DOW
Downer held their AGM today.
Wet weather continues to be problematic; the ironic statement “it actually gives us more work to do” is well noted.
DOW have material leverage to the electrification overhaul of the grid in power/transmission, as a key structural growth driver, for revenue and earnings. That’s a multi-decade driver.
In addition, the vast majority of their work is low-risk recurring government contracts. Apart from the weather, long run we see little earnings risk. The recovery in earnings from the pandemic alone would be a material driver of share price re-rate, and that’s just a function of seeing COVID-absenteeism fade, borders reopen (to get the right labour) and projects restart.
Management think their assets are materially undervalued. They’ve got a buyback going, and are (according to the update) seemingly going to put up the “for sale” sign on various parts of the business, to recognise value.
Overall, we think it a good story!
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