CIMIC Group’s UGL wins contract extension with Sydney Trains

CIM

International contractor CIMIC Group Limited (ASX: CIM) announced an extension of contract secured by its services company UGL from Sydney Trains. The news sent the stock price to surge by 0.443%, closing the day’s session at $45.320 on 30 January 2019.

As per today’s market release, UGL has secured a two-year extension to its contract with Sydney Trains which is expected to generate a revenue of approximately $277 million. The contracts relate to the delivery of maintenance and logistics services for a section of Sydney’s metropolitan passenger rail fleet.

The extension forms part of UGL joint venture with UK-headquartered Unipart Rail which is a 70:30 joint venture between UGL and Unipart Rail. The Joint Venture combines the Unipart’s completed asset solutions for passenger car fleets with UGL’s asset management capability and expertise in Sydney’s metropolitan passenger rail fleet. 

CIMIC Group Chief Executive Officer Michael Wright said that the extension of the contract with Sydney Trains underlines the rail sector expertise and experience that the company holds. Mr. Wright added the company is together working to support the development of the Sydney rail network for the benefit of the people of New South Wales, now and into the future.

The Group further informed that this two-year extension will come into effect from July 2019 and aims to provide heavy maintenance and supply chain services to more than 1,050 passenger rail cars.

Moreover, this extension of the contract follows a recent $200 million maintenance service contract secured by UGL. Under that contract extension, UGL is required to supply turnaround and maintenance services to its oil and gas sectors clients in Australia. The contract will reportedly include the electrical, instrumentation and mechanical services at the Chevron-operated Wheatstone and Gorgon facilities in Western Australia for plant turnaround and brownfield execution services. The CIMIC Group told that this contract extension would deliver further and broader project and maintenance related services to the existing assets of its oil and gas sector clients across Victoria.

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On the financial front, the company confirmed the consistent growth in its top-line and bottom-line for the nine months to 30 September 2018. During this period, the company’s Net Profit After Tax increased by 13% to $564 million compared to the previous corresponding period. As per the company’s information, the revenue growth during the reporting period was increasingly driven by the significant contribution from all operating companies which were up by 11% to $10.7 billion.

The Group announced several key projects during 2018, including mining contract of $722 million in Australia and South America, asset maintenance and services contracts of $260 million in Australia, and construction contract of $1.3 billion in New Zealand, Australia and Asia. Further, the group confirmed its 2018 NPAT guidance to between $720 million and $780 million.

CIM stock settled at $45.320 on 30 January 2019 with a PE of 19.720 x and a market capitalization of $14.63 billion. The stock has witnessed a negative performance change of 6.12% over the past 12 months.


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