Cimic (ASX:CIM) share price inches up on $112 million contract wins

Cimic Group Ltd (ASX: CIM) shares have risen by less than 1% in morning trade despite the company announcing new contract wins worth $112 million. At the time of writing, the Cimic share price has edged 0.45% higher to $26.92.

What’s moving the Cimic share price?

The Cimic share price is inching higher after the group announced that its business, UGL, has been awarded several contracts in the utilities sector. The deals have a combined value of more than $112 million.

The contracts are part of the public-private projects involving the state governments and electricity network operator, Transgrid.

Cimic says the contracts will be executed over a multi-year period, and will start this month.

The projects include the design and construction of a 330kV switchyard at Maragle in the Snowy Mountains for TransGrid.

This contract will involve Cimic building 10km of 330kV transmission lines to connect the switchyard and the Snowy 2.0 pumped-hydro project cable yard.

Another contract with Transgrid involves the installation of a 52MW/78MWh battery for Tesla Inc (NASDAQ: TSLA) at the Wallgrove Substation in Sydney’s West.

Cimic has also been contracted to design and install a 132kV /33kV substation to support the connection of a solar farm in Gunnedah to Transgrid’s network in the state.

Finally, Cimic won a contract with United Energy in Victoria to design and install  feeder schemes at substations, and the installation of safety mechanisms.

What has Cimic done recently?

Cimic is a heavy industry engineering company that has developed the ability and reputation to undertake numerous large-scale contract mining and construction projects simultaneously in Australia and overseas.

Most recently, the company was selected by the Australian Government’s Department of Defence to deliver the development phase of the Australia-Singapore Military Training Initiative (ASMTI) facilities project in North Queensland. That project is worth $800 million in revenue.

Earlier in October, Cimic told the market that its operating cash flows had weakened in the past 12 months, dropping 21% to $922 million at 30 September, from $1.16 billion a year earlier.

As a result, Cimic decided to sell 50% of its stake in Spanish construction company Thiess to hedge fund Elliot Management. That sale raised $1.9 billion for the company. 

How did the Cimic share price perform in 2020?

The Cimic share price has lost around 18% of its value in 2020. This comes alongside the cyclical downturn in general construction activities globally as a result of the COVID-19 pandemic. 

Cimic shares fell as low as $11.87 in March, their 52-week low, before recovering to today’s level. Cimic currently commands a market capitalisation of $8.3 billion.

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Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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