Australia | Feb 28 2008
By Rudi Filapek-Vandyck
Unconfirmed, but in the current market environment important enough to possibly warrant an official company statement to the Stock Exchange: according to an anonymous tip, received and published by online news service Crikey.com.au today, Queensland based engineering and project management service provider Ausenco ((AAX)) is experiencing problems at its Lumwana Copper project in Zambia.
Crikey.com.au reports: “Despite company assurances that the project is on time and budget, this is not the case and the project is unlikely to meet its completion date of 28 June 08, at which point huge liquidated damages come into play. The company has failed to win a project of similar size since Lumwana, so profits are likely to fall significantly at the next half-yearly report.”
Ausenco’s fiscal year runs from January to December and the company reported last week its final figures for 2007. At the time management assured the market the project in Zambia was running on schedule. Brokers covering the stock currently have a positive view on the company but also pointed out post the FY07 release that the US$400m Lumwana Copper project on behalf of Equinox (EQN) is of major significance to Ausenco’s long-term growth and earnings sustainability.
At the results release last week, the company quoted an order book of US$2.9bn which prompted analysts at UBS to conclude “this should be sufficient to underwrite earnings in 2009 and 2010 at higher levels than those reported this year”.
Both ABN Amro and UBS, the only only brokers FNArena monitors daily who cover the stock, rate it Buy with price targets of $15.19 and $15.00 respectively.
Ausenco shares were trading 1.7% lower at $12.80 last time we checked on Thursday afternoon amidst an overall weaker share market.