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IT’S BEEN a pretty torrid two and a half years for shareholders in listed coal mining contractor Buildmax. From a high of R5 in late 2007 the share has been on a steady decline, falling to as low as 33c early in May this year. The slowdown in the global economy, issues about coal supplies and labour unrest at one of its major subsidiaries have all weighed on its operating performance.
Last week Buildmax also announced it would need to undergo a rights issue to recapitalise the business after its 2009 operating disaster, which saw it lose R1,1bn in its previous financial year and the net asset value per share of the company dropped from 157,5c to 60,5c.
The opportunity in Buildmax perhaps lies in the role of private equity firm Brait, which has proven itself an astute investor. In October 2008, 133m shares were issued to Brait at R1,50/share and the company also bought an additional 120m shares at R1,10/share, which took its total stake to 24%.
There’s also a nagging concern that if the share doesn’t receive much love from the market over the next 6 to 12 months some of its private equity players may agitate for it to be taken into the unlisted environment until it can sort itself out operationally. Shareholders who have stuck it out might be short-changed if that were to happen.
OPPORTUNITIES
Buildmax trades at a discount to its net asset value.
With much focus on energy issues facing SA, the company is well placed to service the industry.
RISKS
Buildmax has warned the global economic slowdown has meant there’s a surplus of the equipment it supplies, indicating it will take longer for the group to score from an economic rebound.
Shareholders should expect an operating loss for the first six months of the new year as it attempts to “right-size” operations.
<img src=’http://www.fin24.com/downloads/Media/article_images/fweng_img/2007/sep/ee_bui100610.gif’>
Ashton holds shares in Buildmax
Last week Buildmax also announced it would need to undergo a rights issue to recapitalise the business after its 2009 operating disaster, which saw it lose R1,1bn in its previous financial year and the net asset value per share of the company dropped from 157,5c to 60,5c.
The opportunity in Buildmax perhaps lies in the role of private equity firm Brait, which has proven itself an astute investor. In October 2008, 133m shares were issued to Brait at R1,50/share and the company also bought an additional 120m shares at R1,10/share, which took its total stake to 24%.
There’s also a nagging concern that if the share doesn’t receive much love from the market over the next 6 to 12 months some of its private equity players may agitate for it to be taken into the unlisted environment until it can sort itself out operationally. Shareholders who have stuck it out might be short-changed if that were to happen.
OPPORTUNITIES
Buildmax trades at a discount to its net asset value.
With much focus on energy issues facing SA, the company is well placed to service the industry.
RISKS
Buildmax has warned the global economic slowdown has meant there’s a surplus of the equipment it supplies, indicating it will take longer for the group to score from an economic rebound.
Shareholders should expect an operating loss for the first six months of the new year as it attempts to “right-size” operations.
<img src=’http://www.fin24.com/downloads/Media/article_images/fweng_img/2007/sep/ee_bui100610.gif’>
Ashton holds shares in Buildmax
