO stated that Ferrovial should be expected to remain disciplined.

When asked about how Ferrovial deals with potential cost inflation pressures in these tenders, management explained that the

company spends more ahead of the bidding as this helps de-risk the project and later design a better concession. In addition,