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Aveng (AEG)...free lunch?!

Aveng AEG small cap construction

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#281 BoerieBuffet

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Posted 12 November 2015 - 09:43 AM

I have a small pocket of shares of this one... really not been a good ride. NAV is not the problem, currently the order book (future earnings) is shrinking quite fast and the company faces a lot of litigation.

 

Granted, if you got in high, the ride would have been rough. But at this point, it seems the share has been punished too much, and there is significant upside potential. I'm not referring to the NAV in totality of R30+, because that can be a pointless exercise. But if all their liabilities are settled there is still a big safety margin of current assets to burn through, and then the rest of the NAV (essentially fixed assets) becomes a bonus safety net as portions of it is converted into current (selling properties etc.). 

 

So essentially their future order book would have to remain suppressed for quite a long time to validate such a low valuation. And if that happened, it would be sector wide, and all the SA construction firms would be in trouble, and they don't even have these safety nets that Aveng has, yet they have much higher valuations. 

 

The usual risk - reward scenario, except the market isn't pricing in the safety margin.  


Edited by BoerieBuffet, 12 November 2015 - 09:48 AM.

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#282 Dust

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Posted 11 November 2015 - 05:02 PM

I have a small pocket of shares of this one... really not been a good ride. NAV is not the problem, currently the order book (future earnings) is shrinking quite fast and the company faces a lot of litigation.


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#283 BoerieBuffet

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Posted 11 November 2015 - 04:47 PM

It's hard to find on the JSE (or anywhere!) these days, but seems the market is offering us a free lunch. Aveng trading below R3. From my calculations the current assets minus ALL liabilities per share is equal to just below R8...for which you could have paid only R2.93 today... but that is not all (like in any good infomercial)... you also get ALL the Fixed assets of SA's largest construction company for free!? Talk about paying for one slice of bread and getting a 5 star 3 course meal for the whole family  :D  :D  :D

 

*Disclaimer: If my calculations are wrong, I blame the calculator! :ph34r:


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