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Why the Seven Group share price was up 2% on Friday

The Seven Group Holdings Ltd (ASX: SVW) share price is up 2% today following an investor presentation released this morning. The presentation was given to analysts by Mr Ryan Stokes AO, Managing Director and CEO of Seven Group.

What was in the announcement?

The article included updates about the company’s WesTrac and Coates hire subsidiaries. It also included updates regarding Seven Group’s energy assets, media assets and capital management situation. It was a positive announcement overall which was reflected by the company’s higher share price today.

WesTrac

Seven Group’s Westrac subsidiary has performed well through the recent coronavirus crisis. According to the announcement, the pandemic has so far had a minimal impact on the key drivers of mining production along with fleet utilisation and age. Revenue of the subsidiary for the year to May 2020 was up 15% on the prior corresponding period. WesTrac was recently awarded new contracts from several mining companies including Rio Tinto Limited (ASX: RIO).

Coates Hire

The group’s Coates Hire business has been negatively affected by coronavirus with both the events hire and construction hire businesses impacted. Lockdown measures are estimated to have adversely impacted vertical construction productivity by 30% and horizontal construction activity by 10%. Despite this, the business reported that year to date revenue was up 2% on the prior corresponding period. It also announced that governments were focused on accelerating ‘shovel ready’ projects with demand for engineering and construction poised to benefit. The company reported that Australia was in the midst of its largest ever transport infrastructure boom with investment set to reach $18 billion per annum by 2023.

Energy

Seven Group reported that gas prices for 2020 contracts had remained strong. It also boasted that through its investments in Beach Energy Ltd (ASX: BPT) and SGH Energy the company had the potential to take advantage of a projected supply gap for gas beyond the next 2-3 years.

Media

The company reported that government measures surrounding coronavirus had negatively impacted advertising revenue for Seven West Media Ltd (ASX: SWM). It also announced that it had made some media asset sales and realised more than $140 million in the process. Additionally, it reminded investors that Seven also had other media investments that would expose the group to growth in China’s media, entertainment and consumer sectors.

Capital management

Seven Group’s announcement regarding its capital management was positive with the group reporting it has over $700 million in new funding available. It also announced that its private placement, priced in May, was oversubscribed with US$865 million in bids received. It also has $616 million in existing committed undrawn facilities.

About the Seven Group share price

The Seven Group Holdings share price is up 95% since its 52-week low of $8.92 reached in March this year. The company’s share price closed at $17.35 on Friday which is 10.89% down since the beginning of the year.

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Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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