Looking for that (somewhat) less-discovered energy play? Citi’s flogging SPX Corp. (SPW):
SPX Receives $500mm Thermal Order —
SPX announced a record-breaking $500mm order from Alstom to deliver feedwater heaters and air-cooled condensers to Eskom’s [a South African electricity public utility] Medupi and Project Bravo power plants in South Africa. This follows a $235mm order received from Hitachi in December to supply various plant components, also to Eskom’s Medupi site.
Solid Momentum, More Likely to Come —
SPX is now involved in two of Eskom’s approved capacity addition projects. Eskom’s project pipeline remains substantial with 5 additional coal plants on the drawing board totaling 13,700 MW of capacity. We expect SPX to remain a preferred supplier given their market leading product
position and local manufacturing capacity.
South Africa Represents Long Term Opportunity —
South Africa is currently in a power crisis tied to legacy under-investment which threatens to cripple its important mining industries. Power demand has dramatically outstripped supply as the global commodities boom expanded. Eskom’s investment in energy infrastructure represents a significant long-term opportunity for SPX.
Remains favourite Play on Global Power —
SPX is leveraged to global power and energy demand, and is positioned to play in gas, coal, and nuclear power generation. Today’s order highlights SPX’s solid position in energy markets and extends visibility well into 2009.
Citi maintains BUY on SPX Corp. (SPW), target price $155.
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