Fleetwood wins accommodation tender at Gladstone

The 'picks and shovels' player increases its accommodation arm

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published April 18, 2012 12:00 pm AEST

Fleetwood Corporation Limited (ASX: FWD) has been selected by the Gladstone, Queensland regional council to build, own and operate a transient workforce accommodation village, for up to 1,000 people.

Gladstone is the major processing and export hub for a large number of sizeable and diverse resource projects in the region. More than $50 billion is being spent by major resource companies on LNG, coal and aluminium related projects.

Construction of the village is expected to start in the first quarter of the 2013 financial year (July-September 2012).

Recurring revenues

Fleetwood already owns and operates the Searipple village in Karratha, Western Australia, which houses up to 1,500 people at any one time. The village mainly caters to workers on resource projects for companies such as Rio Tinto Limited (ASX: RIO) and Woodside Petroleum Limited (ASX: WPL) in the state's north west, and remains a valuable source of recurring revenue each year.

The Gladstone village is likely to provide the same sort of recurring revenue once built, with Fleetwood securing a ten year lease on the 23 hectares of land.

The market certainly liked the news, with Fleetwood's shares rising 21 cents to close at $12.65, on a day when the S&P/ASX 200 market closed down 0.3 per cent. In the last month, the company's shares have risen 7.5%, against the S&P/ASX 200 Index rise of just 1.54%.

The Foolish bottom line

This news augurs well for Fleetwood's future. With two major accommodation villages in two different states, the company is exposed to major LNG and resources projects, and will no longer be solely reliant solely on Searipple village for recurring revenues.

Fleetwood is currently trading on a prospective P/E of 14, with a dividend yield of over 5.8%. If you want a "picks and shovels" exposure to LNG and resources, Fleetwood might be the stock for you.

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Motley Fool contributor Mike King owns shares in Woodside. The Motley Fool's purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Click here to be enlightened by The Motley Fool's disclosure policy.

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