Raubex (RBX) – Where to from here

Raubex delivered strong results in FY23 based on solid performances from Australia, Bauba and the Beitbridge project. Even when accounting for the strong dollar providing c. 49% in foreign exchange gains on the project, Raubex still performed well. On a comparable basis, revenue improved by 32.4% y-y driven by the company’s diversification strategy.

Construction Materials struggled over the period as activity in the sector remained low and bad weather in parts of SA slowed sales volumes. Although both Asphalt and Bitumen improved, high fuel costs and persistent load shedding eroded margins. Roads and Earthworks delivered another strong result, driven by the solid SANRAL order book and the excellent execution of these orders. The order book declined y-y due to the slow rollout of SANRAL projects, but Raubex is at capacity for FY24, which should provide it the opportunity to tender more selectively and potentially improve margins.

With the Beitbridge project now complete and the maintenance contract established, a large gap will be left in Raubex’s profitability. It is unlikely that the project can be replaced soon and it could be likened to the 2010 World Cup construction boom. However, Raubex intends to improve both revenue and margins in the coming years.

Instead of replacing Beitbridge with one single project, Raubex plans to do so via a diversification strategy. Projects like the Senqu River bridge and the Namdeb diamond mine are expected to be very profitable. Bauba mine expansion should increase volumes and in favourable export conditions, profitability may not fall significantly. Taken together with short-term Australia contracts, private renewable energy projects in SA and a growing market for renewable energy in Australia, Raubex may be able to plug the Beitbridge hole.