CIG poised for Africa’s expansion

Consolidated Infrastructure Group (CIG) sustained its impressive top-line growth for the first six months, but profits struggled on tougher trading conditions in Angola, a stronger rand, and higher financing costs.

Revenue rose 29% to R2.7 billion, but profits after tax fell 3% to R203 million, giving shareholders just R1.11 a share, down 18.5%.

However, the group order book is healthy, growing above 25% to R6.6 billion.

From an operational perspective, the decline in profits from Angola Environmental Services (AES) fell 47% to R33 million. “It is equity accounted and reduced profits by about R20 million,” says CIG CEO Raoul Gamsu.

The business services the oil industry active off the coast of Angola and Gamsu . It said the business suffered from lower volumes in both oil production and exploration due to Opec cuts.

New purchase Conlog was incorporated into the group’s power division. The company – which manufactures prepaid meters – has already been earnings accretive and Gamsu believes the acquisition will provide more opportunities to cross-sell across CIG’s businesses in Africa.

The continuing strong growth in CIG’s capital intensive businesses means the group is being very conservative with funding. The net-debt ratio is 10.9%, with cash of R548 million.

The group increased its medium-term bond note programme to R1.5 billion. In a junk era, Gamsu believes the group will begin to tap US dollar-based debt markets for most of its work outside of South Africa.

Gamsu is focused on Africa’s renewable energy projects, with $740-million worth of proposals in the pipeline and a further $600 million of grid infrastructure projects up for grabs.

CIG’s share price closed 6.84% lower at R17.70 per share on Monday.

Keith McLachlan of AlphaWealth continues to back it; he sees “a back-ofthe-matchbox” increase in Ebitda of 41% coming.

The group order book is healthy, growing above 25% to R6.6 billion’.