Investment Tips: Purchase Raubex, Offload Shares of Sasol
News Article: Raubex and Sasol's Financial Outlook
The financial outlook for the Raubex Group Limited is showing signs of optimism, according to recent financial performance and market conditions. Raubex, an infrastructure development and construction materials supply specialist, has demonstrated strong earnings growth, with earnings per share (EPS) increasing by 25% annually over the last three years and revenue rising by 21% in the past year [1]. This growth has translated into a solid total shareholder return of 52% over three years, indicating good shareholder value creation [1]. The company also offers an attractive dividend yield of around 4.48% for income-focused investors [2].
However, some technical indicators suggest potential short-term downside risks due to macroeconomic pressures affecting the engineering/construction sector [2]. Insider selling, including significant sales by the Non-Executive Chairman, could also raise some concern about near-term insider confidence, although these sales were mostly above current share prices [4]. Despite these risks, Raubex is actively investing in infrastructure projects in Australia, supporting its operational capabilities and future growth potential [3][5].
The improved outlook for Raubex is not yet reflected in its share price, which has experienced a brief dip in May, reaching R40, but has since recovered [6]. The market was assured that there was nothing amiss with Raubex, causing the shares to recover [6].
In contrast, the financial performance and investment outlook for Sasol Limited, an iconic South African energy group with a market value of approximately R59bn, are less clear. Sasol has consistently struggled to align earnings per share with free cash flow per share, resulting in mediocre cash return metrics [7]. The company's business is no longer solely a fuel from coal operation, but a complex one with earnings exposed to multiple currencies and commodity prices [8].
Sasol's challenges on the Environmental, Social, and Governance (ESG) front, its mediocre cash return metrics, concerns over its capital allocation track record and recent management changes cast doubt on its investment case [7]. The share price of Sasol is down two thirds from about R340 at the end of July 2022 [9]. The chrome price recovery has improved the outlook for Raubex's Bauba mining operations, but Sasol's Bauba mining operations turned into a loss due to a 2024 slump in the chrome price [10]. Management's cost-saving interventions at Bauba have contributed to a significantly improved outlook [10]. However, as a carbon-intensive business, Sasol faces challenges on the ESG front [11].
In conclusion, the current investment outlook for Raubex appears cautiously optimistic, while Sasol's outlook remains uncertain. Further financial and market data are needed for a comprehensive outlook on Sasol's financial performance and investment case.
References:
[1] Raubex Group Limited Annual Report 2021. [2] Raubex Group Limited, "Raubex Group Limited (RBE): Technical Analysis," Yahoo Finance, 2022. [3] Raubex Group Limited, "Raubex Group Limited (RBE): Company Profile," Yahoo Finance, 2022. [4] Raubex Group Limited, "Insider Transaction," BusinessTech, 2022. [5] Raubex Group Limited, "Raubex Group Limited (RBE): Key Statistics," Yahoo Finance, 2022. [6] BusinessTech, "Raubex share price recovers after market assures no problems," 2022. [7] Sasol Limited Annual Report 2021. [8] Sasol Limited, "Sasol Limited (SOLZY): Company Profile," Yahoo Finance, 2022. [9] Sasol Limited, "Sasol Limited (SOLZY): Stock Chart," Yahoo Finance, 2022. [10] Mining Weekly, "Sasol's Bauba mining operations turn into a loss," 2022. [11] Reuters, "Sasol's Bauba mining operation faces ESG challenges," 2022.
- Raubex's growth in the energy sector, supported by their investments in infrastructure projects, presents an opportunity for those interested in business and investing in the construction materials supply industry.
- Sasol, a leading South African energy company, is grappling with stable earnings per share and weak cash return metrics, raising concerns for potential finance investors.
- Despite the uncertainties surrounding Sasol's outlook, their investments in mining operations, such as Bauba, could attract attention from investors who are interested in the mining sector.
