Vallourec (AO) | Hold | An agreement to be fully out of HKM

Research evidence excerpt

Vallourec (AO) | Hold | An agreement to be fully out of HKM

Vallourec Hold | Target Price: EUR24.00

Company description Management

A world leader in its markets, Vallourec provides benchmark tubular solutions for Philippe Guillemot_CEO

the energy sectors and for other applications, including some of the most Sascha Bibert_CFO

demanding: from oil and gas wells in extreme conditions to next-generation Key shareholders

power plants to daring architectural projects and extremely high-performing Free float 70.00%

mechanical equipment. ArcelorMittal 28.20%

Investment case Valuation methodology

Vallourec's equity story has strongly changed in our view. We We look at Vallourec by business unit, valuing the Tubes division

have in front of us a c.17% flowback as ArcelorMittal just sold at 7x EV/EBITDA 2026-27E and the Mine division at 5x EV/EBITDA

10% of its stake, link. Speculative angle is over. This is a clear 2026E (Holding at 6x EV/EBITDA). We then adjust the value for

negative for us. the group's net debt, provisions, minorities, etc. It is also

We do expect EBITDA to improve from Q3 2026. The US market adjusted for the impact of the 30m warrants.

should be a support to that with higher volumes and better We also include a FCF yield approach, targeting a 8.5% yield.

pricing. International offshore activities should also support Risks to our rating

earnings as well as the new Brazilian contract. Any disruption Higher oil price could lead to higher activity in US.

from the Middle East would be limited. ArcelorMittal could launch a takevoer bid on Vallourec.

Vallourec is engaged in the energy transition (geothermal,

carbon capture) and the first key contracts are emerging,

especially around geothermal (XGS generate up to USD1.5bn

revenues)

Catalysts