The South African construction company whose share price increased over 200% in 2024

Stefanutti Stocks is one of the top-performing shares on the Johannesburg Stock Exchange (JSE) in 2024, with the company’s share price return exceeding 200% this year.

Stefanutti Stocks is a construction group that delivers infrastructure development projects to sectors across the built environment in South Africa and neighbouring regions.

It is based in South Africa and has established cross-border operations in Malawi, Mauritius, Zimbabwe, Botswana, Eswatini, Mozambique, and Zambia.

The company specialises in various construction activities, including building, civils, renewable, geotechnical, roads, and earthworks.

It also has strong expertise in electrical and instrumentation, mechanical, data-centre construction, oil and gas, and mining services.

The group’s share price return in 2024 has been 235% year-to-date. Over the last ten months, it has increased from R1.26 per share to R4.22 per share.

The share price rally started at the beginning of June after the group released its full-year results for the year ending February 2024.

The group reported a profit before tax for the first time since 2016. In all other years, it reported losses before tax.

The group saw its strongest revenue growth in its Western Cape and inland segments, which increased by 62% and 32%, in these regions, respectively.

Since February 2024, Stefanutti’s price-to-earnings (P/E) ratio has averaged around 12 times earnings.

However, after it released its February 2024 results, the share price increased to its current level at a P/E ratio of 44 times earnings.

Compared to its competitors, Stefanutti Stocks appears to be significantly overvalued. WHBO (11.98), Raubex (11.35) and Aveng (3.99) all have significantly lower P/E ratios.

One reason why Stefanutti is valued higher than its competitors may be due to claims it has submitted for its work on the Kusile power plant.

Stefanutti has submitted many claims related to delays caused at the Kusile power plant to the Dispute Adjudication Board (DAB) up to December 2019.

The claims submitted to the DAB were calculated by independent experts and amounted to R1.614 billion.

Stefanutti announced in its results that the DAB would make a binding decision on the settlement of these claims by the third quarter of 2024.

Investors may feel that Stefanutti has a strong chance of receiving many of these claims from Eskom soon, which will cause a significant inflow of funds for the company.