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Johannesburg - Construction firm Aveng has outshone its peers in a gloomy year for construction, performing relatively well on the bourse with gains of 30.34% - more than double those of the second placed Raubex.
Aveng's gains were also four times higher than those of the JSE's building and construction materials index (6.63%).
Two of its rivals, Group Five and Murray & Roberts, were hit by the economic meltdown in Dubai. In total, both lost more than R20bn in contracts in the emirate. However, the groups have managed to make up for their Dubai losses by securing contracts in neighbouring Abu Dhabi.
For the year to date, Group Five's share price only gained 4.5%, while Murray & Roberts fell 7.37%.
Locally, firms have had government and the 2010 Fifa World Cup to thank for large-scale infrastructure investment. The landscape in SA's major cities has been altered with the construction of new stadia, improved freeways and other transport systems.
Payment: the good and the bad
Raubex has benefited particularly from contracts for the SA National Roads Agency. The latter has a good reputation for paying projects on time and boasts a healthy balance sheet to fund new work. This has had a positive impact on Raubex stocks, which improved 12.5% this year so far.
However, low-cost housing builder Sea Kay received the long end of the stick from government contracts, saying it has to wait 90 days and longer to receive payment for completed work. Sea Kay has taken legal action as it could face liquidation - a reality that has cut more than 70% of its share price since the beginning of 2009.
Increased competition in South Africa has also caused builders to look for work elsewhere in Africa, where infrastructure demand has increased dramatically.
There has been concern over government failure to pay for work completed, and possible postponement or termination of state contracts. This, as well as the impact of lower margins, has pushed builders across South Africa's borders into Africa.
In a note to investors, Aveng said the continent offers more than $100bn worth of work.
- Fin24.com