Esorfranki: 'What downturn?'

Johannesburg - AltX-listed group Esorfranki said as far as it was concerned, the construction sector was still experiencing a boom.

"Even though economic growth fell by 6.4%, construction still went up by 9% - so where's the downturn?" said Esorfranki CEO Bernie Krone on Tuesday, commenting on the latest gross domestic product (GDP) decline figures.

He was speaking to journalists and asset managers at a bridge-jacking project on the N17 highway in the south of Johannesburg.

Krone said some industry players overreacted and panicked too soon. "But they have to realise that now's the time to pick up the work."

"We went through 18 to 24 months where the construction industry was overcooked, but compared to five years ago, it's still in a boom," Krone said, adding that he remained bullish about the sector.

"We cannot deny that the world is in recession. SA, however, has not been as hard hit as the USA and the European countries," Krone said. "This, together with an expanded domestic public works programme and substantial infrastructure spend ? the third-largest in the world as a percentage of GDP ? should see us survive this disaster."

An analyst said Krone's attitude and work ethic was one of the reasons why Esorfranki's share price rebounded earlier than the rest of the bourse.

Shortly before Tuesday's market close, Esorfranki's share price was up almost 6% to 359c, performing better than the JSE's All-share index (up 0.76%) and the AltX index (up 0.81%).

However, some analysts warned that investing in Esorfranki involved risk, saying its increased dividend cover may weigh on the group's short-term price performance. Also, the market was disapponted with Esorfranki's recent lower-than-expected dividend payout of 15c/share (compared to 20c/share in 2008).

- Fin24.com