The South African stock that went from R1,000 to R22,000 in 5 years

A R1,000 investment in Stefanutti Stocks during the lows of 2020 would be worth roughly R21,790 today—a 2,079% return in five years. 

Stefanutti Stocks is one of South Africa’s most prominent listed construction companies, focusing on infrastructure development projects.

The company operates in various sectors, including civil engineering, building, mechanical and electrical engineering, and mining services.

Despite its diversified portfolio, Stefanutti Stocks faced significant challenges in the late 2010s and early 2020s.

Like its industry peers, it was affected by the downturn in SA’s construction market following the 2010 FIFA World Cup. 

However, compounding the problems was an Eskom tender to work on the Kusile power plant. The tender was a joint venture with other private construction companies working on the Kusile power plant.

The original contract was for six years, with a completion date of November 2016. The planned construction duration was 19,000 days.

However, there were consistent delays in completing the Kusile project due to site access and construction problems.

Independent experts, in conjunction with the Dispute Adjudication Board (DAB), found that the project experienced more than 75,000 days of delays.

Stefanutti claimed that Eskom interfered with its work in a way that breached its original contract. This caused the project to progress much slower than expected.

Due to the delays, the company incurred significant prolongation costs and approached the DAB to assess Eskom’s claims. The company had lodged a R1.6 billion claim against Eskom related to the Kusile Power Station project. 

This claim, project delays, and cost overruns strained the company’s financial resources, as evident in its balance sheets. 

Stefanutti Stocks reported significant losses, leading to concerns about its solvency. The company’s liabilities exceeded its assets, rendering it technically insolvent. 

This situation was exacerbated by the broader economic impact of the COVID-19 pandemic, which led to project suspensions and further reduced cash flows.

The pandemic led to a sharp decline in the South African stock market, with the FTSE/JSE Capped SWIX Index falling by 37% from its January 2020 value. 

The construction sector was particularly hard-hit, with lockdown measures halting projects and disrupting supply chains. 

Stefanutti Stocks’ share price plummeted to R0.14 in May 2020, reflecting investor concerns about the company’s viability.

Turnaround pays off 

In response to these challenges, Stefanutti Stocks implemented a comprehensive restructuring plan to stabilise operations and restore financial health. 

The plan included cost reductions, asset disposals, and efforts to improve cash flow management. These interventions meant that despite the debt burden and liquidity hurdles, Stefanutti has remained profitable in the past two financial years.

By 2024, Stefanutti Stocks reported improved financial performance, with earnings per share turning positive. 

The share price rally started in June after the group released its full-year results for the year ending February 2024.

The group reported a profit before tax for the first time since 2016. In all other years, it reported losses before tax.

The group saw its strongest revenue growth in its Western Cape and inland segments, which increased by 62% and 32%, in these regions, respectively.

Daily Investor reported that a big reason Stefanutti was valued higher than its competitors was the claims submitted for its work on the Kusile power plant.

Stefanutti announced in its results that the DAB would make a binding decision to settle these claims by February 2025.

Investors believed Stefanutti had a strong chance of receiving many of these claims from Eskom soon, which would be a significant inflow of funds for the company.

However, despite the indicated February deadline, the DAB first indicated a decision by the end of Q3 2024, and it has still not made a decision.

This has sparked some concern among investors, and the share price has trended downwards since the start of 2025. 

Despite this, the strategic initiatives to bring the company back from the brink of collapse have borne fruit over the last five years. 

The company’s share price has surged from R0.14 in May 2020 to R3.16 by 16 May 2025, representing a staggering 2,079% return. 

A hypothetical R1,000 investment during its lowest point would now be worth approximately R21,790.