Leighton (LEI) Update

Submitted by Share Trading on 28 March, 2008 - 12:19

Leighton (LEI) has a Neutral recommendation on their company shares with a $50.23 price target from stock analyst Macquarie Research Equities.

Leighton (LEI): Firing Up in India

Leighton International (LEI) has won a $US720m pipeline project in India. The firm has been awarded the contract for the construction of offshore pipelines in India for Oil and natural Gas Corporation. Whilst the firm has strengthened its growth prospects on the back of the Al Habtoor joint venture in the Emirates it appears the firm is progressing its global growth prospects by winning such a deal. Macquarie Research Equities (MRE) currently maintains a Neutral recommendation on the stock with the underlying catalyst being the potential for further large project wins.

Implications for Leighton (LEI)

The project essentially involves the engineering, procurement and installation of over 200km of fixed and flexible pipelines in the Mumbai high field. The works are scheduled to begin in November 2008 and will be completed over three years. Oil and gas is a relatively new market for Leightons and may provide further integrated prospects for the company’s future growth. In addition to Oil and Gas prospects in India, other areas such as Transport infrastructure – particularly roads and rail, residential, industrial and commercial building – appear opportunistic.

Leighton (LEI) Recommendation

MRE maintain a Neutral recommendation on the stock with a $50.23 price target. They maintain a positive macro outlook for the firm but see further upside earnings as somewhat limited given the current global economic environment. Strong EPS growth is forecast for FY10 driven by Al Habtoor as amortisation runs off at the end of FY09.