Here’s Why Investors Are Discussing ASX: CIM

Here’s Why Investors Are Discussing ASX: CIM

CIMIC Group Limited (ASX: CIM), a subsidiary of HOCHTIEF Australia Holdings Limited  and based in North Sydney, Australia, provides engineering-led construction, mining, mineral processing, as well as operation & maintenance services to clients across multiple sectors.

On April 16th, 2019, the Group announced its results for the first quarter of 2019 (1Q 2019) ended March 31st, 2019. Some of the key highlights include revenue of $ 3.4 billion, up 6% year-on-year (YOY), and solid performances across all operating companies with NPAT of $ 181 million, up 5% YOY. Besides, stable EBIT, PBT and NPAT margins of 8.2%, 7.3% and 5.3% respectively were recorded for the period. The Group closed the quarter with a robust financial position and net cash of $ 1.6 billion, up around $ 700 million YOY.

Recently, at CIMIC’s Annual General Meeting, the Executive Chairman, Mr Marcelino Fernández Verdes announced that the company was strongly positioned to deliver continued returns for shareholders, with an affirmative outlook across its key markets and a solid order book. He also recapitulated CIMIC’s good performance during the year 2018 as it generated higher cash flow and net cash.

Mr Fernández Verdes also informed the market about Nexplore, a global initiative to propel digital transformation across CIMIC’s activities in partnership with HOCHTIEF and ACS Groups. Under this initiative, digital innovation and development centres have been opened in Minneapolis and Frankfurt, and planned to be opened in Madrid and Sydney during 2019. The three companies aim to strategically tap into the emerging opportunities offered by latest technologies.

Some of the few factors driving CIMIC’s continued expansion upward include the growing support from the government and private sectors for infrastructure projects, increase in demand for public-private partnerships, investment by the resources sector, and the ongoing transition to renewable energy alternatives.

Subsequently, CIMIC Group Chief Executive Officer Michael Wright addressed the meeting informing that CIMIC had a robust level of work in hand with new projects worth more than $ 6 billion secured since the onset of 2019.

On April 4th, 2019, the Queensland Government appointed CIMIC Group companies CPB Contractors and UGL as contractors in an Alliance partnership to carry out the Rail, Integration and Systems (RIS) package of the $ 5.4-billion Cross River Rail project (10.2-km link).  In the same month, Otakaro Ltd assigned CPB Contractors to deliver the Christchurch Metro Sports Facility, the largest aquatic indoor recreation and community venue in New Zealand. The contract is expected to generate revenues of around NZD 221 million to CPB Contractors.

In addition, the government of New South Wales selected CPB Contractors, that is currently developing various other projects, to develop the Northern Road upgrade between Eaton Road and Littlefields Road, under the Western Sydney Infrastructure Plan. Construction is expected to commence mid of 2019 and be completed by 2021.

Furthermore, in March 2019, Thiess, CIMIC’s global mining services provider, through Majwe Mining Joint Venture, secured an AUD 1.7-billion contract at Debswana Diamond Company’s Jwaneng Mine Cut 9 project in Botswana. While UGL, as part of another joint venture, was awarded a new contract for providing services on the Karratha Gas Plant, operated by Woodside Energy Limited.

For the year FY2018, CIMIC recorded growth across all operating companies that generated total revenue of $ 14.7 billion, up 9.2% on FY2017. The NPAT at $ 780.6 million was also higher by 11.2%, at the top end of prescribed guidance range of $ 720 million-$ 780 million.

On April 16th, 2019, the CIM stock settled the market session at AUD 48.240, down 1.35% with 327,667 shares traded. However, the stock has offered decent YTD return of 14.87% to its investors till date.


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