Is it over for construction stocks?

Simon BrownJSE Direct, Latest

JSE Direct with Simon BrownMurray & Roberts (JSE code: MUR) horror update.

“working capital requirements are especially acute”

“financial results for the six months period ending 31 December 2022, to be at least 100% down”

This is not South Africa at all, it’s Australia and the US. We’ve seen Wilson Bayly (JSE code: WBO) walk away from their Australian operations.

Low margins and bankers not keen on bonding projects are going to crunch this industry globally. I would suggest Aveng (JSE code: AEG) is not immune either.

The only time this industry really made money was in the run-up to the world cup, and they were colluding to get operating margins of +5%. So really this is a bust industry.

That all said, decent results from Calgro M3 (JSE code: CGR) while we wait for Balwin (JSE code: BWN).

Simon Shares

  • MTN (JSE code: MTN) ditches Telkom (JSE code: TKG) over their Rain talks.
  • Pick n Pay (JSE code: PIK) results. Not bad but the market hated selling the stock down 9.3%. Is the issue valuation? Forward PE is ±29c vs. Shoprite* (JSE code: SHP) is on ±21x.
  • Combined Motor Holdings* (JSE code: CMH) great results driven by car rentals surging. But it going to be tough going from here.
  • UK inflation returns to 40-year high of 10.1%.

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