Our opinion on the current state of MUR

Murray and Roberts (MUR) is a large South African construction company which has suffered from the sub-prime crisis and then the slump in construction spending following the 2010 World Cup. This brought the share down from a massive double-top formation at around R100 per share to a low below R5 in May 2020. The company has been consolidating and reducing costs. It has transformed itself into a "...multinational engineering and construction Group focused on the natural resources market sectors." with three primary business platforms - underground mining, oil & gas, and power & water. On 19th April 2021, the company announced that it had won a R2,3bn contract for "shaft lining and equipping" at Newmont. On 5th May 2021, the company announced that it had won a R1,1bn contract to do the engineering procurement and construction of the Tallawara power station in New South Wales. This follows the R2,3bn contract which it won from Newmont. On 11th June 2021, the company announced that its 49% joint venture partner, Boipelo, had won a R3,2bn contract from Arnot Coal in Mpumalanga for underground operations. On 3rd of August 2021 the company announced that it had won contracts worth about R1,2bn in America and Canada. On 12th October 2021, the company announced that it had acquired a North American company, J.J. White for R$28,25m (R424m). In an announcement on 22nd March 2022 the company announced that it had won a contract worth about A$1,5bn in Australia to build a 128km section of railway line. On 17th October 2022, the company warned that disruptions to its order book delivery in the USA and Australia would reduce profits by at least 100% in the six months to 31st December 2022. The announcement caused the share to drop sharply. We advised investors to wait until the share broke up through its long-term downward trendline before investigating further. On 8th November 2022, the company announced that it had sold 100% of Clough for A$350m (about R4bn). The sale is significant because before it was announced MUR had a market capitalisation of R4,89bn. The share price rose by over 17%. Then on 5th December 2022 the company announced that the deal had fallen through leading to a fall in the share price. In its results for the year to 30th June 2023 the company reported revenue of R12,5bn compared to R8,8bn in the previous year and an attributable loss of R3,2bn compared with a profit of R135m in the previous year. The company said, "Earnings include a contribution from the Group’s investment in Bombela of R30 million (FY2022: R193 million), which the investment was disposed of during the second half of the year. Diluted continuing headline loss per share was 71 cents (FY2022: 47 cents*)". On 27th March 2023 the company announced that it had sold its Australian operations (65% of Insig Technologies) for A$1 and so disposing of A$7m in liabilities. ON 8th December 2023 the company reported that it would be able to reduce its debt from R2bn in April 2023 to R350m as a result of "Cementation Canada Inc's recently renewed banking facility agreement with a Canadian bank will provide for Cementation Canada to pay CAD40 million." The share, however, continues to wallow close to record low levels (67c) and has become a "penny stock".