Our opinion on the current state of M&R-HLD(MUR)Murray and Roberts (MUR) has had a challenging decade, with its share price declining sharply from its highs due to the sub-prime crisis, reduced construction spending post-2010, and more recently, a weakened South African construction sector. In response, the company has strategically refocused as a multinational engineering and construction group targeting the natural resources sector, with core operations in underground mining, oil & gas, and power & water.
The company has been actively working to streamline its operations and reduce debt. For example, in March 2023, it sold 65% of its Australian subsidiary Insig Technologies for A$1, thereby shedding A$7 million in liabilities. By December 2023, Murray and Roberts further reduced its debt from R2 billion to R350 million, assisted by a CAD 40 million payment facilitated through Cementation Canada Inc.
In its financial results for the year ending June 30, 2024, the company reported revenue growth to R13.5 billion from R12.5 billion the prior year, although it posted an attributable loss of R138 million. This led to a reduction in net asset value (NAV) from 407c per share to 350c per share. Additionally, net cash increased to R0.4 billion from R0.3 billion in net debt, showing some improvement in its balance sheet.
However, a trading statement for the six months to December 31, 2024, projected a further decline in headline earnings per share (HEPS) by at least 20%, indicating continued financial pressures. Despite these risks, Murray and Roberts recently secured a $200 million contract in Latin America, which could contribute positively in the coming years.
Currently, MUR remains a risky, low-priced stock with high volatility, but it may appeal to investors looking for exposure to natural resource-related construction and infrastructure projects. The company's debt reduction efforts and recent contract wins provide some optimism, though financial challenges persist.
