Buildmax has the distinction of being one of Africa’s leading black-empowered opencast mining contractors, and is the largest such company in the South African coal mining trade. The company also provides bulk earthworks and construction materials to the mining and construction industries.

Buildmax operates through three main business divisions: Mining Services (largely trading through its flagship brand Diesel Power), Equipment Sales and Services, and Civils and Bulk Earthworks.

Mining Services provides a portfolio of opencast mining, rehabilitation, SHECQ management and plant hire services. It does not own any mining or prospecting rights, and therefore assumes no geological risks on any contracts. Clients include large mining compants such as Xstrata, Anglo Coal, Exxaro and HCI. Diesel Power also has a presence in Botswana and the Democratic Republic of Congo. Formed after the restructure of Buildmax Equipment Limited, the Equipment Sales and Rental division focuses on disposal of second-hand equipment, and short-term rental of equipment to preferred customers and subsidiaries.

Buildmax today has a market cap of R30 million and employs approximately 1 200 staff. Buildmax share price is recovering after a period of torrid performance on the Johannesburg Stock Exchange (JSE).

The 2015 financial year proved to be a challenging one for Buildmax. The first three months of the year were heavily impacted by rain at the opencast mines which the group services, resulting in negative performance and losses for period.

The market for opencast mining services diminished, which increased competition and lowered prices, whilst the weakening of the rand was followed by an increase in the cost of new plant equipment. Meanwhile, the civil unit has also suffered from a reduced demand, and is currently in the process of putting operations up for sale, as no major projects lie on the horizon.

Operating profit therefore decreased from R255 million in 2014 to just R15.6 million in 2015. Buildmax shares recorded a total loss of 118.4 cents per share, with net asset value per share also reduced from 361 cents to 246 cents. Buildmax decided to buy into a turnaround plan which involves rightsizing the business to reduce the fixed cost base, terminating loss-making contracts, restructuring bank financing to improve liquidity, diversifying into other commodities and geographies and disposing of non-core businesses and surplus equipment.

The group believes that its good contractual relationships with some of South Africa’s leading mining groups should allow it to secure more contracted work going forward.

The live online stocks chart shows that Buildmax share price has been hovering at around 17 cents for the duration of 2016, having plunged from a high of almost R3 in 2013. The company has a good turnaround strategy in place and although improvement in the market is not forecast in the short-term, Buildmax could yield significant returns for those who buy the shares in the long term, when demand for opencast mining services picks up. Buildmax shares are a risky buy at present, but they could yield some long-term upside for adventurous investors.

Materials

Metals & Mining

Mining Services

We have made it simple to buy JSE listed firm shares online. The easiest way to buy Buildmax Group shares or stocks is to; start by submitting the ‘BUY THIS SHARE’ form. Next, one of our experienced and certified stock brokers will personally get in contact with you to discuss your custom stock request. Finally, a stock advisor will confirm the amount of shares you are looking to invest in Buildmax Group and assist you with the setup and management of your stock portfolio account.

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