Questor share tip: Cape is a hold while the business is fixed Mr Oatley was previously chief executive of oil and gas engineering group Hamworthy and led the group until it was taken over by Finland's Warsila. The market reacted well to the appointment, sending Cape shares up 8pc on the day of the announcement. Investors have to hope that the bad news ends here - however it may not. Following the problems with valuing the company's assets, Cape is now reviewing balance sheet items worldwide. This is the correct move by Mr Oatley, but it could also uncover further issues. This review is expected to be complete in the next few months. We are likely to hear the result of the investigation alongside the full-year results due on March 6 next year. Profits are now expected to be "significantly" below expectations, but by exactly how much has not been quantified because of the ongoing review. Cape was also forced to write down £1.5m relating to a potential bad debt with a customer in Saudi Arabia. However, management insists that this is "not deemed reflective of a structural change in the region." Despite all the gloomy news, the company's medium-term prospects look sound and it looks likely to remain profitable this year. The Middle East and UK operations seem to be performing well and its markets have structural growth drivers. Asia and the Middle East need more energy and Japan is moving away from nuclear energy. Cash management is going to be very important - and the shares are likely to be supported by the yield, which stands at about 7pc. A dividend cut is certainly a possibility, however. It was not all bad news in the statement. Third-quarter revenues actually increased by 6pc year-on-year and Cape also remains well within its banking covenants. Questor has recommended the shares as low as 65½p and as high as 447¾p before the first warning. Investors have also been advised to "top slice" and sell half their holdings on a number of occasions. In order for the shares to move higher, the balance sheet review needs to be completed and the company will have to show that it is delivering real growth. However, by the end of the year we should have all the bad news in the market. The shares look too cheap to sell at this level, so Questor continues to recommend a hold.