Beleaguered Access, whose share price has been falling, to meet shareholders, media next month
View(s):Access Engineering (AEL), with major exposure in highways and building construction, has decided to hold an investor forum to explain a back-up plan after its share price crashed owing to uncertainty over public infrastructure projects that it has been involved in, company officials said.
AEL is expected to meet stockbrokers and the media in the next two weeks.
Access, which handled several high value highway and public infrastructure during former President Mahinda Rajapaksa’s reign, saw its stock take a beating, slumping by near 30 per cent after the Presidential election due to panic selling chiefly among local investors.
The price fall was as a result of weak sentiment due to the ambiguity of the public infrastructure project contracts to be awarded. The worst news to investors was when the new Government cancelled the northern expressway project in which Access was one of five contractors selected.
However company officials said the northern expressway will come into their books in two years and cancelling it will not be an impact on the medium term. One official said if Government contracts don’t work they will canvass other business.
The businessman Sumal Perera-led group – architect of the innovative Water’s Edge resort and golf course which was subsequently acquired by the Government on a Supreme Court order – had powerful links with the former regime.
AEL’s chief revenue generator, the highway construction sector currently adds 47 per cent of the group topline whilst the building construction sector tallies for near 21 per cent of group turnover. The third largest revenue generating sector is its motor vehicle operation, contributing 19 per cent to the group topline.
Presently 72 per cent of group revenues are via direct government contracted projects mainly roads and highways construction. With the change in the government, AEL faces a risk on its project pipeline with 45 per cent of revenues in FY16E from contracts which were recently awarded and are yet to start. “These projects already awarded to them may have to go through a more competitive bidding process in addition to delays faced in commencement,” an analyst said.