Southern Cross Electrical Engineering's Unfavourable Arbitration Proceedings Outcome 'Disappointing', But Not a 'Disaster', Says Euroz Hartleys, Shares Fall 9%

MT Newswires Live12-02

Southern Cross Electrical Engineering's (ASX:SXE) arbitration proceedings pertaining to West Connex going against them is "disappointing" but not a "disaster", according to a Monday Euroz Hartleys note.

The research firm said that the AU$44 million pre-tax hit to the company's bottom line and AU$25 million impact to cash is not as big an issue as it might appear at first read, as the company's balance sheet remains "strong" and structural tailwinds of data centres and batteries remain broadly intact.

"We may well have a different view if this was a problem in relation to a more recent contract," the note added.

Euroz Hartleys kept a buy rating for Southern Cross Electrical Engineering with an under review price target of AU$2.66.

The company's shares fell 9% in recent Tuesday trade.

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