The Global Demand for Infrastructure; (BIP-UN.TO), (NYSE: HSC), (OTCBB: FRCN), (NasdaqGS: STRL)
A Sector to Bet on …Oversubscribed offerings and Global Growth
POINT ROBERTS, - www.InvestorIdeas.com, a leader in sector stock research including construction stocks, homebuilder and infrastructure stocks releases an investor close-up for the global infrastructure sector. From over subscribed stock offerings in Brookfield Infrastructure, to Foreign Institutional Investors moving into construction stocks in India and statements from the head of Bechtel declaring, "We foresee fairly strong markets indefinitely,” this is a sector to watch for investors.
Some of the recent news and hi-lights for investors to pay attention to include:
Brookfield Infrastructure Partners LP (BIP-UN.TO) announced that due to strong investor demand for its previously announced offering of L.P. units, it has entered into an agreement to increase the size of the offering (the "Offering"). Under the agreement, the syndicate of underwriters has agreed to purchase 16,843,500 L.P. units ("Units") at a purchase price of $24.75 per Unit, for gross proceeds of approximately $417 million.
As previously announced, the Offering will provide Brookfield Infrastructure with additional liquidity to fund its growth strategy. Proceeds of approximately $150 million will be used to acquire interests in two Chilean toll roads and proceeds of approximately $150 million will be used to fund growth capital expenditures at Brookfield Infrastructure's Australian railroad. The remaining proceeds will be used to pay down the corporate credit facility, which has been drawn over the past nine months to invest in Brookfield Infrastructure's Australian railroad and other organic growth initiatives.
Fireman's Contractors Inc. (OTCBB:FRCN ), a full service US contractor providing professional services for commercial and government clients in Road Improvements, Parking Lot Maintenance, Seal Coating, Parking Lot Striping, Pavement Marking, and Asphalt Maintenance and Repair reported expansion plans and that they have moved into their new corporate offices in Fort Worth, Texas. The relocation from North Richland Hills was spurred by continuous growth within the Company, including customer service, marketing, sales, operational personnel and will allow us to begin our efforts in franchise development.
Sterling Construction Company, Inc. (NASDAQ:STRL) has bullish sentiment on the street including recent commentary on Seeking Alpha: Well Positioned To Benefit From Infrastructure Spending ;"Sterling Construction is significantly undervalued for a company that can grow EPS at a compound annual rate of 14.4% for the next five years. Based on this growth in earnings, my estimate of fair value using a discounted cash flow model is $21.00, which is 109% higher than the current stock price.
Sterling Construction is a heavy civil construction company that specializes in the building and reconstruction of transportation and water infrastructure primarily in Texas, Utah and Nevada, and to a lesser extent in Arizona and California. Transportation infrastructure projects include highways, toll roads, city streets, bridges and light rail. Water infrastructure projects include large diameter water systems, sanitary sewers and flood control systems."
According to a recent article on Foreign Institutional Investors (FII’s) in India, sectors such as construction and cement, which have been under-performers in the past, saw an average increase of 40-50 bps in FII holdings in the quarter. Among Nifty firms, Mahindra and Mahindra Ltd saw the biggest increase of 2.8% in FII holdings. Dr. Reddy’s Laboratories Ltd with a 1.5% increase in FII ownership and Hero MotoCorp Ltd with a 1.1% rise in FII holdings, were among the major gainers.
To really give a real indicator of the sentiment of the sector, look within the industry leaders. Recently quoted in an article, “The head of US construction and engineering giant Bechtel expects continuing global demand for infrastructure despite repeated shocks to the world economy.
"We foresee fairly strong markets indefinitely," Riley Bechtel said at a Melbourne Mining Club lunch recently according to a report in the Australian.
"We are rolling well in most markets outside the US," Mr Bechtel said. Work was declining in the US "because that economy is particularly challenged right now and because there is, from a contracting standpoint, a fair amount of regulatory challenge in the US compared with elsewhere in the world".
Harsco Corporation (NYSE: HSC ) announced the expansion of its Harsco Infrastructure branch operations in Peru with the opening of new and enlarged facilities in Lima, Peru's largest city and capital. The expanded facilities will enhance Harsco's rental forming, shoring and scaffolding equipment and installation services to major civil construction and industrial maintenance projects throughout the region.
The move to larger facilities follows three years of steady revenue growth since Harsco's market entry into Peru at the beginning of 2009. Industry analysts are projecting further growth in Peru's construction sector in the range of 8-9 percent for 2012. "The investments being made by emerging markets in basic infrastructure expansion and modernization are an increasingly important part of Harsco's long-term focus," said Executive VP and Infrastructure Group CEO Ivor J. Harrington.
Since its arrival into the market, Harsco has participated in some of Peru's largest and most prestigious construction projects, including two regional hospitals in Lambayeque and Ica; several office buildings including the Platinum Plaza, Peru's first "green" office building; and the construction of 13 bus stations for Lima's mass transit system. Harsco is currently supporting the construction of the new Mall Aventura Plaza Santa Anita and the new Wong supermarket in Miraflores, and anticipates further work beginning in January 2012 on the Real Plaza San Borja shopping mall. These latest projects alone are expected to generate new revenues of close to $1 million through the end of 2011 and into 2012, in addition to other ongoing and anticipated work.
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About Fireman's Contractors Inc. (OTCBB: FRCN)
Fireman's Contractors Inc. (OTCBB: FRCN) is a full service contractor providing superior service in parking lot maintenance and construction services. Our services include Road Improvements, Seal Coating, Parking Lot Striping, Pavement Marking, Asphalt Maintenance and Repair, ADA Compliance and other construction services which are delivered at a competitive price. Fireman's brings professional value system delivering outstanding results through honorable customer relationships and repeat business. Local firefighters are supported by a portion of profits which are donated to local Firefighter Associations. http://www.firemans-contractors.com/
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