Afrimat. Special review. Strong financial report: reversal or trap?

A company posts its strongest set of annual numbers in years: revenue up 20%, headline earnings up 32%, dividend up 32% and its share price is still buried in one of the longest downtrends on the JSE. That company is Afrimat, and 2026 marks 20 years since it listed publicly. The disconnect between the report and the chart is exactly what makes it worth writing about.

Once upon a time, somewhere on this planet, 1,000 years ago, a hunter spotted a bear in the forest. The bear ran, and the hunter chased after it. Children saw it and ran after them, dogs saw it and ran after them, women heard about it and joined in, officials heard about it and also started running, just to get in on the action. That's how such a thing as a trend emerged, and since they were all running downriver, the trend was downward. The hunter caught up with the bear, but the bear ate him, and the others scattered. This was the first time that following a bearish trend proved too risky. Since then, 1,000 years later, every day on the stock market we can see bearish trends and situations where the bears prove stronger. Is it true or not? Who knows? you decide - to believe in legends or not 😉

A bit of background

Afrimat is a large mid-tier South African mining and commodities company built around open-pit mining. Since listing in 2006, the stock has delivered roughly 290% growth, and the business today carries a market capitalization in the region of R4.7–5.1 billion. Its recent high sat just under R55 a share (its 52-week peak), a level powered largely by the success of its bulk mining segment and iron ore exports.

But 2024 and 2025 put the company under real pressure: reserve depletion at its key Demaneng mine, the now-familiar logistics problems on Transnet's rail lines, and a power crisis — high costs and shortages — that forced South Africa's ferrochrome smelters to shut. For a business whose anthracite mine feeds exactly that industry, the timing hurt.

What actually changed in the 20 May report

The headlines are genuinely strong: revenue of R10.01 billion (+20.3%), HEPS of 95.8 cents (+32.5%), a dividend up 32%, and operating cash flow up 45.4%. But the headline figure flatters the year, and the real story is in the segments.

The profitable core is doing its job. Aggregates grew revenue 11.2% and operating profit 24.0%, lifting margin to 17.7% from 15.8% a year earlier, while local iron ore sales rose to 1.51 million tonnes. That's the engine still running.

The problem areas are where it gets interesting. Cement grew revenue 54.3% but posted an operating loss of R185.1 million — the result of a R271.6 million maintenance program. The key question for me is whether that's a one-off "recovery cost" or a chronic drain. Management insists it's the former and notes the losses are already narrowing, which is encouraging but not yet proven. Nkomati anthracite is still R160.5 million in the red after a six-month shutdown, and ore exports remain hampered by the rail line.

On the balance sheet there's real progress: R1.6 billion of short-term debt has been restructured into a five-year amortizing loan, and proceeds from selling non-core assets are going toward paying down debt — debt that grew largely because of the Lafarge acquisition. And then there's Glenover, the rare-earth and battery-minerals deposit. It's a genuine option on the future, but it's still in the R&D and negotiation phase, not a profit center today. I'd treat it as upside, not as a reason to buy.

The technical picture

I'll be straight about this: the chart is not pretty. AFT has been in a downtrend for roughly 17 months, and what's striking is how closely the 2026 trajectory is mirroring 2025 so far. The technical indicators are still flashing sell. Given the strength of the latest report, it's reasonable to assume we're somewhere near the lows — but "near the lows" is not the same as "the reversal has started." There's no confirmed turn yet, and in the short term the drift could still be downward.

Fundamental point of view

Buying at a discount is always tempting, and resources are in demand. But here's the angle that genuinely interests about Afrimat specifically: this is a company whose entire identity has been buying unloved, unprofitable, often abandoned commodity assets at sensible prices, modernizing them, and turning them profitable. That's the playbook.

So the question almost asks itself: what if the stock itself is currently in the "unprofitable, unloved" phase of exactly the cycle Afrimat has spent 20 years exploiting in others? Sometimes the smartest move is to follow the strategy of the people who do it best.

Maybe that's why you will see a signal "Buy" among market experts and their forecast that the Company may up by 20-30% withing next 12 months. This opinion have a sense.

Summary

Afrimat looks like a reasonable medium-term idea but only with eyes open and patience built in. This is a "possible reversal at the bottom" case, where the fundamentals and the technicals are pulling in opposite directions. You would likely have to ride out more tough quarters before any payoff, rather than expecting the stock to turn the week after you buy.

If you're not convinced, there's a perfectly rational alternative: wait for the next earnings report and watch whether the market retraces. That may be the confirmation you need. For now, I'd put it this way — the first buy signal has arrived, but the confirmation hasn't. What you do in that gap depends entirely on your time horizon and your tolerance for sitting in the red.

This article has been published for information reasons. Do your own research upon investing. Author isn't responsible for consequences of following or not following recommendations since has no impact on the market.