BUILDING A DIVISION
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.