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Leighton’s $2 billion week

Leighton Holdings (ASX: LEI) is one of Australia’s premier construction and contract mining companies, and has been severely overlooked by the market in recent months, but that could soon change.

Leighton owns names like Thiess, John Holland, Leighton Contractors, Leighton Properties and much more. It has a huge presence in Australia and internationally.

Since June 30 the group has won over $7 billion in new contracts, adding to $40.13 billion of work on hand at the half year. The ability to win contracts both locally and internationally will provide it with solid revenue streams for a number of years to come, despite the slowdown in mining services we’re currently experiencing.

Since this time last week, the company has signed over $2 billion of work including the development of a residential project in India ($246 million), redevelopment of Royal Hobart Hospital in Tasmania ($328 million) and, most recently, a $1.8 billion contract for the construction of gas compression facilities for the Queensland Curtis LNG project.

Queensland Curtis LNG or QCLNG is one of Australia’s largest capital infrastructure projects, with investment expected to reach $20.4 billion before 2014. According to the QGC’s website the facility “will be the world’s first project to turn gas from coal seams into liquefied natural gas, or LNG”.

In an ASX announcement today Leighton’s chief executive, Hamish Tyrwhitt, said the enormous investments being made in the development of new coal seam gas (CSG) fields and LNG capacity in Australia was driving a diverse range of opportunities for Thiess and the other operating companies within the Leighton Group.

Leighton’s half-year to June 30 was one of the highlights of this reporting season, with NPAT up over 240% on the previous corresponding period thanks to the sale of some assets and continued demand for its services. The market has failed to react to the increase in sales, dividends and profit. There could be a number of reasons for this including its largest shareholder, Hochtief, intending on taking the company in a different direction, the poorly executed projects in Brisbane or Victoria or merely the noise surrounding mining services stocks.

lei
Source: Google Finance

Foolish takeaway

After a number of overrun projects, such as Brisbane’s airport link and Victoria’s desalination plant, Leighton’s share price has been hit hard. Similarly to Worleyparsons (ASX: WOR), Leighton pays reliable dividends, has a modest level of debt, is diversified internationally and is involved in a number of different services. It’s definitely worthy of a spot on watchlists.

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Motley Fool contributor Owen Raszkiewicz owns shares in Leighton Holdings.  

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