You guys have pretty well nailed the pros and cons, well done. I have a small exposure to the construction industry and I don't believe the full impact of the current macro scene has been taken into account.
SHA listed at an unbelievable price so much of the value was taken out at IPO (over 2 years ago). Even today the BV is just 17c v SP of approaching $1.89 as i write - following a good FY24 update. The margins are wafer thin and there's no room for error and all this at a time of rising materials and wages costs + as every year passes they have a greater exposure to additional costs with little covering revenue via the builder guarantees. These do and have done many a company in.
Yes, winning contracts is positive & heady stuff, but completion at a profit is the main game here. Unless these guys possess some total 'magic' in their business approach unknown to the rest of the industry, I'm afraid that competitive pressure and the allure of a lower cost will bring them back to the field. Sad to say, the construction industry is full of carnivores who just prey on low price with customers and their project managers mesmerized by lowest price as well.
Whilst SHA looks good on paper (and I do appreciate there are signs of differentiation and segment specialization), I'll stand aside for the reasons above - plus - I was rather surprised at the lowly number of shares held by the Board. To me this reads that the old company has taken their swag of shares at the IPO and have surrended the reins to others. I hope the culture continues.
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SHA Price at posting:
$1.90 Sentiment: None Disclosure: Not Held
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