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!

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.

Receive our investment insights

Something went wrong. Please check your entries and try again.