Why The Downer (ASX:DOW) Share Price Is Rising

The Downer EDI Limited (ASX: DOW) share price is up around 1% after winning a new contract.

Downer is a provider of integrated services in Australia and New Zealand. Its speciality is designing, building and sustaining assets, infrastructure and facilities. Downer employs 53,000 people across 300 sites which are mostly in the Asia-Pacific region, but also South America and Southern Africa. It also owns 88% of Spotless Group.

Downer’s New Contract Win

Downer this morning announced it has been selected by Ausnet Services Ltd (ASX: AST) to provide operational and maintenance services on the electricity distribution network in Victoria.

According to Downer, the five-year contract is worth approximately $600 million and includes options to extend for a further six years. Under the contract, Downer’s services will expand from the current work delivered in AusNet Services’ Central region to include the remainder of AusNet Services’ electricity distribution network in Victoria’s Northern and Eastern regions.

The contract is expected to commence in September 2019 following the completion of a workforce transition.

Downer CEO Grant Fenn said: “We are now pleased to extend our 19-year partnership with AusNet Services for at least a further five years and to now service their entire electricity distribution network in Victoria. 

This contract demonstrates Downer’s ability to deliver and service our customers’ assets to help them provide cost-effective, safe and reliable energy for our communities.”

The scope of work Downer will be delivering includes operations, maintenance, capital works and 24/7 emergency response for AusNet Services’ electricity distribution assets.

Is The Downer Share Price A Buy?

Since 28 May 2019 the share price has fallen 12% after the company announced that its Murra Warra Wind Farm partner Senvion entered administration, but Downer shares any liability from the project jointly and severally.

Whilst it is obviously a better idea to buy things when they’re cheaper compared to more expensive, it’s hard to know if Downer is a buy until we learn more details.

I think the reliable shares in the free report below would be better ideas instead.

At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.

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