Basil Read Holdings Ltd. climbed to the highest level in more than two years after the construction company said it won a contract from South Africa’s Trans-Caledon Tunnel Authority in the nation’s Limpopo Province.
The stock gained as much as 13 percent to 16 rand, the highest intraday level since November 2009, and closed 6 percent higher at 15 rand in Johannesburg.
The 1.2 billion-rand ($155 million) contract for the Olifants River Water Resources Development Project, to be funded by the South African government and Trans-Caledon, is the first of a two-phase contract worth 2 billion rand, the company said in a statement late yesterday. Following the award, Basil Read’s order book is valued at 14 billion rand.
“It’s all in the order book,” Drikus Combrinck, a portfolio manager at PSG Konsult, said by telephone from Pretoria. “The construction sector looks like it is making a turnaround.”
A pledge by President Jacob Zuma in his state-of-the-nation address last week to spend more on railways and ports to boost exports and attract investment in mining may lead to a re-rating for the construction industry, Combrinck said. If Finance Minister Pravin Gordhan increases the allocation for spending on infrastructure in his national budget on Feb. 22 “you might see this sector rally very well,” he said.
The FTSE/JSE Africa Construction and Materials Index has gained 9.3 percent this year after sliding 26 percent in 2011.