By any account, this is a disappointing result for CIMIC coming off the back of a shocker last year. Sale of 50% of Thiess plugs some holes, but moving forward, CIM will lose 50% of future (Thiess) revenue. Shortsighted in my opinion as mining contracts, whilst capital intensive up front, have a long tail of predictable revenue, necessary for those rainy days.
ACS doesn't like that kind of cash flow implication and I think it's pretty clear they want rid of Thiess all together, talk of a future float of Thiess still on the cards - I'd buy that!
Not sure why they'd get out of mining with what appears to be a commodity cycle on the rise. Construction carries a lot of risk for fairly poor return on capital deployed and with international Tier 1's like Bouyges, Vinci, Gamuda, Selini and Acciona now established in the Australian civil construction market, margins are only going to get squeezed further. Yes, there is still a lot of infrastructure spending coming, but if the NSW M6 debacle is anything to go by, blank cheques are a thing of the past as far as government spending is concerned. The PFAS dramas at Westgate and the entanglement with Transurban has still to play out - I don't see any profits coming from that one, only huge LD risk.
Annual report is full of excuses about affects of the 'Rona, but the truth is that civil infrastructure construction wasn't really affected - none of the CPB Contractors' projects were stopped. The other issue is that as far as senior management is concerned, no one seems to have been held accountable - they all just swap jobs with each other!
Now that CIM has restored the dividend, I think the shares will climb their way out of the hole they find themselves in, but I don't see the price going back to the heady days of $50+
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