Investors are not taking any notice of construction company Balfour Beatty (BBY) despite it recently announcing two very large contract wins in Hong Kong worth almost £2 billion.

Its 50:50 joint venture, Gammon, won a £577 million highways contract at the end of June, which was then followed this week by a £1.27 billion deal for the expansion of Terminal 2 at Hong Kong International Airport, accounting for almost 10% of its order book.

The mega deals, in infrastructure where Balfour has the most expertise, show the progress made under chief executive Leo Quinn’s Build to Last turnaround plan, with the tier one contractor focusing more on higher margin projects in areas it specialises in.

While still in the single digits, profit margins in Hong Kong have typically been a little higher than the standard 3% to 4% in the UK construction industry, and 1% to 2% in the US, two countries in which Balfour has a big presence.

The full impact of the new deals on earnings is yet to become clear, with the company warning it would take until 2021 for operating profits to get back to 2019 levels due to the impact of the coronavirus pandemic.

Analysts at Liberum point to a rise in its order book to £17.5 billion, compared to £14.9 billion at the end of 2019, and more contracts it should be able to  win on HS2.

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