AECOM (ACM) Boosts Backlog With Tsing Yi - Lantau Link Project
AECOM ACM won a contract from the Hong Kong Special Administrative Region (HKSAR) Government Highways Department to deliver bridge solutions for a new strategic road, Tsing Yi – Lantau Link (TYLL). The commissioning phase of this project is through 2033.
The company is selected to deliver design and supervise the TYLL project by utilizing its multidisciplinary team, which includes international experts from various aligned fields. The supervision blanket includes coordination of civil and geotechnical engineering, landscaping, road and drainage systems, traffic control and surveillance systems and other similar concepts. HKSAR Government Highways Department chose AECOM for this project in May 2023.
The TYLL is a strategic route linking Lantau Island and Tsing Yi, comprising two long-span bridges crossing Ma Wan Fairway and Kap Shui Mun Fairway. It will act as an alternative for the vehicles commuting between Northwest New Territories (NWNT) and urban areas. The main objective of the construction of this new link is to improve traffic conditions in and near the NWNT and increase capacity and route options considering the Northern Metropolis development. TYLL will also help improve mobility between the Hong Kong International Airport and the Hong Kong - Zhuhai - Macao Bridge.
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Shares of ACM have declined 2.21% on Aug 24, during the trading session. Nonetheless, the stock gained 12% in the past three months, outperforming the Zacks Engineering - R and D Services industry’s growth of 11.6%.
International Infrastructure Spending – ACM’s Growth Driver
AECOM is witnessing growth in international infrastructure spending, owing to the improvement in the global economic scenario. It has been benefiting from solid infrastructure spending in the United Kingdom, Canada, Hong Kong and Australia.
At the end of third-quarter fiscal 2023, AECOM’s International segment’s backlog increased 17.6% to $6.35 billion year over year, reflecting market share gains and growth visibility. Also, net service revenue (NSR) increased 8% to $688.9 million from the prior-year period. This growth reflects an increase in the company’s largest and most profitable geographies comprising Ireland, Australia, New Zealand, Hong Kong, the U.K. and the Middle East. In the quarter, the segment’s adjusted operating margin on NSR was 9.9%, up 110 basis points year over year. This portrays the company’s focus on pursuing the highest-value opportunities, its key initiatives to drive operational efficiencies and expand margins over time.
Even though market softness persists in mainland China, the company is consistently working on decreasing its exposure in the region so that the same does not have any material impact on its growth.
Zacks Rank
AECOM currently carries a Zacks Rank #3 (Hold).
Key Picks
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