Rocket from the crypt: What breathed Group Five into life?
Ghoulish scenes as zombie construction stock rises nearly 60% this week for little to no concrete reason
In the past two days the Group Five share price has surged, breaking the R1 mark for the first time in two-and-a-half months.
The share soared 51.52% on Wednesday to close at R1. It last reached that level on November 15. When the market opened on Thursday, the stock started where it left off the previous day, rising 29% in early trade to R1.29 and closing 7% up at R1.07. This is a share that was at 16c as recently as January 7. What is driving Group Five’s share price? The struggling construction company issued a cautionary announcement on Wednesday about its showdown with former customer and Ghanaian company Cenpower regarding a delayed power project in Ghana. Except for the company’s optimism about the prospects of recouping the $106.5m paid to Cenpower, Wednesday’s announcement was nothing to write home about.
Clearly Group Five must be confident it has a chance of success in its claim against Cenpower as the group would not have taken the matter to the International Chamber of Commerce in Paris if it believed it had a weak case.
But to pin the newly found vigour in the Group Five share price on its update about its fight with Cenpower would be stretching it. After all, an International Chamber of Commerce ruling is expected only by year-end.
Only time will tell why there is suddenly interest in the beleaguered company. Could a suitor be interested in one of the company’s assets? Most analysts are adamant that the SA construction sector is not worth a second look given the lack of public and private investment in infrastructure.