Consolidated infrastructure group’s share price took a bath on Tuesday, falling to a low of R2.65 from R7.95, after the company released a shock SENS announcement warning that 1) the previously expected earnings decline of 55% was optimistic and that the company was in for worse and 2) the results would be subsequently delayed.
The energy and gas company previously announced a 55% decline in earnings on the 9th of November, resulting in a 20% drop in the share price. With the stock now in free-fall, the group blamed subdued economic growth having a negative effect on its Consolidated Power Projects division, while the slowdown in the Angolan oil sector had taken its toll on the performance of Angola Environmental Services.
The company builds infrastructure related to power stations including transmission lines and infrastructure that connects the power stations to the grid. The company also has various waste management projects based on Angolan oil rigs, generating offshore dollar income.
The decision to delay financial results for the year comes after a board meeting on Monday, where directors decided that risks related to three large, multi-year engineering contracts on which power projects subsidiary Conco was working, were not being accounted for fully.
High risk traders have been climbing in on a chance bounce that this might climb higher for a quick profit. Prudent investors will want to wait to find out what management have to say when the results are released.