AFRIMAT LIMITED
Investment Analysis: Afrimat Limited (JSE: AFT)
Date: 9 January 2026 Share Price: ~R42.88 (4,288c) Analyst Role: Senior Equity Analyst, JSE
Step 1: Data Gathering & Source Verification
I have reviewed the most recent financial disclosures and SENS announcements.
- Interim Results: Reviewed the Unaudited Condensed Consolidated Interim Financial Results for the six months ended 31 August 2025 (Released 22 October 2025).
- Annual Financial Statements: Reviewed the Audited Consolidated Annual Financial Statements for the year ended 28 February 2025 (Released 15 May 2025).
- SENS Activity (L12M): Key announcements include the successful integration of Lafarge assets (October 2025), dividend declarations, and trading updates signaling operational recovery.
Data Sources:
- Interim Results (Aug 2025):
https://www.afrimat.co.za/press-releases/afrimat-delivers-on-asset-integration-and-improved-performance/ - Annual Financial Statements (Feb 2025):
https://senspdf.jse.co.za/documents/2025/jse/isse/aft/FY25H2.pdf
Step 2: Metric Extraction
| Metric | Value | Notes | | --- | --- | --- | | Market Cap | ~R6.5 - R6.8 Billion | Mid-cap industrial/mining stock. | | Dividend Yield (L12M) | ~0.82% | Low. Calculated based on a Total L12M dividend of ~35 cents (Interim 2025: 20c + Final 2024: ~15c). Management is conserving cash for debt reduction post-Lafarge acquisition. | | Liquidity Check | Liquid | Average daily value traded is approximately R12m - R16m (~300k - 400k shares/day). Sufficient for retail and most institutional positions. | | P/E Ratio | ~35.4x - 39.5x | High (Trailing). The high multiple reflects the depressed earnings of FY2025 (due to acquisition costs/downturn). However, the Forward P/E is significantly lower (est. ~21x) given the 92% jump in recent interim HEPS. | | NAV per Share | 2,951 cents | As at 31 August 2025. The stock trades at a premium to NAV (~1.45x Price/Book), typical for a company with strong operational cash flows. |
Step 3: Operational & Strategic Analysis
Business Overview Afrimat is a diversified mid-tier mining and materials company. It operates in three main segments:
- Construction Materials: Aggregates, concrete, and cement (boosted significantly by the Lafarge acquisition).
- Bulk Commodities: Iron ore and anthracite (historically the cash cow, though sensitive to export logistics).
- Industrial Minerals: Lime and dolomite. Strategic Shift: The recent Lafarge acquisition was a "deal of the century" attempt to consolidate the cement/aggregate market, reducing reliance on volatile iron ore prices.
Performance Trend
- Revenue: Expanding. Group revenue surged 29.9% to R5.3 billion (Interim Aug 2025), driven by the inclusion of Lafarge businesses and higher volumes in iron ore.
- Margins & Earnings: Recovering rapidly. Operating profit rose 29.8%, and Headline Earnings Per Share (HEPS) skyrocketed 92.3% to 101.9 cents. This signals that the "indigestion" from the Lafarge takeover is passing and synergies are being realized earlier than expected.
- Cement Turnaround: The cement division grew revenue by 118% but was still loss-making at the operating level in the latest results. However, plant reliability has improved, reducing disruptions.
Sector Context
- Construction: The South African construction sector is showing "green shoots" of recovery, reflected in the positive trends of the Afrimat Construction Index.
- Logistics (Transnet): Rail constraints remain a major macro headwind for the Bulk Commodities segment (Iron Ore). Afrimat has mitigated this better than peers by using road transport and diversifying into locally consumed products (Aggregates/Cement) that don't rely on ports.
Step 4: The Verdict
Bull Case (Why Buy): Execution Excellence. Afrimat has a proven track record of acquiring distressed assets and turning them profitable. The latest results show they are successfully repeating this with Lafarge (HEPS up 92%). If they return the cement division to profitability, the earnings unwind will be substantial, making the current "expensive" P/E look cheap on a forward basis.
Bear Case (Why Sell): Valuation & Debt. The stock is priced for perfection with a P/E >35x. While earnings are recovering, the debt levels (Net Debt:Equity ~52.5%) have increased to fund growth and working capital. If the construction recovery stalls or iron ore prices collapse, the premium rating could de-rate sharply.
Fair Value Estimate: R40.00 - R44.00 Current price (~R42.88) is within the fair value range. The market has efficiently priced in the recovery.
Final Rating: HOLD / SPECULATIVE BUY Ideally, wait for a pullback below R40.00. However, existing holders should stay invested to capture the full upside of the Lafarge turnaround.