report: jb were says sell sell sell I've been telling people for...

report: jb were says sell sell sell I've been telling people for a long time this dog has big problems. Fancy having a trading halt last week to announce a small profit partnership over 4 years to build a 220bed gaol hospital with what maybe $15m profit.

Now in the afternoon report from Goldman Sachs JB Were:MULITPLEX {$3.16 -29.0 -8.41%} Multiplex - Update
Multiplex has made the following announcement after an internal report concerning Wembley... "The report indicates that an assessment of the final loss position on the project is subject to considerable variability depending upon the final outcome of steel costs, preliminary and acceleration costs, and final negotiation of numerous subcontractor claims, as well as finalisation of recoveries, including final settlement of variations with the client. The report indicates that the likely loss position is now expected to be substantially adverse from the position that was indicated at the full year and the update commentary provided at the most recent AGM. The Board advises that any additional losses on the Wembley project are likely to lead to a direct reduction in 2006 earnings guidance provided at the full year. "At the same time, the sale of MXG's interest in Global Switch(a non core asset) and Stratford (Olympic project) has been agreed with D and S Reuben for a net A$300m (£127.5m). Multiplex has stated that it "will maintain the potential to participate in the development and construction opportunities in the Stratford project."
Nick Vrondas’ View: The likely further deterioration in profit guidance for F2006 as a result of Wembley may be offset in part by the gains from sale. We had been assuming that the Stratford project was "in the money" in the order of £100m so the £127.5m outcome (inclusive of Global Switch) is not dissimilar. It is unclear from the announcement how the debt in Global Switch has been treated but if we assume it has not been restructured then the sale is a slight positive outcome from our expected number. However, the strategic position at Stratford is unclear, we believe that MXG's position in that project is likely to have been substantially diminished and the loss of other projects is in our opinion the more telling factor in the shape of the company over a longer term view. Until some of the long term issues are resolved, we remain of the view that investors should SELL.




MULTIPLEX {$3.16 -29.0 -8.41%} Further comments on the sale of Global Switch
We are confused by the sale proceeds of Global Switch as the company had previously announced that it had a book value of £248m and could achieve as high as £312m. The £127.5m inclusive of Stratford is substantialy below guidance and could disappoint the market. The transaction is subject to confidentiality agreements so the company is not giving guidance on the matter at this point.
Valuation: $3.09
Recommendation: S/T Underperform; L/T Sell