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Group Five Advances After Earnings Forecast: Johannesburg Mover

Feb. 13 (Bloomberg) -- Group Five Ltd. rose the most in 4 1/2 years in Johannesburg trading after the construction company reported a jump in profit and forecast a further increase as it targets industry and real-estate business outside South Africa.

The stock climbed 9.3 percent, the most since July 17, 2008, to 32 rand, the highest in more than two years, by the close in the city. About 173,000 shares were traded, exceeding the three-month daily average by more than 56 percent. Earnings per share climbed to 1.40 rand ($0.16) for the six months through December from 89 cents a year earlier, the Johannesburg-based company said in a statement today.

“The results are slightly better than expected,” Peter Steyn, an analyst at Johannesburg-based Macquarie First South Securities, said in a phone interview. “Domestic market dynamics require them to move in sub-Saharan Africa where more opportunities lie. They have opportunistically gained work in South Africa with renewable energy projects and building.”

The company expects improvement in earnings for fiscal 2013 as it seeks growth in Sub-Saharan Africa by targeting mining, oil and gas, transport infrastructure and real-estate projects, a strategy that “will not be at the expense of losing foothold in the domestic market,” Chief Executive Officer Mike Upton said in an interview in Johannesburg today.

The order book rose 19 percent from June to 13.5 billion rand. South Africa accounts for 74 percent of the order book, according to a presentation to analysts in Johannesburg. Market “conditions remain tough with thin margins” in the country, Upton said.

Revenue from continuing operations rose to 5.1 billion rand from 4.4 billion rand a year earlier.

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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