M6 Smart motorway contract helps to speed Costain towards expected results.
Infrastructure specialist Costain on track to meet full-year expectations
- The group continues to evolve as technology and innovation across infrastructure positions the group as a beneficiary
- High profile projects such as Crossrail and London Bridge station, and new contract wins have maintained a strong order book
- We continue to recommend Costain as a ‘buy’ for investors seeking a balanced portfolio and willing to accept a medium level of risk
Costain has released a trading update this morning for the first half of the financial year. It shows that the company has continued to perform well and is on course to deliver results in line with expectations.
The company has been successful in winning numerous contracts, including the M6 smart motorway contract, and it has established itself as a leading smart infrastructure company with its recently announced expansion as a technology centre and move to new premises. The group now places increased emphasis on the importance for combining technology and infrastructure which in turn is creating more opportunities, especially in areas such as smart motorways.
Costain’s order book stands at £3.7bn, which is unchanged from its last update; although, it is reported as a preferred-bidder for a £400m contract. We believe that the consensus amidst UK political parties to improve the infrastructure system will continue to place the group as a beneficiary over future years.
Shares are up a modest 1.5% in early morning trading, but have trended sideways over the last 12 months. We maintain our ‘buy’ recommendation due to its positive history of contract wins, its strong order book and the need to improve infrastructure in the UK.
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