Aveng Hits Eight-Month Low on Dividend Risk: Johannesburg Mover

Aveng Ltd. (AEG), a South African builder, fell to the lowest in eight months on concern deteriorating fiscal 2013 earnings may put the company’s dividend at risk.

The stock fell as much as 6.1 percent in Johannesburg and closed down 2.6 percent at 26 rand, the lowest price since Nov. 29, for a market value of 10.1 billion rand ($1.02 billion). Trading volume was 50 percent above the three-month daily average. The share lost 11 percent yesterday.

Aveng, based in Johannesburg, said yesterday headline fiscal 2013 earnings will be as much as 10 percent lower than a year earlier. Labor disruptions are delaying projects and hurting profitability, the company said in a statement.

“Aveng indicated that its South African and African division is likely to see losses widen on lower revenue, margin compression as well as significant increase in loss provisions,” Dirk Noeth, a Cape-Town based analyst at Avior Research (Pty) Ltd., said in an e-mailed response to questions. “This, along with a capital demand from its mining division is expected to have an adverse afffect on cash balances which, in our view, could put the dividend at risk.”

The stock has fallen 14 percent over two days, losing 1.6 billion rand in value. Aveng now trails rival Murray & Roberts Holdings Ltd. (MUR) by 380 million rand in market capitalization, data compiled Bloomberg show.

“The share reaction is a bit of a knee-jerk reaction, but also reflective of a loss of investor confidence,” Noeth said. “At current levels, its probably overdone.”

To contact the reporter on this story: Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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