Wreck­ing ball hits home

Group Five’s malaise is a symp­tom of big­ger prob­lems in the build­ing in­dus­try, which has strug­gled to adapt to change

Financial Mail - - MONEY& INVESTING - Siseko Njobeni njobe­[email protected]­nesslive.co.za

Share­hold­ers who coughed up money for Group Five shares at the be­gin­ning of 2018 have vir­tu­ally noth­ing to show for it.

The con­struc­tion con­glom­er­ate has con­tin­ued its slide be­cause of pres­sure on mar­gins, lower rev­enue and a lower or­der book.

Its mar­ket cap has shrunk from R4.9bn in Sep­tem­ber

2013 to R25.8m.

Those who saw value in Group Five — which op­er­ates in SA, some African coun­tries and Eastern Europe — and pinned their hopes on its re­struc­tur­ing and ra­tio­nal­i­sa­tion in­ter­ven­tions have had their in­vest­ments badly dam­aged: the share price has fallen more than 98% since Jan­u­ary. That makes it an even worse per­former than Stein­hoff In­ter­na­tional, which has fallen 81%.

What went wrong?

For a start: not enough in­vest­ment by the pri­vate sec­tor and the gov­ern­ment, which af­fected Group Five and its peers.

Esor Con­struc­tion has filed for busi­ness res­cue; its res­cue plan is set to be fi­nalised in Feb­ru­ary, ac­cord­ing to its res­cue prac­ti­tion­ers.

Group Five’s rat­ing will im­prove only if the firm re­turns to sus­tain­able cash profitabil­ity

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