Forge for Sale

The news has gone from (very) bad to worse at engineering construction player Forge Group, with its third profit downgrade in less than two months. The company now expects lose $20m to $25m at the ‘pro-forma’ (excluding the horror power contracts) earnings before interest, tax, depreciation and amortisation level. That compares with the previous forecast of $45m to $50m profit. Our estimated valuation when we purchased the stock was in the range $60m to $250m, attributing no value to the power segment and valuing the construction business on a knockdown multiple due to the industry headwinds it faced. That now...

The news has gone from (very) bad to worse at engineering construction player Forge Group, with its third profit downgrade in less than two months. The company now expects lose $20m to $25m at the ‘pro-forma’ (excluding the horror power contracts) earnings before interest, tax, depreciation and amortisation level. That compares with the previous forecast of $45m to $50m profit.

Our estimated valuation when we purchased the stock was in the range $60m to $250m, attributing no value to the power segment and valuing the construction business on a knockdown multiple due to the industry headwinds it faced.

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