STEFANUTTI STOCKS HOLDINGS LIMITED

Investment Analysis: Stefanutti Stocks Holdings Limited (JSE: SSK)

Date: 14 January 2026 Analyst: Senior Equity Desk, JSE

Step 1: Data Gathering & Source Verification

I have utilized the most recent financial disclosures available as of January 2026.

• Interim Results (Period Ended 31 Aug 2025): Released 25 November 2025.
• Source File: Unaudited Interim Results August 2025

• SENS Announcement: Interim Results SENS

• Annual Financial Statements (Period Ended 28 Feb 2025): Released 27 May 2025.

• Source File: Integrated Annual Report 2025

• Key SENS Activity (L12M):

• 25 Nov 2025: Interim Results (Order book surge to R13.4bn).
• 12 Dec 2025: Update on Disposal of Subsidiaries (Mozambique/Mauritius) & Standard Bank Facility.
• 17 Oct 2025: Kusile Power Project Update (Dispute Adjudication Board progress).

Step 2: Metric Extraction

• Market Cap: ~R844 Million

• Calculated as: ~188m shares in issue × R4.49 share price.

• Dividend Yield (L12M): 0.0%

• Status: No dividends declared. The company is strictly focused on debt reduction and liquidity management.

• Liquidity Check: Moderate / High Risk

• Average Daily Volume (30D): ~27,000 to 100,000 shares.

• Status: Thinly Traded. While not completely illiquid, volumes are low. Large entries/exits will move the price significantly.

• P/E Ratio: ~3.2x

• Calculation: Price (R4.49) / TTM HEPS (~141 cents).

• Context: The low P/E is deceptive; it reflects the market's skepticism about the quality of earnings versus the balance sheet risk.

• Net Asset Value (NAV): ~41.5 cents per share

• Price-to-Book: 10.8x (Trading at a massive premium to NAV).
• Critical Note: This is the most dangerous metric. The company has barely positive equity (Total Equity ~R69m). Current liabilities exceed current assets by over R1.2 billion. The share price is priced almost entirely on the hope of successful claim payouts (Kusile), not current assets.

Step 3: Operational & Strategic Analysis

Business Overview Stefanutti Stocks is a multidisciplinary construction group operating in South Africa and Sub-Saharan Africa.

• Divisions: Construction & Mining (Roads, Earthworks, Mining Services) and Building (commercial/industrial).
• Restructuring: The group is in the final stages of a multi-year restructuring plan, selling non-core assets (Al Asmakh, Mozambique operations) to service a legacy loan with the "Lenders" (Standard Bank).

Performance Trend (Interim Aug 2025 vs Aug 2024)

• Revenue: Stable. Continuing operations revenue flat at R3.7 billion.
• Order Book: Explosive Growth. The order book jumped from R8.6 billion (Feb 2025) to R13.4 billion (Aug 2025). This suggests a turning point in the SA construction cycle.
• Profitability: Improving. Operating profit rose to R161 million (up from R132 million). HEPS for total operations more than doubled to 34.5 cents.
• The "Going Concern" Risk: The auditors continue to flag a "material uncertainty" regarding going concern because short-term liabilities exceed short-term assets. The company survives on the support of its lenders and the gradual payout of claims.

Sector Context

• Macro Factor: The Infrastructure Turnaround. After years of stagnation, the SA construction sector is seeing green shoots (tender activity increasing). However, the major constraint is Bonding Facilities (guarantees). Banks are hesitant to issue performance guarantees to construction firms with weak balance sheets, which caps how fast Stefanutti can actually grow despite the order book wins.

Step 4: The Verdict

Bull Case (Buy Rationale) The "Option" Play on Kusile Claims. Buying SSK is effectively buying a lottery ticket on the Kusile Power Station claims against Eskom. The Dispute Adjudication Board (DAB) is expected to issue binding decisions in mid-2025. If these claims are settled in Stefanutti's favor, the cash inflow could wipe out the debt and instantly re-rate the stock. The exploding order book adds operational support to this binary event.

Bear Case (Sell Rationale) Technical Insolvency Risk. The balance sheet is fragile. With current liabilities exceeding current assets by R1.2 billion, the company is technically skating on thin ice. If the lenders pull support, or if the Kusile claims are rejected/delayed further, the equity value could theoretically be zero (given the stock trades at 10x its tangible NAV).

Fair Value Estimate Binary Outcome

• Scenario A (Claims Win): R8.00+
• Scenario B (Claims Fail/Status Quo): R2.00 – R3.00

Final Rating: SPECULATIVE BUY Strictly for high-risk tolerance portfolios. The surge in the order book provides a floor, but the valuation is entirely dependent on the successful resolution of legacy claims. It is a bet on management's ability to navigate the final mile of restructuring.