Our opinion on the current state of RAUBEX(RBX)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 2024 the company reported revenue up 29,7% and headline earnings per share (HEPS) up 49,8%. The company said, "The cash generated by operations was exceptionally strong, up over 110% compared to the prior period. Although we continued to secure contracts during the period under review, our order book declined marginally to R24.50 billion."
The share looks cheap on a PE of 9,97. In our view, this is a share which will benefit directly from the improved economic outlook in South Africa following the advent of the GNU, the end of loadshedding, and falling interest rates. Technically, it has been in a rising trend since March 2023 and has broken up now through resistance at about R30 per share. It was added to the Winning Shares List (WSL) on 21st March 2024 at a price of 3031c and it has now reached 4656c.
