JSE-listed building group Raubex is more and more optimistic concerning the pipeline of recent work accessible available in the market and has submitted bids value R25 billion for Bid Window 5 of the Renewable Power Unbiased Energy Producer Procurement Programme.
Raubex CEO Rudolf Fourie stated on Monday the group can also be excited concerning the variety of public-private partnership (PPP) tasks the federal government has dropped at market and that its SA Nationwide Roads Company (Sanral) order e-book is now at a file excessive of R3.26 billion after dropping to solely R207.6 million in February 2019.
Fourie stated Raubex has not too long ago priced quite a lot of supplies dealing with contracts within the mining sector, with negotiations to safe this work ongoing, whereas there are additionally business and housing undertaking alternatives.
He stated Raubex’s order e-book grew by 29.2% to R11.74 billion at end-August from R9.08 billion within the earlier corresponding interval.
“That is encouraging information nevertheless it’s essential to notice that we expect extra awards earlier than the tip of this [calendar] 12 months.”
He added that Raubex is within the working for tender awards valued at R8 billion and believes will probably be awarded a giant portion of this work, supplied it complies with all of the tender situations.
One chance is the brand new Beit Bridge border submit undertaking valued at R2.6 billion, the place Raubex is the popular contractor.
It’s nonetheless ready for monetary shut on this tender. “We hope that’s going to occur within the subsequent month nevertheless it’s not included in our order e-book,” he stated.
“Raubex was not too long ago awarded the contract for the improve of the N3 from Dardanelles to Lynnfield Park for R1.48 billion in addition to some smaller contracts from Sanral.
“There are a few different Sanral tasks that we’re within the working for and hopefully on the photo voltaic facet we are going to get a fair proportion of the R25 billion in bids we now have submitted for the renewable vitality programme. Historically we get a fair proportion of that work,” he stated.
Fourie stated that if the PPP tasks the federal government has dropped at market get awarded, “it can actually stimulate the market and hopefully we are going to get a bit of it”.
He stated these PPP tasks are substantial, with all of them valued at about R1 billion.
Nevertheless, Fourie admitted that historically the federal government takes a very long time to award PPPs and there’s uncertainty about when these tasks are going to occur.
Nevertheless, PPPs make plenty of sense, notably as a result of they’re a method for presidency to fund these tasks.
Fourie stated the main deliberate PPPs are:
- Six South African border posts, which in keeping with authorities estimates are value a complete of R6 billion;
- Three totally different workplace constructing tasks for the Kopanong Gauteng authorities precinct;
- A water board undertaking in KwaZulu-Natal;
- A hospital in Cape City; and
- A number of faculty tasks in Gauteng.
“We’re fairly excited concerning the medium- to long-term prospects of PPPs in South Africa,” he stated.
Minister of Public Works and Infrastructure Patricia de Lille confirmed in August that the federal government is reviewing the PPP laws and that PPPs needs to be used extra to attract within the personal sector to ship on the federal government’s deliberate R2.three trillion infrastructure funding programme.
Fairness stakes in tasks
Raubex finance director James Gibson stated the corporate shouldn’t be trying to be a giant fairness participant within the PPP market and prefers to be the contractor. Nevertheless, a few of these tasks require the contractor to take a small fairness stake.
“So sometimes it could be a 5% or 10% stake and per undertaking it could be across the R100 million mark or perhaps much less. It’s not massive cash we will likely be placing into fairness from the tasks we now have seen at this stage.”
Raubex plans to scale back its publicity to work in Africa, which previously comprised about 30% of the group’s order e-book.
Fourie stated the group has adopted a extra conservative technique to tendering for work in Africa and can solely take into account tasks with appropriate danger and reward profiles.
He stated this variation in technique has been pushed by the truth that [African projects] have turn into a giant portion of the group’s dangerous debt e-book previously few years and it has additionally been struggling to get into international locations on the continent.
“And now submit Covid-19, it’s going to be very troublesome to function in Africa.
“We’ve taken the strategy that there are plenty of alternatives in South Africa, with PPPs, Sanral and photo voltaic, the place we’re going to focus our focus,” he stated.
Fourie stated the monetary results of all three of Raubex’s divisions have been severely impacted by the Covid-19 lockdown within the six months to end-August.
This resulted in Raubex on Monday reporting a 145.four% discount in headline earnings per share to a lack of 26.6 cents from earnings of 58.6 cents within the earlier corresponding interval.
Income dropped 10.5% to R3.94 billion and working revenue by 90% to R21.7 million, with the group working revenue margin deteriorating to zero.6% from four.9%.
Money generated from operations was up 72.four% to R715 million from R414.eight million.
Fourie stated that is excellent news and attributed this to the group having the ability to accumulate its debt within the interval and the money preservation measures launched at first of the lockdown, together with the choice to not pay a dividend for the 12 months to end-February.
Raubex declared an interim dividend of 24 cents per share for the six months to end-August.
‘Optimistic view on the inventory’
Marc Ter Mors, the worldwide head of fairness analysis at SBG Securities, stated on Monday that the general outcomes by Raubex, notably the robust development in its order e-book, are “very encouraging”.
Ter Mors stated Raubex is changing into extra assured about a number of areas of enlargement, whereas its Australian enterprise remains to be doing nicely, which needs to be useful.
He stated Raubex’s administration could make the choice about taking a much more risk-based strategy to Africa, which can in all probability diminish the contribution of Africa to five% to 10% of group income, due to bettering prospects for infrastructure spending in South Africa and Australia.
“It helps our optimistic view on the inventory, which we now have been expressing now to traders for about two years. It’s good to lastly see a number of the guarantees of infrastructure spending coming again into the image.”
Shares in Raubex rose 1.48% on Monday to shut at R20.52.