Our opinion on the current state of AVENG(AEG)The once-massive construction company, Aveng (AEG), which traded at R69 a share in 2008, was reduced to a penny stock. This sad demise was brought about by a number of factors.
Among these, the reduction in construction spending following the sub-prime crisis has been critical. The government ceased infrastructure development after the 2010 World Cup, which had a further detrimental impact. This was then followed up by the Competition Commission's R1,4bn fines in the construction industry.
The difficult operating environment was made worse by losses on various construction contracts, which have required extensive write-downs and impairments. Its objective has been to focus on McConnell Dowell in Australia and the mining contractor Moolmans, both of which are now profitable.
On 26th January 2021, the company announced the terms of a fully underwritten rights issue to raise R300m by selling about 20 billion shares at 1,5c each. Shareholders were offered 103.122 rights for every 100 shares held. This obviously substantially diluted the existing shareholders.
On 12th October 2021, the company announced a 500-for-1 consolidation effective 8th December 2021, which resulted in the share price rising to around R28. The company announced the sale of Trident Steel on 3rd May 2023 for R1,2bn - which effectively leaves the company debt-free.
The company announced its intention to report in Australian dollars in the future, not rands, because it said 91% of its income was now received in Australian dollars.
In its results for the six months to 31st December 2024, the company reported revenue slightly down at A$1,4bn, with a headline loss per share of A$26,7c compared with a profit of A$8,8c in the previous period.
The company said, "Aveng's revenue contracted 8.1%, in line with previous guidance, to A$1.4 billion (R16.6 billion) in the interim period ended 31 December 2024 (December 2023: A$1.5 billion (R18.6 billion)), following an expected softening of infrastructure markets in Australia and New Zealand."
Prior to this, the share had been moving up since mid-May 2024 and looked to be in a new upward trend. The latest results have seen the share lose most of its gains.
