Oddo BHF confirms its 'outperform' recommendation and its price target of 43.4 euros for Veolia, following results for 2023 in line with its expectations and the delivery of the public services group's trajectory to 2027.
'2023 confirms the continuation of the group's growth profile. We consider the strategic framework to be prudent in terms of EBITDA TMVA, in a context of demand for environmental services, and in line with our estimates", says the analyst.
The research firm also considers that the current valuation is still an obvious entry point, with 2024/26 EV/EBITDA ratios at a 29.4% discount to the historical average (8.1 times).
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Veolia Environnement is the world leader in environmental management services. Net sales break down by activity as follows:
- water-related services (40.6%; No. 1 worldwide): water resources management, drinking water distribution and delivery, wastewater collection, treatment and recovery, engineering, design, construction of water treatment facilities and customer relationship management, etc.;
- waste management services (32.4%; no. 1 worldwide): collection, treatment and recycling of liquid, solid, non-hazardous and hazardous waste, waste treatment and recovery through composting, energy recovery from waste, etc. Veolia Environnement also provides urban waste management services (maintenance and cleaning of public spaces, provision of mechanized street cleaning and façade treatment services), maintenance of industrial sites, and dismantling of industrial facilities and equipment at the end of their useful life;
- energy services (27%; No. 1 in Europe): delegated management of urban heating and air conditioning networks, management of thermal and multi-technique services (operation of heating systems, facility design, construction, and maintenance, etc.) and industrial services (industrial process analysis, production equipment operation, service, and maintenance), general management of buildings and public lighting.
Net sales are distributed geographically as follows: France (21.5%), Europe (41.9%), North America (7.4%), Asia (5.6%), Africa and the Middle East (4.9%), Pacific (4.3%), Latin America (4%) and other (10.4%).