More on Balfour Beatty
Balfour Beatty : Contracts
Balfour Beatty has been winning a steady stream of contracts this year, with a total of eight being awarded since January 2005.
The latest, announced today, was that its’ 50% owned subsidiary Gammon, has been awarded a HK$480 million (£33 million) contract for the management and maintenance of the high-speed roads in New Territories East
and on Hong Kong Island.
Previously, Gammon was awarded a HK$2.6bn (£175m) contract to construct the Venetian Macao hotel tower in COTAI, Macau. Balfour Beatty acquired a 50% interest in Gammon, the Hong Kong-based engineering and construction company in August 2004.
Macau, formerly a Portuguese dependency, became a Special Administrative Region of the People’s Republic of China in December 1999 and is currently attracting significant investment in tourism and leisure.
In early March 2005 Balfour Beatty announced that it has been awarded contracts to a total value of over £360m in the road, rail and social housing sectors. The group is to widen the M1 from Junction 6A to Junction 10 for the Highways Agency, upgrade social housing in Newcastle and extend the railway network in Sweden.
February saw two utility contracts, a £60m award from Severn Trent’s clean water infrastructure capital expenditure programme and a £380m (to be spent over eight years) contract with National Grid Transco for the Greater Manchester Alliance gas mains network.
The company started the year with £240m of new utility contracting work in the water and electricity sectors from Anglian Water (a five year contract worth upto £30m per annum), Yorkshire water (£50m) and National Grid Transco (£40m).
Last year’s earnings growth was moderate, dragged down by losses in its North American operations, which is a concern. The stock trades at 309.75p, on a prospective PE of 11.3× on 2006 earnings which is at the top of the sector range. The prospective yield is 2.5%
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