EFTA01385541

> BLT 0 Vinci — Guillermo Fernandez-Gao, BUY, close €86.7, €94.1 tgt, 9% upside ■ Vinci is a large company (market cap > €50bn) with substantial absolute cash generation potential at E4.5bn FCF ex growth capex, implying a 9.3% yield (well above Ferrovial's at 4.5%). - Growth capex derives from stimulus programmes and construction of new assets (which is M&A-like in nature). ■ 8% EBIT CAGR to 2019E driven mostly by French construction market recovery boosting the late-cycle Contracting segment (c30% of value, growing at a 12% CAGR to 2019). - Infrastructure should be an important driver, spurred by meaningful contracts in railways (such as the Grand Paris Metro network). ■ Earnings visibility in Autoroutes division (50% of Group valuation) due to resilient and predictable cash flows. We expect a 4.1% EBIT CAGR to 2019E — substantial for such mature assets ■ A takeover of ADP would be accretive from day one. Even if we assume no synergies at all and a 30% takeover premium, EPS would increase by 11% in 2018E. This potential deal has seen escalating newsflow. - This would also help reduce Vinci's overexposure to the French economy. Domestic EBITDA would fall from 76% to 63% of the total (assuming ADP traffic mix, Intl 84% of its total). ■ Vinci trades on 16.5x PIE. Our target implies an adjusted FCF yield of 8.5%. ■ Catalysts: FY 2017 Results on 07-Feb. We are 2% above consensus at EBIT level. Related DB Research: Vinci: How Vinci would look with ADP in it (Fernandez-Gao) Transportation Outlook 2018: Going Places (Chu) Deutsche Bank The Contracting segment is growing at a 12% EBIT CAGR to 2019E 1.800 1,600 1,400 1.200 1.000 800 600 400 200 0 r• EBIT (EURm. LHS) —EBIT margin (RHS) hi 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Deutsche Bank, company dale 6% 5% 4% 3% 2% Impressive FCF generation (2018E, EUR bn) — a 9.3% yield ex growth capex 6.8 MIS - 0.5 ■ - 1.4 0.1 - 0.7 4.3 1 6 -1.3 - 1A CF from Cost of operations Debt Souroo: Deutsche Bank. company data Taxes Working Operating Operating Growth Dividends Net debt Capital Capex FCF Capex reduction Var. (M&A) Deutsche Bank Research• European aptly Focus -January 2018 CONFIDENTIAL - PURSUANT TO FED. R. GRIM. P. 6(e) CONFIDENTIAL 42 DB-SDNY-0086827 SDNY_GM_00233011 EFTA01385541