CHARLES UNIVERSITY TEAM CFA INSTITUTE RESEARCH CHALLENGE 2017 2018 EMEA REGIONAL ROUND
1 2 3
Other, 6% Rest of Europe, 31% Germany, 47% Austria, 16%
78% 81% 26% 27% 24% 22% 18% 17%
REVENUE STREAM MARGIN & PRODUCTIVITY BIM.5D
Probability LOW MEDIUM HIGH Lack of qualified labour Reputational risk Loss of competitive advantages Market risks Business risks New competitors in the market Economic slowdown in Europe Decrease in European funds LOW MEDIUM HIGH Impact
Deep Tunnel Sewerage System (2017) : 309M East Side Mall shopping centre in Berlin (2016) : 84M Sonnenhöfe im Sternenviertel (2018) : 85M Unity Tower in central Cracow (2017) : 89M
30000 25000 20000 15000 10000 5000 0 2000 2011
SHAREHOLDER STRUCTURE No investor owns a majority share, but the company is controlled by a syndicate of three largest shareholders. Raiffeisen/UNIQA is the largest shareholder with 26.5% of shares, founder s family holds 25.5%, while Rasperia trading owns 25% of shares. None of the above indicated any intention to leave the company. 13.5% of capital stock is free float, half of which is owned by retail investors. In July 2016, 4 million own shares were repurchased, reducing their share on total from 10% to 6.7%. The new share buyback program authorized in 2016 has recently expired without being used CORPORATE MANAGEMENT The management board has 5 members. All of them have been with STRABAG for about 20 years. Thomas Birtel, the Company s CEO since 2013, has been with the Company since 1996. Mr. Birtel sits on boards of several other companies, including Deutsche Bank. Once concern is that all board members have been with the Company for majority of their careers and might lack exposure to other businesses and industries. Christian Harder and Hannes Truntschnig both sit on the supervisory board of Syrena Immobilien Holding AG. Current mandate of all members ends on 31st December CORPORATE GOVERNANCE The supervisory board has 12 members and 3 committees: 1) Executive committee dealing with matters affecting the relations between the company and members of the management board, 2) Presidential and Nomination committee proposing new Management Board fillings, 3) Audit committee. All supervisory board members are independent as classified under Rule 53 ÖCGK. We are not aware of any further links between members of management board and supervisory board which might have negative impact on the company s governance
Noncompliance with Austrian Code of Corporate governance: C-Rule 2: Two special shares with a right to nominate one member of Supervisory Board each C-Rule 27: Non-financial criteria are not used in compensation of members of the management Board Committee Members Description Executive Presidential and Nomination Audit Dr. Alfred Gusenbauer (Chairman) Mag. Erwin Hameseder Andrei Elinson1)/Dr. Gulzhan Moldazhanova Dr. Alfred Gusenbauer (Chairman) Mag. Erwin Hameseder Andrei Elinson1)/Dr. Gulzhan Moldazhanova Georg Hinterschuster Wolfgang Kreis Dr. Alfred Gusenbauer (Chairman) Mag. Erwin Hameseder Mag. Hannes Bogner Andrei Elinson1)/Dr. Gulzhan Moldazhanova Dipl.-Ing. Andreas Batke Georg Hinterschuster Wolfgang Kreis The Executive Committee deals with all matters affecting the relations between the company and the members of the Management Board, especially matters relating to the remuneration of Management Board members, but excluding decisions regarding the appointment or removal of a Management Board member or regarding the granting of stock options. The Presidential and Nomination Committee submits proposals to the Supervisory Board for filling new mandates or ones that become free on the Management Board, deals with issues relating to successor planning and remuneration policy, and makes decisions in urgent cases. The Audit Committee is responsible for the audit and preparation of the approval of the financial statements, the proposal for the appropriation of net income and the management report, as well as the audit of the consolidated financial statements and the consolidated corporate governance report. The committee also deals with the management letter written by the financial auditor as well as with the auditor s report as to the efficiency of the risk management. The Audit Committee makes a proposal for the selection of the auditor and prepares the proposal of the Supervisory Board to the Annual General Meeting for voting. Pursuant to C-Rule 81a of the Code, the Audit Committee must meet with the auditor to define a mode of communication between the auditor and the Audit Committee.
Company p-value R2 correlation Actively traded Adjusted beta Unlevered beta Relevered beta Skanska AB (publ) 0.00% 28% yes 0.99 0.85 1.29 NCC AB 3.44% 5% yes 0.81 0.61 0.93 Veidekke ASA 0.23% 15% yes 0.88 0.76 1.16 HOCHTIEF Aktiengesellschaft 0.01% 22% no 1.05 0.62 0.94 PORR AG 88.89% 0% yes 0.38 0.18 0.27 Implenia AG 0.01% 23% yes 1.14 0.85 1.30 Lemminkäinen Oyj 33.22% 2% yes 0.56 0.28 0.43 ACS, Actividades de Construcción y Servicios, S.A. 0.00% 26% yes 1.16 0.50 0.76 Vinci SA 1.41% 1% yes 0.68 0.4 0.66 Final beta 1.07 0.80 1.22
2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 2012 2013 2014 2015 2016-0.5% AU 10y yield GER 10y yield
Terminal period WACC Terminal period EBIT margin Long term growth Long term growth 42.2 1.0% 1.5% 2.0% 2.5% 3.0% 42.2 1.0% 1.5% 2.0% 2.5% 3.0% 8.1% 36.9 38.6 40.5 42.8 45.5 1.6% 33.6 35.1 36.8 38.9 41.4 7.9% 37.5 39.3 41.3 43.7 46.7 1.8% 35.9 37.5 39.5 41.8 44.7 7.7% 38.1 40.0 42.2 44.8 47.9 2.0% 38.1 40.0 42.2 44.8 47.9 7.5% 38.8 40.8 43.1 45.9 49.3 2.2% 40.4 42.5 44.9 47.7 51.2 7.3% 39.5 41.6 44.1 47.1 50.8 2.4% 42.7 44.9 47.6 50.7 54.5
EV/Revenues EV/EBITDA EV/EBIT Peer Group 0.4 7.8 14.0 Strabag 0.2 3.9 15.9 Strabag Implied 0.3 4.6 10.4
7%
Source: EUROCONSTRUCT, Company annual reports, European Commission
Source: EUROCONSTRUCT, Company annual reports, European Commission
http://ec.europa.eu/eurostat/statisticsexplained/index.php/construction_producer_price_and_construction_cost_indices_overview
6 SOURCE IMF IMF IMF IMF IMF IMF IMF Czech republic Hungary Poland Slovakia CEE TIME EU28 Germany Austria 2014 1.82 1.6 0.6 2.7 4 3.3 2.6 3.2 2015 2.35 1.48 1 5.3 3.1 3.9 3.8 4.0 2016 1.98 1.77 1.5 2.6 2 2.6 3.3 2.6 2017E 2.34 1.63 2.3 3.5 3.2 3.8 3.3 3.5 2018E 2.08 1.53 1.9 2.6 3.4 3.3 3.7 3.3 2019E 1.84 1.42 1.5 2.3 2.8 3 3.9 3.0 2020E 1.82 1.29 1.5 2.3 2.6 2.8 3.5 2.8 2021E 1.73 1.22 1.4 2.3 2.4 2.7 3.4 2.7 2022E 1.68 1.17 1.4 2.3 2.2 2.6 3.4 2.6 5 4 3 2 1 0 2014 2015 2016 2017E 2018E 2019E 2020E 2021E 2022E EU28 Germany Austria Czech republic Hungary Poland Slovakia CEE
TIME DE AT PL CZ SK HU CH Belgian Netherla nd Romania Denmark Sweden Russia Serbia Italy Croatia Slovenia Bulgaria 2014 1.8-0.1 4.7 4.1-3.5 6.5 3.5 1.5 0.5 0.0 3.2 7.7 0.3 1.9-2.2-11.5 9.8 17.3 2015 0.2 1.1 4 7.1 18.5 3.4 1.7 2.3 7.7 18.2 3.7 6.1-2.1 18.0 0.9 5.0-3.2 21.0 2016 2.5 1.1-4.5-5.8-11.4-19.3 0.9 3.7 5.8 1.7 4.5 5.8-0.9 7.7 1.1 3.7-10.3-35.2 2017E 2.6 2.8 8.7 1.6 3.1 25.5 1.6 2.5 5.4 3.6 2 9.9 0.3 3.3 1 6.2 6.0 7.0 2018E 0.9 1.5 9 5 1.8 21.4 2.5 3.7 4.9 6.8 2.7 3.6 0.1 16.3 2 10.9 8.2 5.6 2019E -0.3 1.4 10.3 6.7 0.4 7.9 1.9 2.3 3.8 5.0 2.8 0 1.8 7.3 1.8 3.9 7.0 5.7 2020E -0.4 1.4 4.2 2.5-0.5 1.4 0.2 3.5 2.6 5.9 2.5-3.2 1.4 10.8 1.6 3.0 2.9 3.6 30 Source: EUROCONSTRUCT, EECFA - Eastern European Construction Forecasting Association 20 10 0 2014 2015 2016 2017E 2018E 2019E 2020E -10-20 -30-40 DE AT PL CZ SK HU CH Belgian Netherland Romania Denmark Sweden Russia Serbia Italy Croatia Slovenia Bulgaria
TIME Total construction output Non-residential construction Residential construction Civil engineering 2015 1.5% 0.5% 2.1% 2.5% 2016 2.8% 1.5% 5.4% -2.0% 2017E 3.6% 2.8% 5.0% 2.3% 2018E 2.7% 2.2% 2.9% 4.2% 2019E 2.6% 1.3% 1.9% 4.5% 2020E 1.2% 0.9% 1.2% 1.9% 2014=100 Source: EUROCONSTRUCT
14 12 Austria Czech Republic Germany Hungary Poland Slovak Republic 2014 5.6 6.1 5 7.8 9 13.2 2015 5.7 5 4.6 6.8 7.5 11.5 2016 6 4 4.2 5.1 6.2 9.6 2017 5.4 2.8 3.8 4.4 4.8 8.1 2018 5.3 3 3.7 4.3 4 7.5 2019 5.2 3.2 3.7 4.3 3.9 7.4 2020 5.1 3.4 3.6 4.2 3.8 6.5 2021 5.1 3.5 3.6 4.1 3.8 5.7 2022 5.2 3.5 3.5 4 3.8 5.7 10 8 6 4 2 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 Austria Czech Republic Germany Hungary Poland Slovak Republic Source: IMF
Austria Czech Republic Germany Hungary Poland Slovak Republic Europe 2014 1.5 0.3 0.8-0.2 0-0.1 2 2015 0.8 0.3 0.1-0.1-0.9-0.3 2.9 2016 1 0.7 0.4 0.4-0.6-0.5 1.5 2017 1.6 2.3 1.6 2.5 1.9 1.2 2.2 2018 1.8 1.8 1.5 3.2 2.3 1.4 2.2 2019 2.1 2 2 3 2.5 1.7 2.3 2020 2.2 2 2.1 3 2.5 1.9 2.3 2021 2.2 2 2.3 3 2.5 2 2.4 2022 2.2 2 2.5 3 2.5 2 2.4 Source: IMF 3.5 3 2.5 2 1.5 1 0.5 0-0.5 2014 2015 2016 2017 2018 2019 2020 2021 2022-1 -1.5 Austria Czech Republic Germany Hungary Poland Slovak Republic Europe Source: EUROSTAT Source: IMF
7 6 Germany Austria Czech Republic Slovak Republic Hungary Poland 2013 1.6 2.0 2.1 3.2 5.9 4.0 2014 1.2 1.5 1.6 2.1 4.8 3.5 2015 0.5 0.7 0.6 0.9 3.4 2.7 2016 0.1 0.4 0.4 0.5 3.1 3.0 2017 0.3 0.6 0.8 0.9 3.2 3.4 2018 0.6 0.8 1.6 1.0 3.7 4.0 2019 0.8 1.0 2.1 1.2 4.8 4.9 5 4 3 2 1 0 2013 2014 2015 2016 2017 2018 2019 Germany Austria Czech Republic Slovak Republic Hungary Poland Source: OECD