Metair (MTA) – Hesto Harness site visit notes

On 10 June 2024, Metair hosted a site visit to Hesto Harness in Stanger Central, KwaDukuza in KwaZulu Natal. We were given a tour of the new Ford plant, the Toyota plant and Unitrade 745.

Hesto manufactures wiring harnesses which is the combination of electrical cables, or assembly of wires, that connects all electrical and electronic components in the vehicle.

Hesto has made good progress despite facing many setbacks, including supply chain issues, riots, political unrest and floods, causing the shutdown of the Toyota plant. Volumes have improved due to the launch of the Ford project.

Hesto operations are constrained by factory space and vehicle volume capacity. Hesto has not announced any intention to build a new factory as yet, but if management does intend to manufacture harnesses for new OEMs, then they would need to secure new land and capex for development.

Hesto has grown into a key business for MTA and contributes c. 36% to group revenue as of FY23. NPAT has improved from c. -18% in FY22 to c. -10% in FY23. Margins are recovering but is dependent on cost control measures and price recovery mechanisms. Margins are unlikely to turn positive in FY24.