Investment Advisory: Purchase shares of Raubex, dispose of shares in Sasol
The infrastructure development and construction materials supply specialist, Raubex Group Limited, has shown a positive investment outlook, thanks to its strong financial performance and growth prospects.
Over the last three years, Raubex has delivered an impressive 25% annual EPS growth rate and a total shareholder return of 52%. The company's revenue increased by a substantial 21% in the last year, indicating a healthy and growing business. Raubex's robust order book grew by 10.3% to R28.18 billion, and the company maintains a strong balance sheet with healthy cash balances.
Despite these positive developments, Raubex's CEO compensation, which totals around R16-19 million annually, has drawn attention. Some shareholders consider it justified given the company’s performance, but it remains a topic of discussion. Raubex is scheduled for an Annual General Meeting in late July 2025 where governance matters like executive pay are discussed.
Sasol, on the other hand, presents a different picture. The specific facts about Sasol's financial situation, order book composition, and Bauba mining operations are not relevant to Raubex. However, Sasol, a South African energy group, has a current market value of approximately R59bn. The company, which is no longer primarily a fuel from coal business, but a complex operation with earnings exposed to multiple currencies and commodity prices, has struggled to align earnings per share with free cash flow per share, resulting in mediocre cash return metrics.
The share price of Sasol is down two thirds from about R340 at the end of July 2022. Sasol faces challenges on the ESG front due to being a carbon-intensive business. Several recent management changes have occurred at Sasol, adding to the uncertainty surrounding the company.
One area of concern for Sasol is its questionable capital allocation track record. In contrast, Raubex's financial results were delayed due to investigations into a whistleblower's report, but the company has since recovered, with its shares taking a brief tumble in May, reaching R40.
The improved outlook for Raubex is not yet reflected in its share price. The profitable Bauba mining operations of Raubex, which turned into a loss due to a 2024 slump in the chrome price, have seen significant improvements following management's cost-saving interventions. The recovery of the chrome price does not pertain to Sasol.
In conclusion, Raubex presents a positive investment outlook with its consistent and strong EPS and revenue growth, robust order book expansion, and strong financial position. For Sasol, a detailed investment outlook cannot be provided without specific updated data, making it essential to review up-to-date financial statements, market analyses, and recent performance reports from trusted financial sources or Sasol’s official investor relations.
- Raubex Group Limited's positive investment outlook could attract personal investors in the business sector, considering its impressive 25% annual EPS growth rate and total shareholder return of 52%.
- Mining operations, such as those of Raubex, might be a more attractive investment option in the energy industry compared to carbon-intensive businesses, like Sasol, due to concerns over ESG standards.
- Finance analysts may find it interesting to compare the CEO compensation at Raubex, weighing its R16-19 million annual pay against its strong performances, with other companies' executive pay in the personal-finance sector.
- Raubex's improved financial position makes it a potential investment opportunity for those looking to diversify their investment portfolio, while Sasol's current struggles might discourage investors until further updates on its financial status become available.
