The shares of infrastructure, mining and construction materials supply group Raubex surged to their highest level in two weeks on Monday after the company reported increased activity in both SA and Western Australia in the half-year to August.
The R5.43bn group said it was on the verge of completing the multimillion-rand Beitbridge Border Post project and eyeing further Sanral contracts to shore up margins while shifting its focus to the private sector and the government’s drive to increase power generation capacity via renewables.
Raubex’s share price rose 4.42% to R31.20, having dropped just under 22% since the start of the year.
Speaking at the six months presentation of the Centurion-based group, CEO Felicia Msiza announced Raubex had been awarded two new projects in Africa: Namdeb in Namibia, with a value of R1.2bn, and the Senqu Bridge in Lesotho, worth R2.4bn and in which Raubex holds a 21% share.
She said there were a number of projects in the pipeline that were awaiting adjudication, which could boost the order book substantially.
Msiza told shareholders that the infrastructure division is well positioned to take advantage of the private sector and the government’s drive to increase power generation capacity. The mining segment would continue to pursue strategic partnerships with mineral resource owners to participate in various materials handling and processing opportunities over the medium and long term.
Raubex reported its order book stood at R16.4bn at the end of the half-year, down slightly from R17.1bn.
This comes as Raubex wraps up a profitable execution of operations at the Beitbridge Border Post, the group’s largest project to date.
Border project
Raubex was appointed by Zimborders, which was awarded the project by the Zimbabwean government, as the contractor to modernise the porous border’s truck, bus and light vehicle/pedestrian terminals, saying it was on target to reach practical completion in early 2023.
The project includes infrastructure improvements in the town of Beitbridge, including a new 11.4-million litre reservoir, 220 staff housing units, a new fire station, an animal quarantine facility and oxidation dam.
The company said after completion of the engineering, procurement and construction] contract, Raubex will participate in a 17-year maintenance project for the border post.
“I must state that this is the best half-year result in the history of Raubex,” the CEO said.
The group reported revenue jumped close to a quarter year on year to R7.38bn, while operating profit surged just more than a quarter to R550.3m.
Headline earnings per share, a measure of profit that strips out impairments and one-off items, increased 16.1% to 159.0c. Profit for the period is up more than one-quarter to R368.4m.
Msiza said “the increased profit is a result of our diversified model, supported by a good performance from Beitbridge Border Post, Bauba Resources and Western Australia.”
Despite tough macroeconomic and inflationary pressures as well as supply chain constraints, cash generated from operations increased 145.7% to R589.3m in the interim period.
The improved performance saw Raubex up its interim dividend more than 10% to 53c per share.
Since 2020 Raubex has undergone strategic changes both at a management level and operationally. Msiza, who was appointed in August to replace Rudolf Fourie, has ushered in the establishment of a fourth division known as materials handling and mining, which has a fresh set of executive committee members overseeing it.
It will provide material handling and processing services for the mining industry, contract mining and contract crushing and focus on specialised resource ownership.
Msiza said the shuffling was done to better reflect the increasing scale and complexity of the group as part of its restructuring plan.
In terms of business segments, infrastructure generates most of the operating profit with 37.5%, then roads and earthworks (31.7%), materials, handling and mining (19%) and the rest comes from construction materials. Geographically, most operating profit comes from the rest of Africa (45.9%), then SA (39.6%) with Australia making up the rest.
The roads and earthworks divisions are directly and indirectly exposed to government expenditure on road construction and maintenance.
Sanral
Raubex is benefiting from most of Sanral’s major projects in KwaZulu-Natal running at full capacity with more projects in the pipeline.
The division, where tender activity remains “encouraging”, is also supported by concession projects such as the N3TC and Bakwena in the rest of SA.
The group’s strategy to diversify into Australia, public-private partnerships and mining is succeeding as they were the key contributors to the robust results in Australia.
Established in 1974, the company was listed on the JSE in March 2007 to provide road and civil engineering contracting, construction materials and mining services. It counts the Public Investment Commission, Old Mutual and PSG Asset Management among its largest shareholders.
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