CIMIC Group (ASX:CIM), formerly known as Leighton Holdings, has announced the sale of its development site in St Leonards, NSW. The company announced in a statement to the ASX on Friday morning that the sale is in line with CIMIC’s strategic review that was announced in June 2014. The aim of the strategic review is to ‘strengthens CIMIC’s balance sheet, streamline its operations, increase competitiveness and facilitate future growth.’
The sale generated strong cash profit for the company as it was owned since the early 1980. For the year ended 31 December 2014 CIMIC announced robust results as revenue rose 4% and Profit attributable to members increased by 33%. The company announced a fully franked final dividend of 68c which underlines CIMIC’s intention to generate shareholder value in line with the ‘image change’.
On 24th April Leighton Holdings Limited changed the name of the company to CIMIC Group Limited which resulted in a change of the ASX ticker code from ASX:LEI to ASX:CIM. CIM has advanced 13.5% in the past 12 months and 1.7% so far this year. The company experienced headwind earlier this year due to corruption allegations, which was most likely one of the reasons for the name change. The Spanish owner Hochtief aims to distance itself from the allegations and wants to rebuild this iconic Australian brand.
Wise-owl initiated coverage on CIM earlier this year and locked in a healthy profit for its subscribers. Following a strong run in April/May, technical consolidation appears due, however the medium-term outlook remains favourable. The Industrial sector has advanced 4.7% in May which compares to a 0.6% drop of the ASX200 benchmark index. Whilst toal construction work fell 1.8% during the March quarter, building work increased by 2%. However residential and non-residential construction work remains at considerably stable levels.
Wise-owl will keep CIMIC on the watchlist for future trading opportunities and inform our premium members as soon as they arise.
Author: Simon Herrmann
Jun 12, 2015
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.