VEOLIA ENVIRONNEMENT : Berenberg lowers its target
June 20, 2024 at 03:24 pm IST
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Berenberg announced on Thursday that it had lowered its price target for Veolia Environnement from €33 to €32, while renewing its Buy recommendation on the stock.
The research firm explains that it sees an opportunity to buy the stock in view of the significant discount it currently commands in relation to the major American groups in the environmental services sector.
Since the European elections, its share price has fallen by around 9%, it points out, which corresponds to twice the fall in the CAC 40 index in the intervening period.
It's true," he continues, "that the cost of equity for French companies has risen as a result of the widening yield spread between OATs and German Bunds, which is now close to 80 basis points.
However, to justify current share price levels, the cost of equity would have to rise by a further four percentage points to 13.6%, says the analyst in a note.
Berenberg adds that the eventual arrival in power of the RN or the Left-wing Union would not change the situation much for the Group, which generates less than 20% of its operating income in France.
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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%).
VEOLIA ENVIRONNEMENT 
