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Trade insight example

 Consolidated infrastructure group (JSE:CIL)

22 August 2014 

Formerly known as Buildworks Group Ltd, and listed on the Alt-X in 2007 prior to the purchase of CONCO in 2009 and its listing on the main board. Consolidated Infrastructure Group (CIL) is a diversified infrastrucure group operating across Africa and the Middle East, having operated in 19 different countries including Nigeria, Angola, Mozambique and Oman, with CONCO having completed the building of the first grid-connected wind farm in the Southern hemisphere in Crookwell, Australia and further to that winning the contract for the Darling wind farm in the Western Cape.

The company’s BBBEE status is in excess of 34% and its strategic focus has been on organic growth and acquisitions, having acquired a 30.5% stake in Angola Environmental Services (AES) which is a service provider to oil and gas rigs off Angola; collecting, recycling and disposing of waste from the oil drilling process, wholly owned by CIG international a subsidiary of the Group and contributing 22% to total profit. The company also has building materials subsidiaries under CBM consisting of West End Claybrick; supplying claybricks and rooftiles to Gauteng, Free State and the North West Province for family homes, industrial and commercial buildings. Drift Supersand is also a part of CBM providing various grades of aggregates, collectively the two add 9% to total profit. 

The largest contribution comes from their power and electrification arm under CONCO previously contributing 87% to group revenue, specialising in turnkey projects involving design, supply, construction, testing and commissioning of high voltage substations and power lines, in addition it has divisions in protection, automation and wind farms. The company won the first 400kV contract from Eskom worth R200million in 2011 and added the largest municipal contract ever awarded worth R800million over a 3 year period to its order book, with it having strong experience in overhead lines and it being one of the top suppliers of high voltage infrastructure. Consolidated Infrastructure Group has quadrupled its market cap over the last five years from R1billion in 2009 to R4.65billion in 2014. Cash flow for the period was subdued in line with the growth phase of the company; with a lack of qualified skilled engineers posing risk to the successful completion of future projects. 50% of revenue is derived from outside of South Africa’s borders and the Group aims to continue to strengthen its order book as it looks forward to the second half of the year which is historically stronger.

The share price has pulled back from the high of 3326c with the price closing closer to the low than the high of the candle signifying the end of the upward move, also evident in the sideways consolidation. The share price has come back to test previous support at 3100c, breaking below 3100c shortly after open this morning. The share price is still trading above its 50day (blue line) and 200day (red line) moving averages, favouring further bias to the upside. The RSI is trading above neutral at 58 in line with the upward movement in price. Volume has been fairly subdued in line with the non committal nature and recent sideways movement in price. Traders looking to get long may look for a break above 3200c with a corresponding increase in volume and RSI above 50. Alternatively a close below 3100c may see further weakness in the price and a retracement to 3000c and 2900c respectively, in line with spikes in volume and weakening RSI below 50. - Leigh Riley, Premium Client Manager

Consolidated Infrastructure Group, 22/08/2014

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