AECOM ACM has been recently selected by South Africa-based public electricity firm Eskom to act as a technical and quality support services specialist for construction of Eskom’s Majuba Railway Line.
Inside the Headlines
AECOM, under a 17-month contract with Eskom, will provide specialists for areas like structural engineering, International Federation of Consulting Engineers (commonly known as FIDIC contract, environment, OHTE, rail design, rail welding, high voltage electrical and railway signaling. Four specialists have already been deployed for the project and the remaining will follow soon.
Coming up in South Africa, the Majuba Railway Line is a 37-mile rail track connecting Ermelo with Majuba Power Station near Amersfoort in Mpumalanga Province. Once completed, this railway line will facilitate easy movement of coal from Transnet Coal Line to Majuba.
Funded by the World Bank, this project reflects Eskom’s efforts to change the conventional mode of coal transportation from road trucks to railways, in order to drive economic and social benefits for the country.
Bottom Line
AECOM’s diversified portfolio comprises both designing and construction services. Further, the company has been making concerted efforts to strengthen its core business by developing an integrated service platform and gaining global expertise as a leading infrastructure provider. Encouragingly, the company’s Design & Consulting as well as Construction services witnessed a solid performance during the fourth quarter of fiscal 2015 quarter. Going forward, management believes that lucrative opportunities abound for this segment.
The latest contract with the largest public electricity company in South Africa adds another feather to AECOM’s cap and will likely help it enhance its footprint in the country. Overall, AECOM won $4.8 billion of contracts in fourth-quarter fiscal 2015 and ended the year with about $40.2 billion (up 60% year over year) in backlog. Since contracted backlog is a key indicator of future revenue growth, we can conclude that AECOM’s prospects shine bright.
AECOM currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Dycom Industries Inc. DY, KBR, Inc. KBR and Jiangsu Expressway Co. Ltd. JEXYY. While Dycom sports a Zacks Rank #1 (Strong Buy), both Jiangsu Expressway and KBR hold a Zacks Rank #2 (Buy).
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