Super-bullish conditions in infrastructure are supporting consolidation and organic growth in the sector, and it seems there are still attractive returns to be had.

Roads & civils specialist Raubex, which listed in March this year, has made its largest move to date, gobbling up peer company B&E in a R514 million deal that will allow the company to bulk up capacity.

Aneshrin Pillay, an analyst with Afri-focus Securities, says the deal is substantial: "It's in line with their strategy to enhance their materials business and it looks to be earnings-enhancing and margin-enhancing."

B&E will slot in nicely with Raubex's aggregates and crushing operation, Raumix. The market appears to like the deal, with the share moving at least 4% on the announcement.

However, says Pillay, a deal this size does eat into the company's cash resources, and this is compounded by the fact that it has already shelled out about R160 million on capital equipment.

The transaction will be funded through a combination of shares and cash, which will see B&E receive about 9m shares (worth about R295m) and R218m in cash.

Rowan Goeller, an analyst with Macquarie First South Securities, says the transaction grows the company's fleet and skills base, and will allow it to take on more work, since one of Raubex's strengths is to "move their plant around and do crushing work for the other contracts they have".

Goeller says B&E is being bought at a historic price:earnings ratio of about 10, based on the past six months' financial performance.

According to I-Net Bridge, Raubex is trading at almost three times the p:e of B&E. The only concern raised over the deal is the dilution to shareholders, but if the deal delivers more profitable growth, shareholders aren't likely to notice.

Another company that has been moving to strengthen its market position is construction company Sanyati. It continues to expand beyond its roots in KwaZulu Natal, and with its R220 million acquisition of the Meyker Group it is now active in seven of the nine provinces.

In the six months to end-August, Sanyati acquired construction and civils companies Ruthcon and GEM. Before that it bought Hibiscus Asphalt and Mega Pile.

The group will be paying for the Meyker transaction in tranches over the next four years. The transaction is being funded through cash and shares (about 44 million will be issued).

Sanyati CEO Rick Jackson says it's likely the group will make one more large transaction so as to meet its 2012 revenue target of R2,7 billion.

Another company making moves is Protech Khuthele, which this week announced the acquisition of two ready-mix operations for R79 million.

Protech is primarily a fast-track bulk earthworks company, but chief financial officer Nellis Wolmarans says it also does some civils work.

This requires a fair amount of concrete and readymix, which the company has had to rely on suppliers for.

"In the past we have called readymix suppliers and they don't arrive the next day or the day after. Even if we place huge orders we can end up waiting for weeks, which holds us up," says Wolmarans.

He says Protech has in the past moved to make itself more efficient by diversifying its business. "We started our geotechnical laboratory for the same reason, because the labs we were using weren't keeping pace with us."

The company will also be able to diversify the service offering on contracts, as it will now have the plant and skills to take on more civils work, such as culverts and drains.

Protech CEO Gerald Chapman says the six plants the business is acquiring will boost earnings, which "should be handsomely compounded in the months and years ahead, given especially the construction industry's rapid growth".

In related news, M&R said shareholders could look forward to earnings per share that would be between 40% and 50% higher for the six months to end-December and the year to end-June 2008, than in the previous comparable periods.

Proceeds from disposals of noncore assets are likely to lift these respective performances by as much as 110%.

M&R also said it had secured a seven-year, R7 billion contract for Eskom's first new coal-fired power station, Medupi, involving steel fabrication, erection and mechanical installation.

Goeller says it is likely that construction companies will continue to deliver outstanding performances "for a while yet", as government's spending was only beginning to have an impact now.

He also says all the indications are that the private sector is starting to make available the infrastructure spending that had previously been put on hold.

Civil engineering and construction group Sanyati Holdings on Tuesday said government contracts and extending operations beyond KwaZulu-Natal had boosted its order book, positioning the black economic empowerment company to achieve its forecast net profit of R53 million for the 2007-08 financial year.

The order book included a R25 million contract for civil infrastructure work in Polokwane, a R75 million road rehabilitation contract in Gamtoos, Eastern Cape, and a R1,9 billion contract for civil works on the new King Shaka International Airport in Durban.

Releasing the company’s results for the six months ended August, CEO Rick Jackson said the buoyant growth in the construction industry boded well for the firm. He said though 66% of Sanyati’s contracts came from KwaZulu-Natal, he was pleased at the inroads the company had made in Gauteng.

“The Gauteng operations are up and running with (the group’s piling subsidiary) Mega Pile’s first R2 million contract ,” said Jackson.

Gauteng accounted for 22% of Sanyati’s contracts, with the balance split among Mpumalanga, Eastern Cape and Zambia.

In an effort to grow the business , Sanyati said, it had acquired Gauteng-based Ruthcon Civil Contractors and GEM Earthworks, which has operations in Eastern Cape and Mpumalanga.

Net profit for the period under review doubled to R22,9 million on a 105% increase in revenue to R396,2 million — up from R192,5 million.

Cash generated from operations surged to R10,9 million from a loss of R4,5 million. Headline earnings per share increased to 8,74c from 5,73c.

Of Sanyati’s four business units, Civils Coastal was the biggest contributor to overall performance.

Revenue accumulated by C ivils C oastal was R215 million. Its performance was boosted by large-scale projects such as the R117 million tender to construct roads in Barberton, and the R52 million contract to construct a water pipeline in Umgeni, on the south coast.

The unit also stood to gain R190 million over the next 19 months after the Ilembe Consortium was awarded a R1,9 billion contract to build the R6,8bn King Shaka International Airport.

Civil engineering and construction group Sanyati Holdings on Tuesday said government contracts and extending operations beyond KwaZulu-Natal had boosted its order book, positioning the black economic empowerment company to achieve its forecast net profit of R53 million for the 2007-08 financial year.

The order book included a R25 million contract for civil infrastructure work in Polokwane, a R75 million road rehabilitation contract in Gamtoos, Eastern Cape, and a R1,9 billion contract for civil works on the new King Shaka International Airport in Durban.

Releasing the company’s results for the six months ended August, CEO Rick Jackson said the buoyant growth in the construction industry boded well for the firm. He said though 66% of Sanyati’s contracts came from KwaZulu-Natal, he was pleased at the inroads the company had made in Gauteng.

“The Gauteng operations are up and running with (the group’s piling subsidiary) Mega Pile’s first R2 million contract ,” said Jackson.

Gauteng accounted for 22% of Sanyati’s contracts, with the balance split among Mpumalanga, Eastern Cape and Zambia.

In an effort to grow the business , Sanyati said, it had acquired Gauteng-based Ruthcon Civil Contractors and GEM Earthworks, which has operations in Eastern Cape and Mpumalanga.

Net profit for the period under review doubled to R22,9 million on a 105% increase in revenue to R396,2 million — up from R192,5 million.

Cash generated from operations surged to R10,9 million from a loss of R4,5 million. Headline earnings per share increased to 8,74c from 5,73c.

Of Sanyati’s four business units, Civils Coastal was the biggest contributor to overall performance.

Revenue accumulated by C ivils C oastal was R215 million. Its performance was boosted by large-scale projects such as the R117 million tender to construct roads in Barberton, and the R52 million contract to construct a water pipeline in Umgeni, on the south coast.

The unit also stood to gain R190 million over the next 19 months after the Ilembe Consortium was awarded a R1,9 billion contract to build the R6,8bn King Shaka International Airport.