Ausgroup

Ausgroup: last Friday issued a profit warning for 1Q14 due to cost overruns, delays in commencement of new contracts, further compounded by one-off operational restructuring costs. The CEO/MD has resigned, and Non-Executive Director Mr. Stuart Kenny has again stepped back into the CEO/MD role. OSK-DMG believes Ausgroup’s problems are not over, and the stock is still highly speculative at this point, without a good order flow momentum and with the profitability of such orders still in question. Even though the stock has collapsed over 30% in the last five months , the house believes there could yet be another leg down given the uncertainty of management direction. Maintains Sell with reduced TP of $0.26