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Licking my grazings of the sp tumble.

 

Picked the wrong stock on a slide.

 

Buggered why it should though. It's a construction company like no other in Australia.

It's multiple holdings / subsiduaries compete with eachother, so perpetual contracts are a near certainty for the mother company.

 

Its variety of jobs are diverse and lucrative, across nations,

so neither domestic economies nor individual contract failure are likely to set it back.

Losses of 130 million on Spencer Street or The Hilton were absorbed easily and the company still boasted 20% profit increase.

 

The new accounting methods, from my reading, will spread profit from large complex jobs into fruition earlier, ie) the client coughs up more of the contract money earlier.

The onus of job completion before the big payday is being reduced.

Having once been a trade contractor, I know more money upfront will make the job less of a burden on other jobs and cash flow. That's how I read it anyway.

I'll hold as a 'bluechip', weather the down trend, and enjoy the dividend.

For what it is worth, a popular, conservative and successful analyst has an Accumulate rec on LEI. It is always the hardest time to buy though, in the dips.

 

Would love a response if anyone watches this.

Ciao, Bello.

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In reply to: bello on Monday 21/02/05 02:58pm

Had them until a few months ago. Sold much too early. Drat.

 

There was a piece in the "marcus today" newsletter on the reasons for the slide. Their 50% +/- German shareholder is apparently in a deal of financial strife (as was Walters German parent). The suggestion in the market place is that either:

 

The German parent is desperate and could use its majority share holding to suit its own needs and to the dissadvantage of the minor shareholders.

 

OR

 

The German parent has ordered Leightons to do itself up for sale. Witness the accounting fiddle that Leightons have used to inflate profits this half year.

 

 

The reason I sold was that I read a market research article arguing that the profitability of construction companies drops off at the peak of the cycle. They argued, with some statistics to back up the argument, that when all construction companies have got heaps of work on the books, then costs tend to run out of control. They also get a bit sloppy with their cost control when there is excessive work available. Its a rush to get the job done at any cost. Skilled labour is in short supply and expensive at the top of the cycle. They argued that maximum profitability is in the period before the peak when the financial disciplines from the recession just past are still in place, and there is sufficient work to run all their assets flat out.

 

That been said, leightons are a great company and very well managed. They are always on my watch list if the price is right.

 

 

 

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Thanks fo rthe info Remliff

 

Leightons German parent interest Hochtief, seem to be operating quite profitably acording to their reports of 16 Feb (see link here

 

QUOTE
HOCHTIEF achieves double-digit earnings growth  Essen
16.02.2005


Preliminary results for fiscal 2004

Profit before taxes gains some 17 percent

New orders grow around 8 percent

Work done rises by about 13 percent

Order backlog increases about 13 percent


With the 2004 fiscal year at an end, HOCHTIEF fully confirms its forecast with profit before taxes increasing some 17 percent to approximately EUR 187 million (2003: EUR 159.5 million). Consolidated net profit likewise fulfilled expectations in spite of a higher tax rate. New orders are up around 8 percent to some EUR 15.5 billion (2003: EUR 14.35 billion). Work done rose about 13 percent to some EUR 13 billion (2003: EUR 11.50 billion). The order backlog increased about 13 percent to some EUR 18.6 billion (2003: EUR 16.47 billion).


Dr. Hans-Peter Keitel, Chairman of the Executive Board of HOCHTIEF, said: ÃÆâ€â„¢ÃƒÆ’ƒâ€Â ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒ¢Ã¢â‚¬Å¾Ã‚¢ÃƒÆ’ƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’‚¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¬ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’‚¦ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“We have achieved very strong earnings growth especially in our construction-related activities. We are generating healthy returns in our core construction operations throughout the Group. Our strategy of addressing the entire value chain with our offerings is successfulÃÆâ€â„¢ÃƒÆ’ƒâ€Â ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒ¢Ã¢â‚¬Å¾Ã‚¢ÃƒÆ’ƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’‚¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¬ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ÂÂ.


The Group will publish full figures for the 2004 fiscal year at its business results press conference on March 23, 2005. The Executive Board will be proposing to the Supervisory Board a dividend of EUR 0.75 per no-par-value share (prior year: EUR 0.65) for approval by the General ShareholdersÃÆâ€â„¢ÃƒÆ’ƒâ€Â ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒ¢Ã¢â‚¬Å¾Ã‚¢ÃƒÆ’ƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’‚¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¬ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’‚¾ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ Meeting on May 18, 2005

 

 

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In reply to: PsyberG on Thursday 24/02/05 12:27pm

I haven't followed them closely, but I have seen it reported that the Leighton shareholding is about the only thing that Hochtief has going for it.

 

Perhaps all that profit growth is what Leighton is contributing?

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  • 2 weeks later...
It needs to be MI because it's fully priced by any measure, PE, Yield, Div Yield, etc...and let's not forget they made forecast NPAT only because of a change to accounting method.....to justify current SP they need to keep the work coming and then some and do a better job managing costs and contracts than they have at Spencer St....they also need to hang on to engineers and other skilled workers who are apparently in short supply.....overseas growth, plus increased local infra. spend will help but still expensive for mine.
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A lovely new contract for Leightons "the conglomerate"

3 year power infrastructure and service deal with Alinta valued at $100 million.

Diversity of sector contracts will see them through the rough patches in the economy.

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