CIMIC Group Ltd (ASX: CIM) shares bounced today after it announced CPB Contractors, part of the CIMIC Group, won two major contracts commencing in 2019.

CIMIC is a major international construction and mining contractor with brands like UGL, CPB Contractors, Thiess and Sedgman under its banner. It’s a well-known company on the ASX with a history that dates back to 1899.

Contract Wins-Fall

The first contract announced was one awarded by the NSW Government to deliver The Northern Road Upgrade Stage 6. CPB are currently delivering Stage 5 of the upgrade and, with joint venture partners, delivering Stage 1 of the Parramatta Light Rail projects.

Revenue to CPB from this contract will be approximately $119 million. CIMIC Group CEO Michael Wright highlighted the track record of CPB on past projects.

“Through CPB Contractors, CIMIC Group has a long track record of delivering high-quality roads and transport projects. We’ll continue to work closely with the Australian and State governments to provide important infrastructure for future generations”, he said.

He added, “Our current work on Stage 5 of The Northern Road upgrade will help facilitate the smooth and safe provision of this important project and provide the local community with certainty of delivery.”

Construction is expected to begin in the middle of this year and will be completed in 2021.

The second contract announced was awarded by Otakaro Ltd to deliver the Christchurch Metro Sports Facility. The facility will be the largest aquatic and indoor recreation and community venue in New Zealand.

Revenue to CPB from this contract is expected to be approximately NZ$221 million.

Mr Wright said of this project, “CPB Contractors has taken a leading role delivering critical infrastructure for the Christchurch community, including the Christchurch Hospital Acute Services Building and Te Pae the Christchurch convention and exhibition centre, both currently in delivery.”

CPB Contractors Managing Director Juan Santamaria said, “CPB Contractors is strongly focused on providing opportunities for local businesses and working closely with Otakaro Ltd to safely deliver this important new facility.”

Construction is scheduled to begin in May 2019 for completion late 2021. CIMIC Group shares are up 1.5% at the time of writing. While CIMIC shares might sound like a reliable investment it’s important to keep in mind that construction is very tough industry and CIMIC is majority-owned by the foreign entity, which may not have the best alignment with smaller shareholders, like us.

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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).

Disclaimer: At the time of writing, Max does not own shares in any of the companies mentioned.