Share price: R6.22 JSE code: AEG
BUY AVENG HAS EMERGED AS A SHINING star in SA’s construction sector, with most analysts viewing the stock as a “buy”.
In September, the Public Investment Corp (PIC), Africa’s largest fund manager, increased its holding in the company to 5.4%.
The PIC’s share increase followed the release of annual results that showed the company had improved its headline loss by 48% to 75.2c/share in the year ended June.
Institutional investor Kagiso Asset Management also nudged up its stake to more than 5% in August, adding further momentum to the rally that has boosted Aveng’s share price by almost twofold since January. What is behind the renewed confidence? Aveng has had to adapt to leaner economic times made worse by a dearth of major infrastructure spend from government in the past five years.
It is in the process of exiting the steel market, selling 70% of Steeledale to black-empowered, women-owned Kutana Group. An announcement of the sale of Trident Steel is expected shortly.
It has also offloaded four infrastructure investments from Aveng Capital Partners to Royal Bafokeng Platinum for R890m.
CEO Kobus Verster says the proceeds, including R252m from offloading Steeledale, will be used to strengthen its balance sheet.
Aveng has also right-sized operations in financial 2016, slashing 8,000 jobs, and most loss-making contracts have closed out.
The order book in Australia, which jumped 22% to A$1.5bn, also inspired confidence.