Thanx 93...very useful....If you don't mind, I'll put it on this...

Thanx 93...very useful....If you don't mind, I'll put it on this thread as well as it relates to the survey, conducted by the Australian Industry Group and the Australian Constructors Association.

Macquarie: BOL & UGL -Leveraged to Booming Government Spending
7/11/2007


The infrastructure sector is in a unique position currently with roads, rail, power and water all election issues and the government sector being in a financial position to fund substantial future investment. Macquarie Research Equities’ (MRE) analysts have added the five-year infrastructure spending plans of the state governments and their 2007 plans amount to $140bn. This compares to $100bn in 2006 for a lift of 40%. Click through to read up on how it affects two of MRE’s preferred infrastructure plays – Boom Logistics (BOL) and United Group (UGL).

Coupled with the above, the Prime Minister, John Howard, has unveiled more than $10.5bn in new infrastructure projects across the three eastern states of Queensland, New South Wales and Victoria. Under the planned spending proposal, NSW would receive $3bn, Victoria $2.45bn and Queensland $5.2bn, with the funds to be directed towards road and rail infrastructure development.

Irrespective of who wins the upcoming Federal election, there will be a sizeable run-up in spending on infrastructure. MRE expect their key infrastructure picks BOL (outperform), and UGL (outperform) will continue to benefit from the continuation of the infrastructure boom.

Boom Logistics (BOL): Boom is benefiting from strong construction and maintenance markets. MRE expect organic growth rates to continue in the high single-digit range for the immediate future. There is currently a two-year lag in obtaining new equipment which could place pressure on hire rates in the near term. Over 70% of FY07 revenue was derived from maintenance contracts,
typically of three-year terms, giving a high degree of revenue certainty.
Outperform.

United Group (UGL): United remains one of MRE’s preferred infrastructure boom plays. MRE see 20% underlying organic EBIT growth in FY08 based on the strength of the cycle and contract outlook. UGL is also rationalising its back office following recent acquisitions and is looking to make material cost reductions. UGL’s order book is being maintained at $4.4bn. The pipeline
continues to be excellent with several large jobs coming up for tender.