Our opinion on the current state of RBX

2023年11月14日

Raubex (RBX) is a construction company that was started in 1974 and listed on the JSE in 2007. The company has three divisions in construction, materials, and infrastructure. Recently, with the dearth of work in road-building, especially from Sanral (who have halved the value of the tenders which they issue), the company has branched out into solar and wind energy and has won contracts worth R500m in this area, doing work on the Droogfontein photovoltaic farm and the Copperton wind farm in the Northern Cape. The company is bidding for contracts all over Africa and has benefited from the increase in contract work from the South African government, especially Sanral from whom it has won R6bn worth of orders. However, this is a well-managed company that is managing its costs closely and which has a strong balance sheet. The company has businesses in Cameroon, Namibia, Botswana, and Zambia and owns Westforce Construction in Western Australia. Raubex is one of those companies that will benefit directly from any significant improvement in the South African economy. In its results for the six months to 31st August 2023 the company reported revenue up 14,5% and headline earnings per share (HEPS) up 19,4%. Its net asset value increased to R6,04bn from the previous period's R5,8bn. The company said, "...the robust performance of the Group had been largely attributable to the successful completion of the flagship Beitbridge Border Post Project, the full year contribution from Bauba Resources (Pty) Ltd, and the solid performance of the Western Australian operations". The share looks cheap on PE of 6,37. In our view, this is a share to buy on weakness when things begin to improve in this country's economy. Technically, it was in a strong rising trend until May 2022 and since then it began falling. For the past year, since December 2022, it has been moving sideways We suggest waiting for a clear upside break above resistance at about R30 per share.