BUILDING A SOLID FUTURE
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.