Aveng eyes benefits of Covid-19 stimulus packages
Group says its geographic diversity and government contracts should help offset risks posed by pandemic
Infrastructure and mining group Aveng, after seeing its share price falling more than 99% in three years, has pinned its hopes on contracts from governments seeking to revive economies hit by Covid-19 through stimulus packages.
Aveng is among a few infrastructure companies left standing after an industry-wide slump led to the collapse of several peers such as Group Five and Basil Read, thanks to its geographic diversification and sharper focus on providing services to mines.
The company said on Thursday that its Australian infrastructure contractor, McConnell Dowell, had an order book of A$1.9bn (R22.8bn), representing growth of 47% since the end of December.
Aveng, which also operates in New Zealand, the Middle East and Southeast Asia, said a high proportion of government contracts in its order book reduced the risks relating to contracts falling through.
“These projects will very likely form an integral part of the stimulus packages and recovery efforts that the respective governments will implement as they emerge from lockdown restrictions,” Aveng said.
In addition to the secured orders, McConnell Dowell had more than A$1.2bn of tenders under evaluation, pending contract award. Tender volumes were expected to increase further in coming months, particularly in support of stimulus packages as economies entered a post-lockdown period, the group said.
It was too soon to assess the financial effects of the coronavirus, however, and liquidity and cash-flow management in the SA market remained a key risk to the group, Aveng said.
“Management continues to monitor the liquidity position and engage constructively with banks and other stakeholders as appropriate,” the group said.
Aveng’s mining contractor Moolmans, one of Africa’s largest open-cut mining contractors, recommenced full operations at the majority of its contracts after SA’s move to a level-4 lockdown, the group said.
Despite the disruption, Moolmans continued to pursue opportunities for new work during the pandemic.
McConnell Dowell also helped the group narrow its headline loss to R205m in the group’s six months to end-December from R703m previously. The group said that business had a growing trend of winning work from a low of A$450m in the 2018 financial year, to A$1.3bn in 2019.
Aveng’s share was unchanged at 2c at close of trade, giving it a market capitalisation of R388m.