Section 1: Company Overview and Fundamental Insights

1.1 Company Overview:

Aecon Group Inc (TSX: ARE) is a Canada-based company that operates in two segments: Construction and Concessions. The Construction segment includes various aspects of the construction of public and private infrastructure projects, mainly in the transportation sector. Its concessions segment is engaged in the development, financing, construction, and operation of infrastructure projects. Aecon generates the majority of its revenue from the Construction segment. Kalkine’s Real Estate Report covers the Investment Highlights, Key Financial Metrics, Risks, Technical Analysis along with the Valuation, Target Price, and Recommendation on the stock.

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 10 Shareholders:

The top 10 shareholders together form ~22.27% of the total shareholding. Mackenzie Financial Corporation and Mirae Asset Global Investments (USA) LLC hold a maximum stake in the company at ~­­­5.66% and ~4.96%, respectively.

1.4 Key Metrics:

The company is clocking healthy revenue growth and operating profit growth on the back of strong performance from all segments, which is a key positive. Moreover, on the TTM basis in Q2 2023 it reported higher recurring revenue, which is a significant plus. Furthermore, it reported a decent backlog along sequential decline in debt-to-equity ratio, demonstrating its strength and adaptability.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates: The below picture gives an overview of the company’s recent activities, such as the announcement regarding the Deerfoot Trail Improvements project and an update on financial results.

2.2 Insights on Q2 2023 Financial Performance:

Section 3: Key Risks, Company Outlook:

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

The stock has witnessed an upside of ~4.22% and a downside of ~12.75% over the last 1 month and 3 months respectively. Moreover, the stock is trading below the average of 52-week high price of CAD 14.04 and 52-week low price of CAD 8.29 providing an opportunity to ride the trend. Aecon Group Inc (TSX: ARE) was last covered on 15^th August 2023.

4.2 Fundamental Valuation

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is September 18, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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Disclaimer

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