Recent and fundamental context

OHL is a group of Spanish companies dedicated to construction and one of the oldest companies with more than 100 years.

It is the merger between two groups, General Society of Obrascón Construction and Construcciones Huarte. This takes place in 1998. In 1987 Juan Miguel Villar Mir takes control of the company and since 1991 he will start trading on the stock market.

OHL was invested in two IBEX35 groups, such as Colonial and Abertis, but it has sold its stake this year to save the company from the large debt it owed. The most relevant shareholders are the group that controls more than 50% and some American funds and banks.

During the period of the housing bubble in the period between 2000 and 2007, OHL advanced very quickly in capitalization and became a giant in the sector, reaching 20 euros. With the correction of the markets led by the bursting of the bubble and the bankruptcy of Lehman Brothers, the value would plummet in just one year to reach 4 Euro, with a capitalization close to 1 billion. Later I would go back up positions and it would be one of the IBEX35 companies that better bounced after the crisis. It would reach 65% of its fall in just two years and would get back to maxima in 5 years.

In 2015, scandals such as hiding the debt in its subsidiary in Mexico and its participation in dilapidated projects would begin to uncover. This would be the beginning of a correction that has not stopped until today. To regain confidence and invest in new projects that could solve these problems, a capital increase worth 1,000 million Euro would be made, after the fall to 8 Euro. That is, one new action for every two old ones. This far from getting solve the problem would aggravate it and would be values ​​of both capitalization and value of the action that would not be seen again.

The punishment would come to place the company in less than 1,000 million down from 2 Euro . And it is that the EBDITA between 2014 and 2015 would be reduced by half and the benefits would be very scarce. In 2016 it would suffer losses of 432 million due to the ruinous projects carried out . As an example the construction contract of the University of Montreal with a loss of 149 million and the rehabilitation of 476 million other projects.

This year would be the one that the presidency would change and that would be the son of Juan Miguel Villar Mir , curiously when everything was going to get worse, although this is pure coincidence. The illogical thing is that a person so old was not relieved long before his position. It also happens that Villar Mir father accumulates a large number of alleged crimes, mainly due to the years of governance of the PP, illegal financing of the PP and alleged bribes to political offices, including Ignacio González, vice president of the Community of Madrid that has already gone through prison and is disabled by his involvement in the Lezo case for corruption in the construction of Canal de Isabel II. And it is not by chance his position or his wealth, since it goes back to Franco's time whose role with the regime was of great importance. It was in 1987 when he decided to buy the company. In addition, he had relationships with other important characters of the century as Botín, the cula would be sponsoring the wedding of his daughter. And is that Banco Santander and other banks have had special relationship in the financing of your company. And it is that part of the favours he received, it was not bad managing capital, and buying, since OHL would repurchase it for one euro in 1987 and in 1996 he would buy another company such as Sefanitro for a lower cost value. This was a gift from Jose Mari, the former president of the government for so many years of support in electoral campaigns. This would later be one of the many scandals that OHL has carried out, since after the purchase, the workers would be fired and the floor would be passed from industrial to residential so that it could get a good pinch. No less than 240 million when he sold it to companies for the construction of houses. Two thousand homes, by the way, that would never see the light due to the crisis. After these would come much more commitments and corruption of the company, and it is not coincidence that in 2013 entered Josep Pique as a director of the company.

And it is that "God raises them and they come together", so it is not surprising that his granddaughter his daughter will marry one of the main defendants of the Lezo case, Javier López Madrid, friend of former adviser Francisco Granados involved in the Punic Operation "He has been charged in the case of Spain for the corruption of Jaume Matas in Mallorca and right now is one of the main businessmen involved in the case Gürtel, illegal financing of the PP, which is on track to last 10 years of instruction.

Making this statement about a part of the group's recent history and the history of its leaders, we arrived in June 2016, which is the moment in which your son takes control, when the company barely capitalized 650 million . That is, he was already on the edge of the precipice so the work that the son has had as president is the least important thing. The son had no choice but to apply great remedies to fight major problems and what he did was sell half of his company and start over with the other half. This seems to me of the most intelligent measures taken by a businessman since it costs a lot at times to get rid of assets that historically have given so many joys. He did it by selling the Concessions part to the Australian fund IFM Global Infrastructure for more than 2,000 million Euro. With this he would pay all the debt that several Spanish banks, including Santander or Bankia, granted to the company in 2015 due to its lack of liquidity. In addition, the bonds issued then have been paid .

Despite all the liquidity entry with the company's entry, the volatility of the value will be maximum as get a positive EBDITA , first goal of any company, will be frankly complicated . Many projects have to end and many will do so with losses and the new projects that are being projected and beginning to be carried out will begin to yield results at least by 2020.

Seen like this, it would not be surprising that next year there is a capital increase before any doubt of the feasibility that may arise. That is why the value is plagued by short positions, with 8.8% posted in mid-September . That said, I recommend being the furthest from this value for at least 4 years until you see what all this is left with.

Next, I present the data of fundamentals that I think are most important:

• Capitalization: At minimum, having gone from being worth more than 4,000 million to being very close to 200 million.
• Net Benefit: The main culprit in the situation of OHL as it has gone from not winning to generating large losses.
• EBDITA
• Debt/Ebdita: It will be one of the protagonists this year after having reduced the debt to just over 1,500 million after the sale of Concessions.
• PER

Technical analysis

If we look at the long-term chart we see a big drop since 2014 caused by very negative results, which were the prolegomena of what was to happen in later years. From there it would go from having very small profits to having large losses and the price would reach 2 Euro in just two years, a fall of 91% . After that the value would rebound strongly against all forecasts, reaching 5 Euro, with a revaluation of more than 200% in less than a year. This would be caused by the closing of shorts by several funds and the purchase of the company itself to mitigate losses. From here I would enter a side channel that was not broken until this year with the loss of the two Euro that would lead to a capitalization never seen before and to the action touched the half Euro. This seems to be the value that must not be transferred under any circumstances to avoid entering a new phase of stock market panic.



If we look at the graph of the short term we see how to lose the 2 Euro would be a new support at 1.7 euros that would not take long to drill the quote to the half Euro. From here it seems that is forming a new side channel between 1 and 0.5 Euro . If you are still in the value it would be advisable to undo positions as the maximum is touched in one euro and to enter another more stable value, expecting anything in the first half of 2020 results, since the 2019 will unfortunately be very bad .