| Fri 2 Jun 2006, 12:31 | | SANYATI ENJOYS STRONG DEBUT ON ALTX |
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With 75% of its projected revenue for 2007 already on its books three months into the financial year, civil engineering company Sanyati Holdings is well positioned to deliver value to shareholders. Sanyati's share debuted strongly this morning on Altx at R1,48, higher than the R1 at which the share had been placed in the pre-listing capital raising, giving the company a market capitalisation of R318,2 million. 2006 revenue of R260 million, up 29% year-on-year, makes Sanyati the largest of the construction companies to list on the exchange.
Hungry investor interest, evident from the 29 times oversubscription of the pre-listing private placement, was further reflected in the 3,3 million Sanyati shares that changed hands in 214 separate trades before 11h00. Sanyati CEO Rick Jackson says that the healthy trade "affirms that the listing has started to elevate the company's profile, which should enable Sanyati to become a prominent national construction group".
At present Sanyati is located only in KwaZulu-Natal. While Jackson is confident that the deluge of projects in that province is sufficient to meet Sanyati's immediate financial projections, he indicates a strategic intention to expand throughout SA. "Sanyati is cash-flush and in a sound financial position, which means that we can use the R35 million raised before listing for acquisitive growth to expand our footprint outside of KZN."
Jackson explains that the forecast 65% increase in revenue to R430 million in 2007 is attributable to a combination of organic growth and the recent Nyanga Roads acquisition. Breaking down the projected growth, Jackson says that new projects in Zambia will contribute 7% while Deroma Structures and Rusinga Building will, through recent management changes and staffing-up, add 11%. He continues: "22% of the forecast revenue growth is accounted for by organic growth at a rate that has been sustainable over the past three years. The projected revenue and profitability from Nyanga Roads will contribute the remaining 25%."
He believes that Sanyati's 26,6% BEE shareholding and 98% black workforce form a competitive advantage in winning government tenders, for instance four SA National Roads Agency (NRA) contracts valued at approximately R40 million. The award to the group of an R80 million earthworks and roads contract, and water supply and reticulation projects for various water boards and municipalities valued at over R50 million, confirms Jackson's view.
He points out that Sanyati's enterprise development strategy was critical to scooping the NRA management contracts for pedestrian facilities, that together account for R14 million. "The group has a contractual undertaking with the NRA to act as an incubator for inexperienced local contractors and enable them to complete immediate projects and over the long-term to become economically sustainable." The NRA footpaths contractors were financially supported, trained and equipped by group subsidiary Afriscan Construction.
Jackson adds that outside of Sanyati's contractual obligations, the group further supports community empowerment through ad hoc projects. These include the construction, as a gift, of a new staffroom at Luhlaga School in Mhlana and a market stall in rural Shemula to capitalise on rising tourism in neighbouring Manguzi.
He says that significant growth is a process in which today's listing is a milestone, in light of the intention to join SA's first tier of construction companies (made up at present of the six JSE main board construction companies). "We are confident that the Altx listing will enable the group to continue elevating its profile and expanding its national reach, which will in time allow us to grow and penetrate the first tier ranking through a move to the main board," he concludes.
Ends.
Issued by: Envisage Communications
Nicole Sacks/MichFle Mackey
(011) 325 5944/082 497 9827
On behalf of: Sanyati Holdings Limited
Rick Jackson, CEO
(031)705 9210 /082 449 6512
Issue date: 2 June 2006
