Avior Capital Markets - Reunert Ltd. (104F) Reunert | Outperforming an underperforming market

Report

Avior Capital Markets

Ruhan Du Plessis

Reunert | Outperforming an underperforming market

Reunert delivered weak FY'18 results with normalised HEPS down 1% y/y. Strong exports in Applied Electronics, supported by a weaker ZAR, and a robust performance in ICT offset slowing demand for cables. Unusually, Reunert consumed more cash with net cash balances declining 72% y/y to ZAR352m (FY'17: -27%) as liquidity issues in Zambia and large contracts in Applied Electronics temporarily increased working capital 37% or ZAR491m y/y in FY'18. We expect acquisitions and share buybacks to stop as management focuses on maintaining the dividend through the cycle.

13/12/2018 10 EN

Underlying

Reunert Ltd.

Reunert is engaged in electrical engineering, information and communication technologies and defence and allied technologies. Co.'s Electrical Engineering segment encompasses the design, manufacture, installation, supply and maintenance of power, copper and optical fibre telecommunication cables, as well as switchgear and transformers. Co.'s Information, Communication and Technology segment provides communication and telecommunications applications as well as distributes office automation and telecommunications business systems products. Co.'s Defence and Allied segment focuses on tactical communication systems as well as designs and manufactures a range of defence related products.

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ZAE000057428 Johannesburg Stock Exchange South Africa

Provider

Avior Capital Markets

Avior is a globally recognised capital markets research and trading firm, with the broadest research coverage within the region, with 100+ SA and 20+ SSA companies under coverage. Avior services clients from offices in London, Cape Town and Johannesburg.

Our research quality is consistently recognised in local and global surveys, with 18 analysts currently rated in their respective sectors (FM 2017). Value add through in-depth, innovative, high quality and consistent research with comprehensive underlying fundamental modelling supported by regular analyst and roadshow interactions.

Avior has proven that by working closely with our clients we can mutually develop dominant positions in certain sectors, going from strength to strength. Avior has a dedicated ESG team, having been ranked #1 in Corporate Governance research since 2008.

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Analysts

Ruhan Du Plessis

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Reunert | Outperforming an underperforming market

Reunert | Cash is king in a crisis

1 director sold

Reunert | No power for growth

Tiger Brands | ESG | Pressed to execute

SA Investment Strategy | Review of January 2020 for SA investors: Coronavirus weighs on the ZAR

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