Finweek English Edition - - Companies & Markets - NICOLE REGO

A FO­CUS ON gov­ern­ment spending is one of the rea­sons for construction com­pany Basil Read’s lat­est R345,5m ac­qui­si­tion, which will help en­hance the group’s earn­ings and or­der book in the fu­ture. Ef­fec­tive 1 Septem­ber 2009 (sub­ject to com­pe­ti­tion reg­u­la­tions) Basil Read will ac­quire a 28-year-old Pre­to­ria-based build­ing group made up of Mve­laphanda Construction, Con­tract Plumb­ing & San­i­ta­tion and P Gerole­mou Construction.

Basil Read fi­nan­cial di­rec­tor Donny Gou­veia says: “If you look at Basil Read’s di­vi­sions, our build­ings divi­sion is still the small­est. We need to grow the divi­sion by get­ting in­volved with more Gov­ern­ment work, which is one of the rea­sons we agreed on the ac­qui­si­tion.”

An an­a­lyst’s re­port states: “Al­though Basil Read is only the sev­enth largest stock in the construction sec­tor, it has come a long way since hav­ing had less than a 10c net as­set value four years ago.”

In its re­sults for the year to end-De­cem­ber 2008, Basil Read re­ported an NAV/share of 915,99c, up from the 473,52c re­ported in the pre­vi­ous cor­re­spond­ing pe­riod. At end-De­cem­ber 2008 its price was trad­ing at a pre­mium to NAV at 1475c. One an­a­lyst says in gen­eral most construction coun­ters on the JSE looked cheap at the time, as they were trad­ing at low earn­ings mul­ti­ples and they were trad­ing close to their NAVs due to global liq­uid­ity con­cerns that were see­ing over­seas in­vestors pulling out of emerg­ing mar­kets, in­clud­ing the JSE. OP­POR­TU­NI­TIES

spending pro­gramme over the next three years. RISKS cial ef­fects of its Mvela Construction ac­qui­si­tion haven’t yet been re­leased.

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