WBHO shares slide despite positive trading news

WBHO shares slide despite positive trading news
DURBAN - Shares IN Wilson Bayly Holmes-Ovcon (WBHO) slid almost 5 percent in intraday on the JSE yesterday despite releasing a positive trading statement after the market closed on Tuesday.

The update comes as the construction sector in the country continues to feel the brunt of a stagnant economy.

South Africa’s leading construction company WBHO expected its earnings per share to increase by between 200 and 220 percent for the six months to end December to be between 401cents a share and 428c, up from 133.7c compared to last year. Its headline earnings per share were likely to increase by between 175 and 195 percent to be between 400c and 429c, up from 145.6c compared to last year.

WBHO’s operating performance was affected by the recognition of an additional provision in respect of the anticipated loss to complete the Western Roads infrastructure project in Australia and a loss making project in the Australian building business.

Last year the group reported that its roads project in Melbourne, Australia, resulted in its operating profit to decline to R3million for the six months to end December 2018 compared to an operating profit of R510m reported a year earlier. However, the group said that it expected its African and the UK operations to perform better during the period.

“The group’s Africa operation has operated satisfactorily in an extremely difficult market and the UK operations have performed well,” the group said.

Andrew Padoa, a portfolio manager at Sasfin Securities, said the overall construction sector continued to face difficult operational challenges despite WBHO earnings expecting an improvement in earnings.

“The construction industry has definitely not turned the corner. The significant earnings increase is because WBHO was coming off a low base from the previous year.

"They had a major problem with the Western Road infrastructure project in Australia which resulted in their earnings in the previous period falling by 80 to 100percent,” Padoa said.

WBHO expects to release its half-year results on March 3.

The share price declined to a low of R117.02 a share, before closing at R119.48 on the JSE yesterday. Murray and Roberts was also down by 4.86 percent, with both Raubex Group and Aveng remaining flat yesterday.