CIMIC (long +31%) shares rallied after announcing the sale of a...

CIMIC (long +31%) shares rallied after announcing the sale of a 50% interest in its mining services business (Thiess) to Elliot Advisors
for an enterprise value of ~$4.3b. The cash proceeds of ~$1.7-$1.9b from the sale will enable CIMIC to return the balance sheet to a
net cash position and provide capital management optionality going forward. The sale enhances CIMIC’s leverage to the infrastructure
construction cycle, with ~70% of earnings generated from Construction and Services Activities (up from ~50% previously).
CIMIC has a dominant market position in the delivery of large-scale infrastructure projects, with the majority of its construction work
linked to government projects. The upcoming pipeline remains substantial, with CIMIC noting in its results update that it was bidding
for ~$470b of work to be delivered from CY21 onwards. We expect this pipeline will increase as governments look to boost infrastructure
spending to help stimulate economies post COVID-19. We believe CIMIC is materially undervalued, trading on a normalised P/E of only
~10.7x despite this structural industry tailwind and its industry leading positions across construction and mining services.