Leighton's advantages

While we agree there should be no panic, that reasoning just doesn't make much sense to us. CSR we can understand. It has built a big operation in the United States and has opened the way for the company to grow its US dollar revenue.

Finding its feet

Leighton on the other hand has all its offshore operations in Asia, a region still finding its feet after the financial crisis of the mid-90s. But Leighton still derives 79% of its operating revenue from Australia. Half of all its foreign revenue comes from Hong Kong, the company's Asian headquarters. That market is attractive, with government spending underpinning a $770m investment in public housing and rail projects and a planned $30bn expenditure on rail upgrades over five years.

The real reason we think Leighton has not crashed is its sphere of excellence - infrastructure. While the canning of the high speed rail link to Canberra was a blow to the company's hopes, new opportunities have just arisen.

Leighton, after the spectacular job it did on Sydney's Eastern Distributor road, finishing the job months ahead of schedule and under budget must be in pole position to win work on the recently announced $1.25bn Western Sydney Orbital ring road - quite a consolation prize.

In fact, in the light of this, we are surprised the stock hasn't done better, but put that down to the fact that the market has never really come to grips with the changes that have happened at Leighton. Only half of the company's business comes from building and civil engineering these days. The other half is contract mining (holding up, through Thiess, in Indonesia despite that country's problems) and telecommunications.

Through the operating division Vytel Pty Limited, formed last year, Leighton has finalised an $820 million project finance package for Nextgen Networks, Australia's largest privately owned optic fibre network. Significantly, the majority of this was underwritten by Macquarie Bank.

Old mates

It's old mates with Leighton through its relationship with Macquarie Infrastructure, owners of the Eastern Distributor. Sounds horribly incestuous - and is - but it is a tried and tested infrastructure partnership.

Rollout of the Nextgen network will be undertaken by Vytel subsidiary, Visionstream Pty Ltd and construction is valued at $612 million. That company will then take over operation and maintenance of the network for an initial 10-year period.

That the share price has been wallowing for a while now leads us to believe that the market may be unimpressed by the infrastructure considerations of the Leighton story in the short term and in the face of a cooling economy. For that reason, this one's a longer term focus. We'd still ACCUMULATE - particularly if we are right and the share price is slow to move up in the near future. While it may not be earning greenbacks, it looks a whole lot more together than CSR and if you were to decide to exit that stock, Leighton would not be a bad alternative parking spot. But then regular readers will know what infrastructure junkies we are.