Seven months after it floated, Ventia Services’ balance sheet is worrying some analysts, with one describing the company’s negative working capital position as “highly irregular.”
from initial estimates as high as $3.15 per share, Ventia’s stock has traded as high as $2.96 per share before weakening in May and June to trade at $2.35 on Wednesday morning.
But in a detailed report, Mr Amland has outlined several reasons why he does not think the company will sustain current growth rates, including its “worrying balance sheet” that has negative working capital, and Ventia’s high leverage ratio of 6.9 times assets and liabilities to total equity. Mr Amland acknowledges Ventia has sufficient lending arrangements to survive most cash crunch scenarios. The company had some $580.2 million of liquidity at the end of December, including $180 million in cash.
Other concerns raised by CLSA on Ventia include the company’s $251 million of provisions related to bad contracts and claims, and the likelihood of its owners, construction group Cimic and US private equity firm Apollo Global Management, selling their remaining stakes in the company when their share escrow period ends in February 2023.