First Read Getlink 1H26 results trending in line; full year guidance raised

研报英文原文证据摘录

First Read Getlink 1H26 results trending in line; full year guidance raised

Forecast returns

Forecast price appreciation 1.9%

Forecast dividend yield 4.6%

Forecast stock return 6.4%

Market return assumption 7.8%

Forecast excess return -1.4%

Company Description

Getlink holds the concession to operate the rail link via the tunnel under the Channel. It is

both a concession holder and a railway operator. Eurotunnel operates truck and car train

shuttles (the Shuttle) through the tunnel. This division, which enjoys unregulated prices,

generated around 40% of the group's revenues in 2023. The group also derives revenues

from railways, where third-party train operators, such as Eurostar, pay to use the tunnel.

Getlink also operates freight trains in France (Europorte), and operates an interconnector

between the UK and France (ElecLink).

Valuation Method and Risk Statement

Our valuation employs a DCF methodology using a WACC of 7%. GetLink's Shuttles activity

operates in a competitive environment. The truck shuttles operation is particularly sensitive to

changes in the economic situation, especially in France and the UK. GetLink generates about

half of its revenues in sterling, which puts the company at risk should the British pound

depreciate against the euro. The company is financially leveraged, which puts it at risk should

the operational situation deteriorate sharply. A high operational leverage will lead to a

meaningful downgrade to profits if volumes decline. The high financial leverage and the

importance of debt service could also weigh on the ability of the company to pay a dividend.

Eurotunnel is also exposed to environmental and legal burdens. GetLink mainly operates one

asset – therefore events like fire, terrorist attacks could have a big impact on operations.