I longed on the ex div day dip - so far so good. I suspect that...

I longed on the ex div day dip - so far so good. I suspect that while there could be some more skeletons in the closet, with this impacting only one division of a division, the majority of the value in the business lies outside construction. The market doesn't like construction when it goes wrong, but they are not building power stations and the losses are more to do with not making a profit margins rather than risking catastrophic losses. I think if we could be all knowing, which we are not, you would be more inclined to look at these two projects losses as a $80m (after tax) hit to the balance sheet, and a one-off hit to the P+L accounts. So I suspect we ought to reduce the value of FBU by 12cps plus another (say) 12 cps for lower business being written than expected in the future if they tighten up, rather than reducing earnings expectations by a permanent 10 - 20 cps or so, as the market appears to have done.

Anyway - we will see what the market really thinks upon reflection soon enough. It certainly is a bad look to reduce guidance so soon after their HY accounts. Management may have been pinned down by some big investors, or by the board after receiving the report, and so the report has done its job for investors in the end. But just because it is a bad look does not mean the substance is any different to if this news came out in the leadup to the FY results - this is better IMO, and the problems are being dealt with.