Buy REUNERT LTD (RLO) shares from the R74.23 level with a R83.07 target for a maximum period of 4 months.
1. High-quality assets in diversified sectors:
Reunert operates in three focused pillars; electrical engineering, ICT, and applied electronics. The company is leveraging strong market positions and benefiting from good fundamentals. Key growth drivers include renewable energy opportunities and international expansion in core segments, ensuring a diversified revenue base.
2. Strong financial performance and shareholder returns:
Reunert is a strong dividend payer with a dividend yield of 5.5% (2023) and a total shareholder return of 47% in 2023, supported by a healthy balance sheet and disciplined capital allocation.
3. Sustainability and responsible business practices:
Reunert focuses on ethical leadership, talent development, and ESG principles. The company integrates sustainability into its strategy, with management KPIs aligned to mid- and long-term ESG goals, enhancing its appeal to socially responsible investors.
Forward P/E ratio – 10.73x
The company’s balance sheet metrics:
- RLO has R13.53B in total assets
- R8.1B in total equity.
- Debt/Equity ratio is 0.83.
- Total liabilities are R5.43B.
1. Dividend per share growth (YoY): 10.24%
2. Revenue growth (YoY): 4.83%
1. Dependence on local market conditions: A portion of Reunert's operations is based locally, exposing the company to economic challenges such as political instability, regulatory changes, and slow GDP growth, which could impact its financial performance.
2. Execution risks in growth strategies: The company’s ambitious plans for international expansion, ICT segment growth, and renewable energy investments carry execution risks. Delays or underperformance in these areas could hinder earnings growth and shareholder returns.
3. Exposure to cyclical industries: Reunert operates in segments like electrical engineering and applied electronics, which are sensitive to global economic cycles and commodity price volatility, which could affect revenue stability during downturns.
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** This article was prepared by BROKSTOCK analyst Maboko Seabi
