Want to get a piece of Australia's secret boom? Forget mining companies for a minute and look to your water supplier and toll road operator.

Diamonds might be a girl's best friend, but where would she be without sewerage companies, fire stations and hospitals? These companies, so long seen as quiet, boring and unsexy, are today part of a huge Australian infrastructure boom where earnings and share prices have shot up.

Last year infrastructure stocks jolted experts awake when the industrials sector rose 11 per cent. Companies such as Worley Parsons and Alinta have leapt 182 per cent and 25 per cent respectively.

Many experts argue that there is still room for further growth and investors should dig in. Should you listen to them? Can this phenomenal growth continue? What can be said for sure is that infrastructure is part of the everyday flotsam and jetsam of our lives. It's all about us, but we never notice it. We rarely appreciate the silent performance of the companies supplying scaffolding or hire equipment, building more roads, more trains, and more power lines. Nevertheless, these services are essential and while they often require large initial investments, the payback can be significant if they are successful. Here are six companies that are benefiting from the infrastructure boom.

Boom Logistics

The boom times continue to roll in for Boom Logistics, which listed in 2003 at 80 cents and closed at $4.85 on Friday. The shares have shot up on the back of the upsurge in mining, which accounts for 28 per cent of the company's sales. The construction of the $1.5 billion Perth Metrorail and substantial road development should also create opportunities for the company, whose customers include BP and Iluka Resources. Management hopes to see 10 per cent organic growth and plans to expand its 16 per cent market share. It bought equipment hire company Sherrin Hire for $130 million last year, which should have a substantial effect on future earnings and provide the capacity to take advantage of infrastructure spending, particularly in Western Australia. Further rationalisation is expected within the industry. Analysts expect pre-tax profits of $43.7 million in the year to the end of June against $21.5 million in the previous year.

Bradken

The heavy engineering group was one of the sharemarket's best performers last year and one of the greatest beneficiaries of the resources boom. A manufacturer of components to the rail freight and mining industries, it listed in August 2004 at $2.40 a share and closed at $5.10 on Friday. Fund managers think there's more upside to come from Bradken. The company, which also manufactures wagons and rolling stock used in the transportation of containers, grain and cement, has a reputation for providing clients with quality products. Bradken's maintenance and replacement business is also an important revenue driver since wear and tear on some equipment such as gearboxes is extensive. Bradken's operations extend to New Zealand and Papua New Guinea. Its prospects and growth would be further enhanced if it could pull off more acquisitions, similar to its purchase in January of a foundry in Perth.

Coates Hire

Coates, which is Australia's largest equipment hire company for the construction, infrastructure and resources sector, has operations in Europe, Indonesia and across the Asia-Pacific region. Its speciality is providing compressed air, power, welding and lighting equipment. The company has a 17 per cent market share of the $2.6 billion Australian equipment hire market, which is quite a large chunk given the market is mostly made up of operations that have a market share of less than 1 per cent. The group has benefited most from surging activity in the mining sector in Western Australia. Meanwhile, small acquisitions in the south and infrastructure development along the east coast have also helped the company. Given that most of its competitors are smaller fry, there is substantial scope for Coates to grow by buying them out. Analysts think such rationalisation in this industry will lead to a more predictable and less competitive business environment. Coates is diversified with its top five customers contributing only 10 per cent of revenues. It also enjoys a strong operating cash flow, which means it can reinvest in its hire fleet.

United Group

United Group is hoping to win a major share of work from the planned public-to-private-partnership rail development in NSW, which is expected to announce its preferred bedfellows at the end of the year. The contract is likely to be worth $1 billion for fabrication and $1 billion for maintenance, and analysts say this could drive up United Group's earnings per share by over 10 per cent. The company reported a 122 per cent rise in net profit to $35.3 million for the six months to December 31. Its rail division contributed sales of $529 million and accounted for almost half of earnings, but is considered a volatile business so the growth in the company's infrastructure and resources divisions was equally significant. Infrastructure earnings before interest and tax rose 225 per cent to $12.2 million, while resources turned in an inaugural profit of $13.3 million. United paid a half-year, interim dividend of 20 cents in March, which was double the company's previous half-year dividend. Full-year net profits are expected at about $76.5 million. United's share price relative to its forward earnings projections compares favourably with other larger engineering services companies such as Downer EDI.

Worley Parsons

The oil and gas contractor floated at $2 late in 2002 and closed at $18.82 on Friday. It has been going from strength to strength with no sign of a slowdown. In fact, it recently announced a five-year contract, worth $US69 million ($93.5 million), to provide engineering services to Middle East-based Al-Khafji Joint Operations. Analysts are anticipating a good full-year profit announcement, after half-year profits leapt 142 per cent to $61.8 million. The result was boosted by booming sales, which rose 94 per cent to $1.14 billion. Worley's hydrocarbons business, which accounts for 72 per cent of the company's total revenue, reported operating earnings of $75.3 million up from $32.6 million in the corresponding period last year. The company has a strong balance sheet, with its borrowing level at a low 1.6 per cent and cash of $89.9 million at December 31. Worley Parsons' share price looks expensive, but further upside could come from an acquisition.

Macmahon Holdings

The engineering and contract mining company has been enjoying a turnaround ever since Nick Bowen took the reins as managing director in 2000. He has expanded the company and built up a strong order book of more than $1 billion. He has also refocused the group to increase its exposure to infrastructure projects that provide steady cash flows. However, free cash flow will be limited over the next few years because spending on civil engineering and contract mining activities is sucking up any spare cash. Macmahon bought HWE NT Civil last year in order to strengthen its position in the Northern Territory, a region experiencing considerable growth. Analysts expect the group to post full-year pre-tax profits of $38.9 million in the year ending June 30, against $21.2 million in the previous year. Earnings are expected to grow 9 per cent this calendar year and the shares are yielding 2.4 per cent. Launched in 1963 by Brian Macmahon, an Adelaide civil engineer, Macmahon listed in 1983.

In the middle of the 1997 mining boom the shares hit a high of $1.10. They closed at 85.5 cents on Friday.

Road to riches

Toll roads have hit the headlines recently with the public in revolt. No one wants to pay the excessive charges, which is why Sydney's Cross City Tunnel has been a shambles and will not be profitable unless current usage of 20,000 vehicles a day rapidly moves towards the 90,000 required by the developers.

But not all toll road operators in recent times have done so poorly. The developers of Sydney's M4 gained several times their equity contribution when it was sold several years ago. The recent sale of the M2, also in Sydney, secured a price almost three times the equity investment of owners. Profits from these roads have led Macquarie Bank - the python that has encircled Sydney with its development of the M2 and its ownership of the M1, M7 and M5 - to pay tens of millions of dollars to shareholders.

Last week Macquarie Infrastructure Group announced plans to sell its 50 per cent stakes in the M4 and M5.

Other ways to invest

Another way of getting exposure to the quiet achievers is by investing in infrastructure funds. There are about 17 unlisted infrastructure funds, including 11 launched in the past three years.

Be warned, however. While they have returned a total of about 6 to 13 per cent a year in the past five years with 4 to 5 per cent income, fees can run as high as 1.15 per cent and additional performance fees range between 5 and 20 per cent. Watch out also for the level of borrowed money the funds have used to buy infrastructure assets. Companies such as Babcock & Brown and Allco Finance Group have taken infrastructure assets - everything from airports to toll roads to parking stations and caravan parks - and leveraged them up.

This has been possible in the low-interest rate, low-inflation environment, but will be riskier when economic conditions turn around.

HOW MUCH YOU NEED
Fund name                               Minimum
Goldman Sachs JBWere Aust Infra Wholesale       $50,000
Lazard Global Listed Infrastructure Fund                $1000
Macquarie Infrastructure Securities Fund                $20,000
Skandia GIS - Macquarie Int Infrastructure      $3000
Source: Morningstar