Going nuclear: Assystem short notes

  • Business
    • One of the leading nuclear engineering companies in the world from France
    • Operating mainly in France, UK, Central Europe, Middle-East and India to benefit from new nuclear buildup market and maintenance and decommissionings of existing nuclear fleets
    • In the past, Assystem has focused more on maintenance engineering in France and UK, as the new-nuclear build-up market has been dead for last two-or-so decades
    • Now, there seems to be new boom in the nuclear build-up market, which is complete change relative to what Assystem has experienced in the past
    • Growth in the core Energy & Infrastructure engineering segment has been 10 %+ in the past, so if the old maintenance business is not lost, the new build-up market would mean acceleration of growth (by a lot per my gut feeling)
    • Assysttem is also serving other energy transition engineering needs
      • Renewable energy, hydrogen, rail and other public transportation, electricity grid
    • In short, Assystem seems to be big beneficiary of energy transition projects in the coming decades
  • Target Nuclear market situation
    • UK: One existing new-build on-going, one new announced + decommissionings and extensions of large nuclear fleet
    • France: Flamanville and ITER are existing buildups, also doing extensions and decommissionings of existing fleet, but big thing is, after two decades, rumored new nuclear buildup projects (6 units)
    • India plans to go from 7 to 63 GW by 2030s
      • If so, market would be equal to France, which is one of the biggest nuclear markets in the world
      • Assystem has subsidiary here with strategy to come the leading nuclear engineer in the market.
      • When China decided to go nuclear, it built huge amount of nuclear power plants.
      • Now Assystem has leg in to benefit from similar trend if it happens in the India market.
    • Turkey is Finishing Akkyu in 2026 and wants to build at least two more
      • Assystem has JV here so doesn’t matter who will do it, but if it will be done by EDF/FRamatome, it will mean big business for Assystem
    • Also Saudi-Arabia new nuclear buildup, UAE nuclear buildup, Egypt nuclear buildup and Utzbekistan and Czech investigating nuclear
  • M&A
    • Announced selling of non-core units and JVs, proceeds say 200 meur
    • Might sell Framatome JV (“committed” to hold for 2022), proceeds at book value would be some 130 MEUR
    • Will continue nuclear engineering and other energy transition engineering roll-up: has bought something every year in the past, contributing to growth
    • Experienced in M&A gymnastics: lot of transactions and buybacks in the past
  • Management
    • 50%> owner Dominique Louis “bet the farm” on nuclear engineering middle of Fukushima bear market, now seems to be paying off
  • Other
    • Market mood toward nuclear changing:
      • Spike in electricity prices, energy transition urgency and bad behaving Russia (supplying most of European gas) seem to have benefitted nuclear industry
      • UK announced one new plant, France announced committing to new nuclear projes, in in immediate aftermath of the European “gas-crisis”
      • Will accelerate new-nuclear projects over the the world? (everybody wants to be energy independent, nuclear is one way to do it)
      • Post-Fukusima nuclear bear market over?
  • Valuation
    • If you deduct 300 meur JVs (at book value) from 525 MEUR EV, the core operating EV/EBITA is 6, which is pretty cheap
    • If you calculate normalized “look through earnings” we are at around 10-11 P/E ratio, but JV interest makes the look through earnings little bit hairy to calculate

Disclosure: Long 4,6 % position. Note that this research is just random googling, I’m not expert in the energy industry. Do your own DD.

3 thoughts on “Going nuclear: Assystem short notes

  1. One thing I forget to mention, to understand the scale of the new-build market opportunity, was that about 10 % of nuclear plant over night costs are engineering. For example EDF estimates that cost of building six ERP2 plants would cost 56 billion euros, of which engineering would be 5,6 billion euros. With similar math the engineering opportunity in UK would be 1 billion euros, India say 50 billion euros, Turkey 2 billion euros. Not all this is available for Assystem as it’s external engineer and some or even most can be done by equipment providers etc, nevertheless it’s big new market opportunity for Assystem.



  2. looks like you (partially) swapped to spanish re
    -(how) are you dealing with the 19% spanish dividend withholding tax?
    -how are you dealing in general with financial transaction tax, several european countries have ftt rates from 0.5-1% making it harder to move in and out and switch between stocks….


    • Yeah moved some of the portfolio to Spain developers Aedas and Metrovacesa after doubling Assystem. Aedas is in growth mode so it pays less dividends so the tax headwind is not as bad. Finland has double taxation contract with Spain so I can redeem excess tax if I get double taxed with divs (difficult though, hope my broker Lynx does it automatically so I don’t have to go there). I have encountered the transaction tax but I don’t think (?) it’s the case here.


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