JSE-listed development group Raubex is disappointed it misplaced the tender award for the R1.8 billion improve to the Ashburton interchange in KwaZulu-Natal to a Chinese three way partnership firm.
However, Raubex CEO Felicia Msiza stated on Monday she doubts the exercise of Chinese firms within the native market will negatively influence Raubex’s order e book and monetary efficiency sooner or later.
Msiza stated that of the 4 tenders awarded by the South African National Roads Agency (Sanral) final week, Raubex solely submitted a bid for the Ashburton interchange mission.
“We are obviously disappointed not to have won the bid, but we do believe the DBSA [Development Bank of Southern Africa] has followed the supply chain management processes in terms of the award and it looks like it was awarded based on the lowest price,” she stated.
Msiza stated it’s constructive to see that Sanral is now awarding tenders and Raubex is wanting ahead to extra awards from Sanral.
Outlook
As to whether or not these Chinese contractors will have an effect on Raubex’s order e book going ahead, she says: “…we have always delivered quality, on budget and on time in terms of our work with Sanral and believe our experience, current balance sheet and the capacity we have places us in a better position [than other contractors] in terms of other contracts to be awarded by Sanral.”
Raubex stated in May this 12 months the group was within the working for Sanral tasks valued at between R8 billion and R10 billion.
Msiza stated on Monday that Sanral accounted for 32% or R5.29 billion of Raubex’s complete R16.4 billion order e book at end-August in contrast with 39% or R6.68 billion at end-December 2021.
She stated various mission awards are nonetheless anticipated from Sanral.
Chinese firms have been final week awarded the majority of the Sanral tenders for 4 important tasks. The Ashburton interchange mission was awarded to the Base Major/China State Construction Engineering Corporation (CSCEC). Base Major, based by Chinese businessman Stephen J Lu, was registered in South Africa in 2007.
Read: Raubex maintains report R17.1bn order e book, produces sturdy outcomes [May 2022]
Msiza stated Raubex continues to be happy with the group’s present stable order e book of R16.4 billion, however burdened the necessity to frequently replenish it as a result of the group is “in fact working off R50 million a day”.
“There have been high levels of tender activity, which have continued during the year to date. There are a number of projects that are still pending adjudication, which can increase the order book substantially if awarded [to Raubex].”
Raubex’s worldwide division elevated its portion of the group’s complete order e book to 34% at end-August, from 24% at end-December.
Two new main contracts
This improve is due to the award of two main contracts in Africa – the R1.2 billion Namdeb mission in Namibia and the R2.4 billion Sequi River Bridge mission in Lesotho, during which Raubex is a 21% three way partnership associate.
“If you look at the growth of our order book over the past five years, you will see that the group has actually doubled in size,” stated Msiza.
“Our teams are energised to deliver on our R16.4 billion order book and to also leverage our healthy balance sheet and take advantage of diverse opportunities for growth available to us.”
Beitbridge Border Post
Raubex’s flagship mission, and the one greatest contract it has been awarded to date, is the R2.5 billion engineering, procurement and development (EPC) contract for the upgrading of the Beitbridge Border Post in Zimbabwe.
Once it’s accomplished, Raubex has a 17-year upkeep contract valued at R1.7 billion.
Raubex chief working officer Dirk Lourens stated on Monday the border submit part of the Beitbridge mission have to be accomplished by end-November and the mission in totality throughout April 2023.
Lourens stated Raubex has not seen the federal government infrastructure construct programme “coming on line yet”.
“We believe there is a lot of it in the pipeline and we will definitely look at it strategically with regards to margins and risk. We are ready to execute once this infrastructure drive has been fully rolled out by government,” he stated.
Raubex is focusing on additional border submit tasks in South Africa and its neighbouring international locations, plus renewable power tasks.
Minister of Home Affairs Dr Aaron Motsoaledi stated in June his division plans “in a few months’ time” to problem a public request for proposals for a R6 billion mission to fully overhaul and rebuild South Africa’s six busiest border posts.
Lourens stated the suggestions Raubex is getting from South Africa and its neighbouring international locations on border submit tasks is that these public personal partnerships (PPPs) will likely be marketed imminently.
Renewable power
Commercial shut on Bid Window 5 of the Renewable Energy Independent Power Producer Procurement (Reippp) programme – comprising 25 tasks totalling 1 600MW – has been additional delayed, with the popular bidders solely introduced a few week in the past.
Msiza stated the group’s infrastructure division is nicely positioned to make the most of the personal sector and authorities’s drive to improve energy era capability.
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Lourens stated Raubex has skilled elevated exercise and demand within the personal renewable power sector and has shifted its focus to this market due to the delay within the award of Bid Window 5 tasks.
Interim outcomes
Msiza stated Raubex achieved its finest first half-year ends in the historical past of the group within the six months to end-August 2022.
Raubex on Monday reported a 23.2% improve in income to R7.38 billion from R5.99 billion within the prior corresponding interval.
Operating revenue improved by 26.4% to R550.3 million from R435.2 million.
Headline earnings per share grew by 16.1% to 159 cents from 137 cents.
An interim dividend per share of 53 cents was declared, which is 12.8% increased than the 47 cents declared within the prior interval.
Analyst remark
Peregrine Capital government chair David Fraser stated Raubex has produced a stable end result, which exhibits the advantages of a diversified earnings base.
However, he stated going ahead Raubex can have to discover alternative work for the Beitbridge border submit contract, noting that this contract is extra materials to Raubex by margin contribution than income.
“If you look at the international margin it’s at 25%. The vast majority of that is the Beitbridge border post contract. They will have to replace that operating profit rather than the turnover and it may need twice or even three times as much turnover to generate that operating profit. That will be the challenge going forward.”
Shares in Raubex rose 4.38% on Monday to shut at R31.19 per share.
Read: Trust tasked to develop development sector allocates much less to business, extra to state tasks
