Sunday, January 16

Raubex targets the renewable energy space


JSE-listed construction group Raubex aims to play a leadership role in the renewables space by capitalizing on its well-established relationships with renowned independent power producers (IPPs).

Raubex Chief Executive Rudolf Fourie said Monday that the group’s infrastructure division is well positioned to harness the government’s push to increase power generation capacity and is “in the running for a substantial portion” of the work in the renewable energy IPP bid window 5.

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“Obviously, it is subject to financial closure, so once we do, we will update the market on how much,” he said.

The government has announced the preferred bidders in 25 projects in the IPP 5 bidding window, with 12 onshore wind projects and 13 solar photovoltaic (PV) projects selected, for a total of 2,600 megawatts (MW) of energy, and the business closure will be estimated in February 2022.

Fourie declined to comment on how many projects Raubex has in a partnership in this bidding round, emphasizing that “this is price sensitive information because we have not achieved financial close.”

“It’s a large number of projects, so it’s price sensitive. As we announced earlier, in the IPP risk mitigation round, there are two big projects that we should get, ”he said.

Fourie said the business close of the risk mitigation round was delayed due to various legal actions and meant that Raubex’s infrastructure division only won one solar contract and that the potential solar work the group envisions will only occur in the next year. financial.

“But we are excited and we see ourselves playing an important role in renewable energy,” he said.

Fourie added that the government has announced that the IPP 6 bidding window is scheduled to open to the market in late January 2022 and is expected to also comprise 1600 MW of onshore wind power and 1000 MW of photovoltaic solar power.

He said that the early announcement of this round will ensure continuity in the renewable energy market.

“We are quite a major player in this market, but the problem at the moment is ‘stop-start, stop-start’. For example, this year we had quite high maintenance costs on our renewable energy capacity.

“Hopefully, if all of this happens, we should see continuity of at least three or four years in this space, which will obviously benefit us,” he said.

Analyst point of view

Rowan Goeller, an analyst at Chronux Research, said that the announcement at COP26 of the United Nations Climate Change Conference currently underway in Scotland on the cash that developed nations have provided to Eskom makes renewable energy “very interesting”.

This is a reference to the announcement at COP26 that South Africa would receive more than R130 billion from the richest nations to help end the country’s dependence on coal.

Read: SA secures R131bn’s commitment to transition to a low-carbon economy

Listen to Ryk van Niekerk’s interview with Eskom CEO André de Ruyter, broadcast by RSG Geldsake (or read the English transcript here):

Goeller believes this will allow for an acceleration of investment in renewable energy through the Independent Renewable Energy Producers Program (REIPPP) and will likely also unlock private spending because a good amount of the money committed at COP26 will likely go to growth of companies. transmission lines as it is currently is a bottleneck.

“Raubex is very well positioned to be the contractor on many of these renewable energy projects and that will likely give them further growth in addition to an order book that looks good from a traditional Sanral. [South African National Roads Agency] point of view highway projects, ”Goeller said.

“Short-term emergency procurement is an area where Raubex has come up with a lot of proposals to balance the type of plant work and that should go quite well in its financial year 2023, effectively the next calendar year.”

Partnership prospects

Fourie said that Raubex is also exploring opportunities to selectively participate in a number of public-private partnerships (PPPs) and is establishing partnerships with mineral resource owners to secure opportunities to participate in material handling contracts in the mining space.

It said that Raubex had acquired minority stakes in Bauba Resources Ltd (23.08%), Arcadia Minerals Ltd (27.73%) and Vanadium Resources Ltd (9.56%) and will continue to explore complementary acquisitions.

He said that Raubex is investing between R50 million and R100 million per opportunity and all these bets will give the group the first right of refusal for the handling of materials in these mines.

“This is quite a different strategy and we believe that in this way we will create 10-15 year jobs in these mines for our own companies,” he said.

Infrastructure activity

Fourie said that the government has launched several PPP projects, that Raubex is very busy with prices and they are quite large projects, as well as student accommodation and affordable housing developments, which could grow the infrastructure division in the medium term. .

“There are a number of projects on the table, but they are very expensive and time-consuming to execute, so we are not going to pursue them or bid on all of them. We are going to select a pair that complements our core business and then we will focus on them, ”he said.

Interim results

Fourie’s comments coincided with Raubex’s report of a 1907.9% increase in operating profit to R435.2 million in the six months to the end of August this year from R21.7 million in the corresponding affected blackout period. due to the blocking of Covid-19 in 2020.

Revenues increased by 52% to R5.99 billion from R3.94 billion.

Overall earnings per share increased 615% to 137 cents from a loss of 26.6 cents in the prior period.

An interim dividend of 47 cents per share was declared.

Order-book

Fourie said that the order book increased 41.1% to R16.55 billion from R11.74 billion in the corresponding period prior and held compared to its record order book of R17.1 billion at the beginning of the reporting period.

Read: Raubex Increases Order Book To Record R17.1bn

He said the group’s Sanral order book is currently at R6.7 billion compared to three years ago when it dropped to just R200 million and once again accounts for 40% of Raubex’s order book.

Fourie said the group has an ongoing order book for at least four years for the first time in its history.

“This order book can only get better in the future because there are a number of projects where we are expecting awards, so the order book is quite encouraging,” he said.

Fourie indicated that there are about “six tenders north of R1 billion that we are in the running for,” but stressed that he would not be able to account for them until the awards are awarded.

Goeller said that Raubex performed well, adding that the group now comprises several different companies, while “the old Raubex” was a highway company.

Raubex shares rose 1.13% on Monday to close at R35.80.


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