CIMIC Group (ASX: CIM) rallied 44% today after the ASX index rose 3.7% in the open. This is a far cry from the highs above 7,000 points which we saw a few weeks ago. With the ASX currently in a bear market, several companies managed to rebound from yesterday’s heavy sell-off a result from the increasing Coronavirus cases. CIMIC Group is one company that managed to stand out in the bear market today.
CIMIC Group is an international contractor that provides services in the telecommunication, mining, infrastructure industry, and energy sector. The company has a history of success in the Middle East, Southeast Asia, Australian, and New Zealand. However, last year the company had to exit the middle east after facing many problems with a project and a deteriorating market condition. This resulted in a weakened cash position and this resulted in the company scrapping the final dividend for 2019.
Whilst the departure in the Middle East saw the share-price tumbling down by 19%, the company has managed to pick up momentum by successfully securing two contracts in Australia. The contract in Adelaide sees CIMIC’s group subsidiary UGL, operate and maintain the tram and bus network for eight years. This contract would generate more than $180m. Additionally, the company has also secured a $450m contract in oil and gas maintenance in Western Australia. Market recognition is a natural competitive advantage for the company, and we can expect it to be reflected in the next financial report.
This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
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