Australian (ASX) Stock Market Forum

CIM - CIMIC Group

Jump to new
Re: LEI - Leighton Holdings

Hi Miner.
I don't hold LEI although I've been a longtime admirer and it's firmly on my watchlist but I think it's just a sign of the times/market.
LEI is still at a higher historical P/E than BHP which is some measure that it hasn't fallen into the "write-off " basket. Anything to do with development/capital works/expenditure is going to do it hard for a while yet. I'm picking that LEI will be worth a hard look when the trend turns.

;)
 
Re: LEI - Leighton Holdings

I've just read an email from Macquarie Equities in which they downgrade LEI to "Hold" on account of the slowdown in world GDP growth and expected effect on infrastructure spending. Probably accounts for the weakness in the LEI S/P ?
 
Re: LEI - Leighton Holdings

oldblue said:
I've just read an email from Macquarie Equities in which they downgrade LEI to "Hold" on account of the slowdown in world GDP growth and expected effect on infrastructure spending. Probably accounts for the weakness in the LEI S/P ?
Click to expand...

Thanks a lot Old blue for sharing with Macquaire report.

I also noticed InterSuisse has recommended a BUY note for LEI when market slumped and So Bell even at a much higher price.

The SP further eroded at the end of day today and with a rise today in ASX and high rise in Dow Index probably the market will correct itself tomorrow in Oz and NYSE tonight.

I will watch LEI tomorrow for an opportunity :confused:
 
Re: LEI - Leighton Holdings

Miner said:
Hi
Could any one provide any clue on LEI ?
When the market has been rising but LEI has been descending continuously.
Have they lost any contract or was it because o any cancellation of contract with MAH due to market slump and projec cancellation ?

Any thoughts or knowledge sharing will be appreciated

Regards
Click to expand...

Well I bought in today surely something has to give.. reminds of bhps fall but where is the bottom? They just got approval yesterday for Royal north shore and even with that huge contract they still getting hammered, anyone know why?
 
Re: LEI - Leighton Holdings

zorrro13 said:
Well I bought in today surely something has to give.. reminds of bhps fall but where is the bottom? They just got approval yesterday for Royal north shore and even with that huge contract they still getting hammered, anyone know why?
Click to expand...
Entire contruction industry is freezing up. A lot may be factored in to the current sp but I'm not sure if everyone is aware of the effect this will have on overall development and infrastructure projects around the world.

Construction freeze hits city
Cameron Houston and Royce Millar
November 1, 2008

DEVELOPMENT in Melbourne is expected to come to a virtual standstill over the next few years, with commercial building projects worth billions of dollars frozen by the financial meltdown.
 
Re: LEI - Leighton Holdings

In the coming days the construction sector is going to come down. And many development projects will be taking place. The construction sector is down at present worldwide.
 
Re: LEI - Leighton Holdings

Thanks Kennas .........really bad news for construction and more importantly
Steel ......................:eek:
 
Re: LEI - Leighton Holdings

That is right that construction gloomy picture in LEI like companies will short the demand of steel

When the market is bad for steel (BSL and ONe Steel), then the news is bad for iron ore (BHP, FMG, Rio and others). metallurgical coal (RIV, Mccarthur and other coal) used for steel, alloy elements (Moly, Nickel and Vanadium), Cement (CSR, Brick works, Brighton) - gosh and then holes in our pockets and super fund :banghead:

When do we get the good news probably another war like Iraq will inflate the consumption and pumping money into market - bad omen but that is the reality in life when consumption fails down. So if I stretch my imagination on a long shot to see Iran gets attacked by USA under some pretext in next 12 months :confused:
 
Re: LEI - Leighton Holdings

SO MANY contracts LEI won but the share price sliding inversely.

It has gone to about $19 from $24. Does any one know what could be reason which does not justify the wining contracts ?:banghead:
 
Re: LEI - Leighton Holdings

Why does leighton continue to drop in the face of a rise all other stocks? This stock seems pretty cheap to me, but am I missing somthing?

I want to buy but am hesitant in case it drops further...
 
Re: LEI - Leighton Holdings

Johno said:
Why does leighton continue to drop in the face of a rise all other stocks? This stock seems pretty cheap to me, but am I missing somthing?

I want to buy but am hesitant in case it drops further...
Click to expand...
Seems unusual considering all the new contracts they are winning and already have in the pipeline.

Like many other stocks, the market is factoring a reduction in demand and earnings due to the potential long and deep recession.

VERY long term these guys should do OK, so depends on your horizon. Worst case the world explodes and 4 horses break out of the cracks in the ground and carry your money off to armageddon. A better case might be a 1-3 year recession which means the US is already 1/3 into it. We'll probably find soon that we have been in recession for a few months, but how long to go?

Place your bets.
 
Re: LEI - Leighton Holdings

The company has massive amounts of work in hand, at all time highs I think. Things are slowing down, but you also need to consider that this is the time Governments will start spending to give the economy a boost, and one way they spend is through infrastructure. Leighton is, amoung other things, a world class construction company, and will therefore benefit from such expenditure.

I was reading from one of their announcements that the company is sticking by its guidance of 15% profit growth for the coming year. They also have stuck by their commitment to pay out about 70% of profits in dividends. You go do the maths regarding what the yield will be if this holds true and you buy LEI around the $18-22 mark. It really doesn't look too bad at all.

Just my thoughts.
 
Re: LEI - Leighton Holdings

This article offers some suggestions re reasons for falling SP.
I've held LEI, sold at $53.50, would like to buy back in but won't in this climate.

FN ARENA NEWS - 25/11/2008


At its AGM earlier in the month, construction leader Leighton Holdings' (LEI) management maintained an upbeat view of the company's ongoing prospects, implying a level of immunity to the global economic downturn. Management noted that the Australian government is set to pour money into infrastructure, that rumours of the local mining industry's demise are exaggerated, and that the Middle East is still offering golden opportunities for further extravagant construction.

Analysts were not so blindly optimistic however, and considered Leighton's 15% earnings growth expectation in FY09 might mask the potential for a disappointing FY10. After all, most of FY09's contracts were already sown up. FY09 might prove a year when new contracts quickly dry up. Moreover, write-downs on local toll road contracts had a feeling of "this might just be the beginning" about them. (See "Leighton's Rose-Tinted Glasses"; Australia; 07/11/08).

In their report at the time, JP Morgan's analysts noted "we remain comfortable with our current FY09 profit growth forecast of 14%" but suggested consensus estimates were too high. They were right, as their peers took the opportunity to slash earnings forecasts and subsequently target prices from an average of $47.29 to $37.53. This figure is still artificial, as Deutsche Bank is yet to come back with a promised review and so its target remains at an outlying $51.50.

JPM nevertheless left its target at $44.41, given its "comfort".

One or two brokers did make note of Leighton's booming business in Dubai, but were happy with management's claim that for every Dubai there is an Abu Dhabi or Qatar waiting in the wings. That left most of the concern around Leighton's local contracts and whether or not there would indeed be a downturn in mining sector construction, and as to whether toll road write-downs may not become more severe. All up, analysts were happy to just be cautious.

I also made the following comment in the previous article:

"I've been reliably informed by a source close to the action that markets tend to believe Dubai is a fantasy world built on petrodollars, but that's a misconception because Dubai actually has no oil. The spectacular "city in the sand" is really a city based entirely on debt".

It is thus interesting to note JP Morgan's comments this morning:

"Dubai's rapid modernisation has been built on cheap debt. With debt markets closed, there are now serious questions being asked about the ability of companies linked to the Dubai government to raise new debt to refinance their existing obligations and continue to pay for the emirate's rapid development."

This comment forms the basis of JP Morgan's rethink on Leighton in a report this morning. Having been comfortable with their earnings forecasts earlier in the month, the analysts are now not so comfortable with the Middle East. They have slashed their target from $41.44 to $23.20 - just like that.

While making no reference to Leighton's suggestion that other Emirates would make up for any downturn in Dubai, the analysts suggest that any inability of Dubai government entities to refinance their debt will cast doubt over further construction development. A material downturn in Leighton's Gulf operations will have a meaningful impact on the company, they note.

If Dubai is about to struggle you wouldn't know about it. Last weekend saw a $30m party thrown for the opening of the $2.32bn Atlantis hotel on Dubai's artificial Palm Island. Kylie reportedly pocketed $4m for 45 minutes work and the firework display was said to be seven times larger than the one at the Beijing opening ceremony. The CEO of the company that built the hotel was reportedly embarrassed by the excess in a time of global economic hardship.

Pride comes before a fall.

Apart from JPM's sudden concern over Dubai, the analysts also aired their belief this morning that many Australian resources expansion projects will be put on hold until demand recovers. And they also expect further impairment charges on ConnectEast ((CEU)) and RiverCity ((RCY)). In general, the analysts suggest "the global financial crisis appears likely to trigger a synchronised global economic recession".

Not so comfortable after all.

JPM has responded to its new fears by downgrading Leighton to Underweight, introducing the first Sell rating into a B/H/S ratio which is now 5/3/1 in the FNArena database.
Click to expand...
 
Re: LEI - Leighton Holdings

Julia said:
This article offers some suggestions re reasons for falling SP.
I've held LEI, sold at $53.50, would like to buy back in but won't in this climate.
Click to expand...
Thanks for the article Julia.

Did someone in there have a $51 price target? For when? 2020? :eek: And someone was 'comfortable' with $45 ish.... eeek

Makes you wonder why anyone bothers to take notice of those valuations/targets.

They are so far behind the curve it's crazy. Perhaps because if they give a sell recommendation too early, the industry won't allow them access to briefings etc ... In fact, it can get to the point where analysts can be sued for issuing a sell. Something my brother had to deal with a couple of years ago. FFS!

Still, can't help but think the market might be going into an oversold state, or was and is recovering a little of that. I think the market's potentially factoring in major disaster for the infrastructure players.

Having said that,

Maybe it will be total distruction? :eek:

Hitting a zone of support here, but does technical support matter anymore?

:confused:
 

Attachments

  • LEI.gif
    LEI.gif
    27.9 KB · Views: 9
Re: LEI - Leighton Holdings

Bell Potters have valued LEI as $35 about. Still a buy.

LEI lost some project and won.

One of the directors sold considerable shares end of last month.

It seems around 24-26 Nov few things were reported in ASX

WIth market it may not be an unlikely event that LEI again takes control of MAH in next 6 months or so.

Extracted from Bell Report with some formatting done (less than 10% content so copy right is not violated) original size 800 kb not allowed due to size restrcition

"$ 3.8b Dubai win: Still some gas in the tank.

Al Habtoor Leighton wins AED8.85bn contract (A$3.75bn LEI shr $1.7bn LEI’s UAE JV Al Habtoor-Leighton signed a letter of intent on a $3.8bn 4-year construction contract (not incl. design) for the Dubai Pearl mixed use development comprising a luxury hotel, commercial, retail, residential and leisure facilities. The contract is fixed price, though major input costs of c50% are recoverable at cost.

Can government funded work fill the void as the economy slows?

Elsewhere Aust. economic data today showed some resilience in the construction cycle with work done surprising on the upside (4.4% vs UBSe 1.5%).
This is a function of the 2-3yr lag between work commitments & work done. We note the strength in public construction at +8.8%. LEI have an estimated c95% of FY09 & 55-75% of FY10 work locked in today. Hence the important issue is understanding the growth profile into FY11 & onwards.

Weak macro outlook though work still there & cost pressures reducing
While LEI is exposed to the construction cycle & broader economy, its scale &
diversification may provide opportunities as competitors fall away & cost pressures subside.

(26/11) Today’s Dubai win (in a market supposedly cooling) shows that LEI can still drive revenue through large projects even as the pace slows. Assuming an 8% margin this is c4% of NPAT for 4 years locked in.

PE-based PT $34.50 & Buy recommendation unchanged.

We (BPS) believe the key driver for LEI is whether governments commit soon enough & in sufficient size to avoid a 2011 hole as private sector infrastructure support & resources slow. In the short term we look to the $700m Single LEAP defence accommodation project contract as the next likely piece of positive newsflow, expected in the next c2 months."
 

Attachments

  • LEI DUBAI PROJ.pdf
    19.1 KB · Views: 6
  • LEI SALE DIRECTOR.pdf
    39.9 KB · Views: 10
  • LEI DUBAI BUY PROJ.pdf
    100.1 KB · Views: 7
Re: LEI - Leighton Holdings

And, yet anoter project awarded.

Must be a fvckin big slowdown coming in 2010....

Al Habtoor – Murray & Roberts – Takenaka JV awarded
AED 4.9 billion (A$2 billion) Dubai Airport Concourse 3 project

The Al Habtoor – Murray & Roberts – Takenaka (HMRT) Joint Venture has been awarded an AED 4.9 billion (A$2 billion) contract for the construction of Dubai Airport’s new Concourse 3 for Dubai’s Department of Civil Aviation (DCA).

The project is worth AED 2 billion (A$800 million) to the Al Habtoor Leighton Group.
 
Re: LEI - Leighton Holdings

I wonder how much of the $38Bn that the Victorian Government just announced to be spent on road and rail infrastructure will end up being awarded to Leighton or subsidiaries.

Here comes the infrastructure spending, next stop, Federal Government.
 
Re: LEI - Leighton Holdings

Reported in Compare Shares with no data or reasoning. Probably they think the prospective investors have no knowledge and they will take his no fact based reasoning to buy LEI. Span is for five years. So many ups and down will be there to give this broker a credit:confused:. ANy way DYOR and just positng as verbatim


"Richard Morrow
E.L.& C. BAILLIEU

BUY RECOMMENDATIONS

Leighton Holdings (LEI)

Leighton is a construction and contracting giant trading at less than half the price its shares reached during the peak of the bull market. The company has major exposure to infrastructure development, where a lot of government money will be focused over the next five years."
 
Re: LEI - Leighton Holdings

One more broker's recommendation extracted from FN Arena published yesterday

" LEI - LEIGHTON HOLDINGS LIMITED

Deutsche Bank rates LEI as Buy - Leighton Holdings is doing its best to counter the critics and the sceptics by announcing new deals in the Middle East. Yesterday the company delivered another confirmation of a new contract won.
Deutsche Bank analysts estimate the group's Gulf business now has $5.2bn in work at hand, compared with $2.8bn at June 2008. This gives them enough confidence about the performance of this division in the three years ahead.

Double digit EPS growth should be maintained for years to come for the group, Deutsche argues, and thus the current share price is seen representing "compelling value".

No changes made to forecasts.

Target price is $36.85 Current Price is $24.44 Difference:$12.41 - (brackets indicate current price is over target). If LEI meets the Deutsche Bank target it will return approximately 51% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Market Sentiment: 0.5"
 
Re: LEI - Leighton Holdings

Watched this on Friday, it held about 2250 which is on short term uptrend from its lows.
At noon it broke up and reached abt 2310 before dropping back to 2250, possibly on negative
US car firm news. Many stock dropped at the same time so nothing to do with LEI,
After a bounce it dropped to 2210 where it seemed to form a double bottom before it rocketed
to close at 2300.
If this is due to a positive buyer influence it could test 2500 again, maybe Monday, with
a possible move back to 3500 where it would still be in a downtrend.
Some could say it is now in a rising wedge or flag which is usually bearish.
Georgey

ps
 
Top