MENU

Leighton Holdings returns to profit, but remains a high risk investment

Leighton Holdings Limited (ASX: LEI) shares jump as the company returns to profit. The shares look cheap, but are one of the risker S&P/ASX 200 companies.

What: Leighton Holdings Limited announced on 16 January 2012 that it expects reported net profit after tax for the six months to December 2011, to be $340m. This figure includes a capital gain of $179m from the HWE Mining iron ore sale, offset by non-cash impairments on investments in BrisConnections ($49m) and the Habtoor Leighton Group ($50m).

The company also confirmed its previous guidance for the 12 month period to Jun 2012 of underlying (excluding abnormal items mentioned above) net profit after tax of between $600m-$650m. NOTE: Leighton’s advised in 2011 that they would be changing to a December financial year end, the first of which will commence on 1st January 2012.

So What: This is a turn-around from the 2011 full year result when Leightons announced a $409m loss due to an expected $520m loss at completion on the Airport Link PPP project in Queensland, an expected $278m loss at completion on the Victorian Desalination Plant Project, a $100m loss in Leighton Properties and $492m in operating losses and impairments at their 45% owned associate Habtoor Leighton Group in the Middle East.

The share price is up 70 cents, (3.4%) so far in trading to $21.23.

Now What: A return to profit for 2012 is a good sign for the company. Leighton’s is a cyclical company and see-sawing between losses and profits can occur, depending on conditions, and 2011 was the first full year loss Leighton’s have reported in 13 years.

Shares are currently trading on a 12 month forward PE of 10.4, with an expected dividend yield of around 6% (based on 65% payout rate). On those statistics, the company looks cheap, but for a blue chip company, Leighton’s is a relatively high risk investment, and deserves more in-depth research before investing.

Are you are looking for investing ideas for 2012? Request our free reportThe Motley Fool’s Top Stock For 2012Click here, whilst it’s still free and available.

More Reading

One MAD stock still on our radar

Why I’m buying QBE Insurance shares next week

Motley Fool contributor Mike King owns shares in Leightons. The Motley Fool’s purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Click here to be enlightened by The Motley Fool’s disclosure policy.

 

Top 3 ASX Blue Chips To Buy For 2019

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked…

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of The Motley Fool’s Top 3 Blue Chip Stocks for 2019.

Each one pays a fully franked dividend. The names of these Top 3 ASX Blue Chips are included in a specially prepared FREE report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

See the 3 blue chip stocks

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.