Hochtief AG
XETRA:HOT
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Intrinsic Value
The intrinsic value of one HOT stock under the Base Case scenario is 192.23 EUR. Compared to the current market price of 118.2 EUR, Hochtief AG is Undervalued by 39%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
Valuation Backtest
Hochtief AG
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Fundamental Analysis
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Hochtief AG, a global leader in construction and engineering, has a rich history that dates back to its founding in 1874. Headquartered in Essen, Germany, the company has carved a niche for itself as one of the largest and most reputable construction firms worldwide. With a diverse portfolio that includes major infrastructure projects, transportation systems, and urban development, Hochtief operates primarily through its key segments: Concessions, Construction, and Services. The company has established a solid reputation for delivering complex projects with a commitment to sustainability and innovation, thereby attracting significant investments and partnerships across Europe, the Americas,...
Hochtief AG, a global leader in construction and engineering, has a rich history that dates back to its founding in 1874. Headquartered in Essen, Germany, the company has carved a niche for itself as one of the largest and most reputable construction firms worldwide. With a diverse portfolio that includes major infrastructure projects, transportation systems, and urban development, Hochtief operates primarily through its key segments: Concessions, Construction, and Services. The company has established a solid reputation for delivering complex projects with a commitment to sustainability and innovation, thereby attracting significant investments and partnerships across Europe, the Americas, and Asia-Pacific. This strategic geographic diversification offers resilience against market fluctuations, making it an appealing choice for investors seeking stability.
Investors will find Hochtief AG's robust backlog of projects particularly enticing, as it signals future revenue and growth potential. The company is also known for its aligned interests with shareholders, demonstrated through its strong dividend policy and proactive share buyback initiatives. Recently, Hochtief has placed a strong emphasis on digitalization and sustainability, aiming to integrate cutting-edge technologies and environmentally friendly practices into its operations. This forward-thinking approach not only enhances operational efficiency but also positions the company as a leader in sustainable construction—a trait increasingly valued by modern investors. With its proven track record, strategic focus on growth, and commitment to innovation, Hochtief AG represents a compelling opportunity for those looking to invest in a solid player within the construction industry.
Hochtief AG, a prominent international construction and engineering company based in Germany, operates through several core business segments. Here’s an overview of those segments:
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Construction: This is the primary segment of Hochtief, focusing on general construction activities across various sectors. It includes building construction, civil engineering, and infrastructure development. The construction segment involves projects such as roads, bridges, and various public and private building projects.
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Project Development: In this segment, Hochtief engages in the development of real estate and infrastructure projects. This includes the planning, financing, and execution of projects, often in partnerships or public-private partnerships (PPPs). This segment is essential for generating long-term revenue through stable projects.
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Services: Hochtief offers facility management and support services within this segment. The company provides services to maintain and manage buildings and infrastructure, ensuring operational efficiency and sustainability. This segment also includes lifecycle management solutions, enhancing the value proposition to clients.
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Public-Private Partnerships (PPP): Hochtief is heavily involved in the PPP space, where it collaborates with public entities to execute large-scale infrastructure projects. This segment includes funding, designing, constructing, and operating public infrastructure projects, which allows the company to diversify its revenue streams and reduce risk exposure.
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International Operations: Hochtief has significant international operations, particularly in regions like North America, Australia, and parts of Europe. This segment is focused on leveraging Hochtief’s global expertise to execute large projects in various markets, adapting to local demands and regulatory environments.
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Specialty Areas: Within its core business, Hochtief often focuses on specialized construction areas such as tunneling, underground construction, and large-scale civil engineering projects.
Each of these segments plays a vital role in Hochtief's overall strategy, contributing to its position as one of the leading construction and engineering companies globally. The firm's diversification across these segments aids in mitigating risks associated with economic fluctuations and sector-specific downturns.
Hochtief AG, one of the leading construction companies in Europe, possesses several unique competitive advantages that distinguish it from its rivals:
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Global Presence: Hochtief operates in various international markets, allowing it to capitalize on diverse opportunities and mitigate risks associated with economic downturns in specific regions.
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Strong Financial Position: The company has a robust balance sheet, enabling it to take on large-scale projects and weather financial uncertainties better than some competitors.
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Diverse Portfolio: Hochtief has a diversified service offering, including infrastructure, building, and project management services. This diversification helps it attract a wide range of clients and stabilize revenue streams.
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Innovative Technology and Practices: The company invests in cutting-edge construction technologies and sustainable practices, enhancing operational efficiency and reducing costs. This includes adopting Building Information Modeling (BIM) and advanced project management software.
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Strategic Partnerships and Acquisitions: Hochtief's strategic alliances and acquisitions provide access to new markets and advanced expertise, strengthening its competitive stance.
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Expertise in Infrastructure Projects: The company is well-known for its expertise in large-scale infrastructure projects, particularly in transportation and public-private partnerships, which can be complex and require specialized knowledge.
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Strong Brand Reputation: Hochtief has a long-standing reputation for quality and reliability in the construction industry, which can lead to repeat business and customer loyalty.
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Sustainability Focus: Increasingly, clients prioritize sustainability. Hochtief embraces sustainable construction practices, positioning itself competitively in a market that values environmentally friendly solutions.
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Skilled Workforce: The company invests in training and development, ensuring a skilled workforce capable of delivering high-quality projects efficiently.
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Geographical and Sector Diversification: With operations spanning multiple sectors (such as residential, commercial, and infrastructure) and geographies, Hochtief can offset downturns in any single segment or market with stability from others.
These advantages enable Hochtief AG to maintain a competitive edge in the construction industry, continue expanding its market share, and deliver value to its stakeholders.
As of my last update, Hochtief AG, a large construction and engineering company based in Germany, faces several risks and challenges that could impact its operations and financial performance. Here are some key areas to consider:
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Economic Fluctuations: Economic downturns can significantly affect construction demand. Recessions can lead to reduced public and private investments in infrastructure projects.
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Supply Chain Disruptions: The construction industry relies heavily on a smooth supply chain for materials and labor. Global supply chain issues, exacerbated by geopolitical tensions, the COVID-19 pandemic, and other disruptions, can result in delays and increased costs.
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Labor Shortages: The construction industry is experiencing a shortage of skilled labor in many regions. This can lead to project delays and increased labor costs.
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Regulatory Changes: Changes in environmental regulations, building codes, or labor laws can impact project costs and timelines. Compliance with these regulations is essential but can be challenging.
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Competition: Hochtief faces significant competition from other large construction companies and local firms, which can pressure margins and profitability.
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Project Execution Risks: Large construction projects come with inherent execution risks, including cost overruns, delays, and technical challenges that can negatively affect project profitability.
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Currency Fluctuations: As an international company, Hochtief's profitability can be impacted by fluctuations in exchange rates, which affect its revenues from foreign operations.
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Sustainability and ESG Expectations: Increasing pressure from stakeholders to adopt sustainable practices and improve Environmental, Social, and Governance (ESG) performance can require significant investment and changes in operations.
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Technological Disruption: Advancements in construction technologies, including automation and digitalization, mean that companies must continually adapt. Failing to innovate could lead to a competitive disadvantage.
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Geopolitical Risks: Operating in various regions exposes Hochtief to geopolitical risks, including political instability, trade restrictions, and changes in government policies that can affect operations and profitability.
Considering these factors, Hochtief AG must strategize effectively to mitigate these risks while capitalizing on opportunities in the construction market. Regular risk assessments and strategic planning will be vital for navigating these challenges.
Revenue & Expenses Breakdown
Hochtief AG
Balance Sheet Decomposition
Hochtief AG
Current Assets | 16B |
Cash & Short-Term Investments | 5.5B |
Receivables | 8.1B |
Other Current Assets | 2.4B |
Non-Current Assets | 8B |
Long-Term Investments | 1.9B |
PP&E | 1.9B |
Intangibles | 3.4B |
Other Non-Current Assets | 892.5m |
Current Liabilities | 14.2B |
Accounts Payable | 9.8B |
Other Current Liabilities | 4.4B |
Non-Current Liabilities | 9.1B |
Long-Term Debt | 7.6B |
Other Non-Current Liabilities | 1.5B |
Earnings Waterfall
Hochtief AG
Revenue
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37.7B
EUR
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Cost of Revenue
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-28.1B
EUR
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Gross Profit
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9.6B
EUR
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Operating Expenses
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-8.5B
EUR
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Operating Income
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1.1B
EUR
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Other Expenses
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-253.2m
EUR
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Net Income
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853.7m
EUR
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Free Cash Flow Analysis
Hochtief AG
EUR | |
Free Cash Flow | EUR |
In the first half of 2023, HOCHTIEF witnessed robust sales and profit growth, underpinned by significant high-tech infrastructure projects and order book improvements. Sales rose by 9% to EUR 13 billion, with operational net profit increasing 8% to EUR 270 million. Cash flow grew considerably, contributing to a solid net cash of EUR 346 million, a year-on-year rise of EUR 381 million. New orders spiked by 26% over the previous year, leading to an order book of EUR 53.6 billion, showing an 8% annual increase when adjusted for FX impacts. The company's strategic shift towards high-tech, energy transition, and sustainable infrastructure combined with prudent risk management bolstered these results, with low-risk orders making up 85% of their book. Investments in energy storage systems, electric vehicle battery production, and digital infrastructure, including EDGE data centers, underscore HOCHTIEF's pursuit of growth in emerging, high-demand sectors.
What is Earnings Call?
HOT Profitability Score
Profitability Due Diligence
Hochtief AG's profitability score is 60/100. The higher the profitability score, the more profitable the company is.
Score
Hochtief AG's profitability score is 60/100. The higher the profitability score, the more profitable the company is.
HOT Solvency Score
Solvency Due Diligence
Hochtief AG's solvency score is 32/100. The higher the solvency score, the more solvent the company is.
Score
Hochtief AG's solvency score is 32/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
HOT Price Targets Summary
Hochtief AG
According to Wall Street analysts, the average 1-year price target for HOT is 121.63 EUR with a low forecast of 96.96 EUR and a high forecast of 144.9 EUR.
Dividends
Current shareholder yield for HOT is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
Ownership
HOT Insider Trading
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Profile
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Description
Hochtief AG operates as a holding company, which engages in the real estate business. The company is headquartered in Essen, Nordrhein-Westfalen and currently employs 33,835 full-time employees. Through its subsidiaries, Hochtief delivers construction and civil engineering projects for the transportation, energy and urban infrastructure industries, as well as the mining industry. The company operates three business divisions: Hochtief Americas coordinates construction activities in the United States, Canada and Brazil; Hochtief Asia Pacific covers construction activities in Asia and Australia involving building, infrastructure and contract mining projects, and Hochtief Europe conducts construction projects in Europe and select regions worldwide, involving real estate and transport infrastructure, such as tunnels, bridges, airports, marine ports and sports stadiums. The firm operates a number of subsidiaries, notably Turner Construction Co., Flatiron Construction Corp., CIMIC Group Ltd., and Hochtief Infrastructure GmbH, It operates as a subsidiary of Actividades de Construccion y Servicios SA.
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IPO
Employees
Officers
The intrinsic value of one HOT stock under the Base Case scenario is 192.23 EUR.
Compared to the current market price of 118.2 EUR, Hochtief AG is Undervalued by 39%.