Our opinion on the current state of WBO

WBHO (Wilson Bayly Holmes-Ovcon Limited) has emerged as South Africa's leading construction company, a notable achievement given the challenges faced by industry counterparts such as Aveng and Murray & Roberts. With a market capitalisation surpassing R5 billion, WBHO has successfully diversified its operations beyond South African borders into other parts of Africa, Australia, and the United Kingdom, positioning itself as a significant player in the global construction sector.

For the fiscal year ending on 30th June 2023, WBHO reported a remarkable 38% increase in revenue and a 31% rise in headline earnings per share (HEPS). This growth was attributed to the exceptional performance of its African operations and significant progress in the United Kingdom, particularly in the latter half of the financial year. The company highlighted a healthy overall operating margin of 4.5%, alongside a continued expansion of its order book levels, indicating a robust pipeline of future projects.

A trading statement for the six months ending on 31st December 2023 projected an increase in HEPS of between 5% and 15%. This forecast reflects the translation of high order book levels secured in Africa into increased activity across all divisions during the period. Despite the heightened level of work executed, the African order book has been maintained, underscoring WBHO's operational efficiency and strategic focus on growth.

Technically, WBHO's share price experienced a downtrend influenced by the COVID-19 pandemic and challenges encountered in its Australian operations. However, the company's strategic decision to exit Australia has allowed it to refocus on its core and more profitable markets. This shift is evidenced by the share price breaking through its long-term downward trendline, signaling the commencement of a new upward trend.

WBHO's resilience, strategic diversification, and strong financial performance underscore its status as a formidable entity in the construction industry. The company's ability to navigate through challenging times, coupled with its sustained order book and geographic diversification, positions it well for continued growth and success in both local and international markets. Investors and industry watchers may view WBHO's upward trajectory and strategic maneuvers as indicators of its potential for sustained profitability and expansion in the construction sector.