COSTAIN
| COST | £123m |
195.75p
|
BUY
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| Contract Win |
FULL LIST
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Engineering and construction services group Costain Group has announced that its Joint Venture with Skanska has been awarded a second contract by Crossrail. This is part of the enabling works framework at Pudding Mill Lane Portal, near Stratford, which will act as the North East transition ramp for trains entering and leaving the central London tunnels. The statement suggests the value of the contract is similar in size and scope to the Royal Oak portal contract, which is worth £15 million. Work is due to commence immediately, and last until Summer 2011.
COMMENT
Coupled with the Royal Oak Portal contract announced on 5 March, today's win means the firm should be well placed to secure further contracts from Crossrail. Following the recent one-for-ten share consolidation, earnings forecasts are 24p for the for the current year, rising to 26p for 2011. This puts the shares on a modest rating of 8.2 falling to 7.5; however, such a metric is rendered almost superfluous given that net cash accounts for over 70% of the market capitalisation. The value proposition is further underlined by the huge £2.6 billion order book. BUY.
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