Buy: Raubex
Raubex, the infrastructure development and construction materials supply specialist, hit the headlines about two months ago when its financial results were delayed by investigations into a whistleblower’s report. The shares took a brief tumble in May (going as low as R40), before recovering sharply when the market was assured nothing was amiss. According to current fundamentals, Raubex has a strong balance sheet dovetailing with a record order book, the composition of which has evolved into higher-margin work. Though a 2024 slump in the chrome price turned its profitable Bauba mining operations into a loss, the price has recently recovered. This recovery, combined with management’s cost-saving interventions at Bauba, points to a significantly improved outlook. In our view, this outlook is not yet reflected in its share price.
Sell: Sasol
Iconic South African energy group Sasol used to be regarded as a share that every South African should own. However, it is no longer a fuel from coal business. The group — which has a market value of about R59bn — is now a complex operation, with its earnings exposed to several currencies and commodity prices. Furthermore, as a carbon-intensive business, it faces challenges on the ESG front. Sasol has consistently struggled to align earnings per share with free cash flow per share, resulting in mediocre cash return metrics. The share price is down two thirds from about R340 at the end of July 2022. In our view, Sasol’s questionable capital allocation track record, combined with several recent management changes, casts doubt on its investment case.
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