Leighton Holdings under review
Recommendation
Allegations have surfaced in the press about improper ‘facilitation payments’ made by parts of Leighton Holdings’ international operations. The group’s share price fell 10% yesterday, though it’s up 6% since Leighton: Interim result 2012 from 07 Aug 12 (Avoid — $16.48).
Perhaps this represents an opportunity to acquire a dominant Australian blue chip during a temporary setback that will be forgotten in a couple of years’ time. Or maybe it’s the tip of an iceberg that will reveal a rotten culture and subsequent action that will significantly curtail the group’s ability to win new work.
Without a crystal ball, we can’t answer those questions for sure. But we’re taking a closer look. Next week we’ll publish our analysis of whether, from an investment perspective, the risks of buying the stock in this situation seem justified by any potential upside.
Until we’ve completed this research, we’re placing the recommendation UNDER REVIEW.