Feature Stories | Oct 30 2024
Defence, energy, digitalisation industries collide with sustainability to provide a very positive investment spending backdrop for Australia's engineering services companies.
-Major infrastructure spending is back
-Defence budgets on the rise due to geopolitics
-Net zero targets equal more investment
-The future is digital
-Which companies are set to benefit?
-Worley chasing the sustainability dollar
By Danielle Ecuyer
Ramping up investment in Australia's future
The rather un-glamorous sector of engineering services might be entering a golden era of major infrastructure spending across what can only be considered as "critical" industries for Australia's well-being and future.
A big topic with even bigger financial carrots is hanging in the offing.
In the latest deep dive sector research conducted by RBC Capital, focusing on "disruptive forces", the broker explores opportunities for engineering services in the defence, energy and digitalisation industries.
The report offers a cursory observation of the shifting sands of geopolitics, explains the need for energy systems to be decarbonised and climate event resilient, as well as the ongoing rise of digital demand across industries, including the burgeoning growth in data centres.
These factors underpin sizable tailwinds for companies exposed.
RBC takes a top-down approach to set the scene for why its analysts have initiated coverage on Ventia Services Group ((VNT)), Downer EDI ((DOW)) and Service Stream ((SSM)); each in possession of downstream exposure to the industries mentioned.
Goldman Sachs shines an ESG light on Worley ((WOR)) investigating whether the company is an "underappreciated solutions provider" to the global greening agenda.
Industry-by-industry outlook
Defence budgets are rising in Australia.
Around 18-months ago I sat with a renowned stockbroker for a coffee at Sydney's Australia Square who explained to me just why Darwin was the hot new investment capital of Australia.
His observations were prescient.
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