BUILD­ING A SOLID FU­TURE

Finweek English Edition - - Companies & Markets -

CON­STRUC­TION COM­PANY Group Five’s re­cently re­leased full-year num­bers pro­vided com­fort for in­vestors in the stock, who have seen its price fall 44% since reach­ing a R68,55/share high in Novem­ber last year. Its share price gained 12% in the two days fol­low­ing its re­sults – an in­di­ca­tion of the mar­ket’s view of its earn­ings per­for­mance. “The share price is more re­flec­tive of what lies ahead,” says Sas­fin mar­ket watcher David Shapiro.

An­a­lysts say Group Five will con­tinue to be a good per­former but don’t ex­pect its price to out­per­form the mar­ket. Group Five re­ported big in­creases in op­er­at­ing mar­gins and that mo­men­tum seems to be pick­ing up, with talk that SA’s con­struc­tion sec­tor is ben­e­fit­ing from in­fra­struc­ture spend.

The 2010 Fifa Soc­cer World Cup, which trig­gered the con­struc­tion boom in SA, is al­ready his­tory for Group Five. It’s got its sights set on new hori­zons, hav­ing been awarded two big con­tracts on the Gaut­eng Free­way Im­prove­ment Project. Gov­ern­ment and pub­lic cor­po­ra­tions are also talk­ing of mas­sive in­fra­struc­ture projects that lie ahead – such as power gen­er­a­tion and wa­ter retic­u­la­tion – which could keep the ball rolling un­til be­yond 2020. But with eq­uity mar­ket volatil­ity in­vestors could be in for a bumpy ride.

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