Is the market simply misreading Reunert — or has it forgotten how to value industrial reinvention?
Despite a buoyant JSE, up more than 12% year to date, Reunert has lost more than 20% of its market value. At R59.75 per share, investors seem to be betting on a decline. But what if the real story is quite the opposite?
Behind the gloom lies a quiet transformation that the market has yet to price in. Reunert, a 100-year-old industrial holding company with roots in electrical engineering, has re-emerged as a digital and energy powerhouse. And the numbers aren’t lying. With a forward earnings multiple of just 8.6, an earnings yield north of 10%, and a dividend yield of 6%, this is not a fading industrial. This is a misunderstood machine.
Based on conservative discounted cash flow assumptions, Reunert’s intrinsic value lies between R93 and R103 a share — offering investors a 55% upside even under moderate scenarios. Analysts blaming South African macro risk for the valuation gap are clinging to a one-note narrative.
Here’s the real picture: the underperforming Blue Nova battery business has been divested; exports and ICT revenue now exceed 30% of the total, reducing local dependency; and renewables and digital solutions are scaling faster than expected.
The surprise isn’t that Reunert is cheap. The surprise is that it’s still being priced like a mature utility, not a next-generation infrastructure platform.
The ICT segment, once a sideshow, has become a profit engine. With acquisitions like +OneX and IQbusiness, Reunert has built a scalable platform offering cloud, cybersecurity and hybrid work solutions.
This is not an adjunct; it’s a pivot. ICT now contributes more to group profits than power cables.
What’s more, South Africa’s energy crisis has become Reunert’s runway. The group is delivering commercial-scale solar and storage solutions amid regulatory reform (licence-free sub-100MW projects). The misstep with Blue Nova has been corrected and the vision remains intact.
Embedded generation is booming in mining and manufacturing. Policy tailwinds are creating a R15bn alternative energy market in South Africa alone.
Then there’s Reunert’s defensive side. Reutech’s fuze systems and radar exports are quietly gaining global traction. These are high-margin, IP-heavy exports — not dependent on erratic state defence budgets.
Here, Reunert benefits from niche positioning: quality engineering at scale, priced below OECD suppliers.
Using Warren Buffett’s investment litmus test, Reunert clears more bars than its valuation implies.
The moat may not be wide. But in ICT and defence-grade engineering, it’s certainly durable
The group offers an understandable business with predictable cash flows. Gearing is low and return on capital invested (ROCE) is high at about 17%. Investors can also bank on consistent dividend growth (10%-plus in 2023 and 2024) as well as smart capital discipline (the exit from Blue Nova and the integration of IQbusiness, for example).
The moat may not be wide. But in ICT and defence-grade engineering, it’s certainly durable.
The FM would argue that Reunert is a mispriced platform rather than a cyclical play. The market has mischaracterised it as a cyclical laggard, but this misses the bigger strategic transformation. In this regard, it’s worth noting that ICT is a subscription and services model, renewables are being driven by infrastructure urgency, not hype, and the applied electronics division is export-led and IP-anchored.
The result? Reunert is less cyclical, more scalable.
Under CEO Alan Dickson, Reunert has quietly outperformed most expectations. His tenure has been marked by operational discipline, rational capital allocation and a willingness to course-correct — as seen in the swift exit from the loss-making Blue
Nova.
The strategy has been refreshingly clear: scale up ICT, exit underperformers and compound capital without grandstanding. Dividend growth, smart acquisitions and strong ROCE figures suggest not empire-building, but value stewardship.
In short, Reunert is led by custodians who think like catalysts.
Of course, there are execution risks. But there are no fatal flaws in the business model and strategy. Still, defence contract delays could affect earnings timing, and commodity input costs (such as copper) could compress margins. South African political volatility remains a macro overhang, and there is integration risk from recent acquisitions (IQbusiness) that might require attention.
But Reunert has navigated worse. And the balance sheet offers ample cushion for such risks.
The bottom line? Reunert won’t make headlines with flashy tech demos or moonshot promises. But in a market crowded with overpriced hype, here’s a firm quietly building the infrastructure of Africa’s digital and energy future.
Sometimes the best growth story isn’t in Silicon Valley. It’s hiding in plain sight on the JSE — with a 6% dividend and a balance sheet built to last.
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