After 45 years of trading on the JSE, Group Five’s stock was suspended on Tuesday after the company filed for bankruptcy protection, making it the fifth local builder to enter business rescue in less than a year. From a peak market value of R8.2bn in 2007, it was worth less than R100m when the shares stopped trading.
“Those construction companies that are SA-orientated have gone from bad to worse in the past 12 months,” Marc Ter Mors, the head of equity research at Johannesburg-based SBG Securities, said. “In SA, volumes are low, pricing is under pressure and companies are taking on more risk to win contracts, so margins are thin and that hits cash flow. There are no real segments to hide in.
While M&R’s market valuation is a fraction of what it once was, the stock has gained 44% in the past year amid takeover interest from 40% shareholder Aton. In the meantime, the FTSE/JSE Africa Construction & Materials Index is down 27% in the past 12 months, compared to a 6% drop in the FTSE/JSE Africa All Shares Index. There is also risk that if SA’s local construction industry is wrecked, future building projects will become more expensive, Ter Mors said.
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BREAKING NEWS: Struggling Group Five files for business rescueGroup Five and peers including Basil Read and Erbacon have succumbed to a depressed construction market in which major projects have failed to materialise Group5 go speak to Edgars..
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Struggling Group Five files for business rescueGroup Five says it has filed for business rescue — a process aimed at rehabilitating financially distressed companies — because lenders have not been willing to give it more funding.
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JUST IN: Group Five placed in business rescue | IOL Business ReportThe group and its subsidiaries have said to have been experiencing cash flow difficulties due to significant operating losses. busrep interesting move
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Group Five placed in business rescue, listing of shares suspendedThe construction group is currently conducting retrenchment proceedings.
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MAVERICK BUSINESS: Group Five: Another SA construction giant buckles under the pressureGroup Five, one of SA’s biggest names in construction and the company that built the Moses Mabhida stadium and King Shaka airport in Durban, filed for business rescue on Tuesday 12 March, becoming the latest in a long line of construction companies that have gone under in the past few years. The question now is not so much whether the company sector can be saved, but whether the sector can ever be revived, and if so, how. When companies like group 5 are crumbling, what chance do we have as smaller construction companies? It's tough It is tough out there.
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Sasfin and Hello Group join highly contested retail banking marketThe two companies have partnered to offer a comprehensive digital banking package to the ‘unbanked’
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