WILSON BAYLY HOLMES-OVCON LIMITED
Investment Analysis: Wilson Bayly Holmes-Ovcon Limited (JSE: WBO)
Date: 9 January 2026 Share Price: ~R172.51 (17,251c) Analyst Role: Senior Equity Analyst, JSE
Step 1: Data Gathering & Source Verification
I have reviewed the most recent financial disclosures and relevant SENS announcements. The company follows a June financial year-end.
- Annual Financial Statements: Reviewed the Audited Financial Statements for the year ended 30 June 2025 (Released 9 September 2025).
- Interim Results: The interim results for the six months ended 31 December 2025 have not yet been released (Expected ~4 March 2026). The analysis relies on the full-year 2025 figures and subsequent trading updates.
- SENS Activity (L12M): Key announcements include the Annual Dividend Declaration (September 2025), significant acquisition of beneficial interests by asset managers (Foord, Ninety One, PSG) in late 2025, and the vesting of share plan awards for directors (November/December 2025).
Data Sources:
- Annual Results (Sep 2025):
https://www.wbho.co.za/wp-content/uploads/2025/09/Audited-Financial-Statements-and-Cash-Dividend-Declaration-for-the-year-ended-30-June-2025_Final.pdf - Integrated Report (Oct 2025):
https://www.wbho.co.za/wp-content/uploads/2025/10/WBHO-Integrated-Report-2025.pdf
Step 2: Metric Extraction
| Metric | Value | Notes | | --- | --- | --- | | Market Cap | ~R12.3 Billion | The heavyweight "Blue Chip" of the JSE Construction sector. | | Dividend Yield (L12M) | ~3.6% | Moderate. Total L12M dividend of 620 cents (Interim Mar 2025: 300c + Final Sep 2025: 320c). The dividend was increased by 39% year-on-year, signaling balance sheet confidence. | | Liquidity Check | Liquid | Average daily value traded is healthy (~R15m â R25m). It is the preferred institutional entry point for the SA construction sector. | | P/E Ratio | ~7.3x | Attractive. Based on FY2025 Headline Earnings Per Share (HEPS) of 2,337 cents. This is a discount to the broader market (~10x) but typical for the cyclical construction industry. | | Net Asset Value (NAV) | ~10,700 cents | Estimated. The stock trades at a significant premium to Book Value (~1.6x P/B). This premium (rare in construction) reflects the market's trust in WBHO's ability to generate cash returns on equity (ROE >15%) compared to peers trading at discounts. |
Step 3: Operational & Strategic Analysis
Business Overview WBHO is a multinational construction group with three primary engines:
- Building & Civil Engineering (SA): Commercial buildings, data centers, and mining infrastructure.
- Roads & Earthworks (SA/Africa): Heavy infrastructure, SANRAL road projects, and energy (renewables).
- United Kingdom (Byrne Group/Russell WBHO): Focused on London concrete structures and Manchester contracting.
- Note: The problematic Australian division (Probuild) is long gone, removing the primary drag on earnings.
Performance Trend
- Revenue: Growing. Group revenue increased 4% to R28.5 billion (FY2025).
- Margins: Expanding. Operating profit rose 13% to R1.4 billion. Margins in the African operations improved to 6.1%, approaching the group's long-term target range.
- Order Book: Surging. The order book jumped 23% to R37.6 billion (June 2025). This is a critical forward-looking indicator, driven by renewable energy projects, data centers, and the SANRAL road expansion program.
- UK Operations: Stable. The UK contributed R5.7bn in revenue with improved operating profits, successfully navigating the post-inflationary environment in London.
Sector Context
- Infrastructure Super-Cycle: South Africa is seeing "green shoots" in fixed investment. The private sector (Mining/Energy/Data Centers) is spending heavily, and SANRAL continues to award massive road contracts.
- Competition: The collapse of major competitors (Group Five, Basil Read) years ago has left WBHO as the "last man standing" for mega-projects, giving them pricing power and the ability to be selective (margin over volume).
Step 4: The Verdict
Bull Case (Why Buy): The "Quality" Monopoly. WBHO is effectively the monopoly player for large-scale, complex infrastructure in South Africa. With an order book up 23% and margins expanding, the earnings visibility for FY2026 is excellent. The balance sheet is rock solid (R4.3bn cash vs minimal debt), allowing them to self-fund growth and pay increasing dividends. At a 7.3x P/E, you are buying a high-quality cyclical compounder at a value price. The recent buying by smart money (Foord, Ninety One) confirms the institutional thesis.
Bear Case (Why Sell): Macro & Margin Ceiling. Construction is inherently risky. A single bad project (problematic contract) can wipe out a year's profit. While WBHO is conservative, the Building division faces volume pressure in Gauteng (office oversupply). Additionally, the stock has already run hard (+30% in L12M) and trades at a premium to NAV. If the SA economic recovery stalls or interest rates don't fall as fast as predicted, the order book conversion could slow.
Fair Value Estimate: R210.00 - R220.00 Implies a re-rating to a ~9.0x P/E, justified by the double-digit earnings growth profile.
Final Rating: BUY WBHO remains the "gold standard" for SA construction exposure. The growing order book and clean balance sheet offer a strong margin of safety.