Downer Enhances NZ Capability

Engineering & construction services company Downer EDI ((DOW)) has added another construction business with the acquisition of Hawkins in New Zealand. The private company is a bolt-on acquisition, which will make Downer the number two integrated construction player in New Zealand behind Fletcher Building ((FBU)).

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Upper For Downer

Engineering & construction conglomerate, Downer EDI (DOW), is moving with the times, countering the mining investment downturn with new business in infrastructure and ongoing work on the National Broadband Network. Net profit in the first half of $78m beat many broker forecasts, while FY17 net profit guidance has been raised by 7% to $175m.

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Is Downer’s Valuation Becoming Stretched?

Infrastructure, engineering and mining contractor, Downer EDI (DOW), has won a second major contract out of the three large Australian public sector projects recently up for grabs. The Sydney growth trains contract is worth $1.7bn and follows the contractual close of the Victorian government’s $2bn high capacity metro project, with Downer part of the Evolution Rail consortium.

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DOW – Macquarie rates the stock as Outperform

The broker has reinforced its positive view on Downer as the top pick in a tough sector following a guidance downgrade from electrical competitor Southern Cross Electrical ((SXE)). DOW stands out given it has less of a second half earnings skew than peers, offers strong cash flows and boasts a strong balance sheet which provides the opportunity for capital management and/or acquisitions, the broker notes.

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