As outlined in our earlier articles, investors may be wise to focus on companies that have a strong or emerging presence in stgeloping countries and regions rather than concern themselves with the hot and cold US market.
We have focused on five companies with robust Australian businesses that have also shown that they have what is required to make it on the international stage. The countries that analysts are talking up as the next big things are Brazil, Russia, India and China – the BRIC countries.
There are also regions in northern Africa such as Saudi Arabia and the United Arab Emirates that are undertaking huge infrastructure projects as the public sector and private enterprise continue to show that they can do it bigger and better than the western world. To provide some variety we have chosen a company that is active in each of the BRIC countries as well as the United Arab Emirates.
Ausenc o (AAX) was founded in 1991 and is one of Australia’s most geographically diversified mining services company. Ausenco has extensive involvement in Australia, Europe, Asia and Africa. More recently, Ausenco has acknowledged that certain areas of South America are on the verge of a mining boom.
Metals Economics Group recently estimated that budgeted global exploration projects total $US7.13 billion, of which Latin America accounts for 24 per cent. While Ausenco isn’t currently involved in projects in Brazil, it is in various stages of providing multi-disciplined engineering solutions for companies undertaking exploration and mining activity in Mexico and Argentina. One of the projects Ausenco is completing is a feasibility study on behalf of Rio Tinto regarding the establishment of a 2.4 million tonnes per annum potash facility.
While Ausenco trades at a significant premium to some of its peers, its pipeline of projects is such that the company’s earnings forecasts are continually being upgraded by analysts as new projects are confirmed. So while a P/E ratio of about 20 times 2008 earnings per share may appear expensive today, upward earnings revisions are likely to dilute that P/E ratio as projects come on stream. Ausenco’s share price tells the story – since listing on the ASX in June 2006 it has increased more than tenfold.