Boral Limited (BLD:ASX)

Last update - 1 December 2020 By Rivkin

Boral Limited (BLD) manufactures and supplies building and construction materials globally.

Key Statistics
52-Week Range Avg. Daily Vol (3 Mo) Market Value Dividend Yield Float % Target Price Consensus Rating
(5 strong buy – 1 strong sell)
Next Earnings Announcement
1.68 – 5.28 8,327,969 5,968.90 2.4% 99.7% 5.03 3.18 18/02/2021

 

 

It’s building products are supplied to residential and commercial building markets, it also operates a clay brick business in the United States along with plasterboard, timber and concrete products.

The company operates three segments, the construction materials business of Boral Australia, USG Boral, a plasterboard joint venture across Asia, Australia and the Middle East, and Boral North America, a building products and fly ash business. Geographically Australia is the dominant market accounting for 58% of sales, followed by the United States accounting for 40%. BLD recent added new management and completed a full strategic review, resulting in the sale of its plasterboard business, which it had a 50% stake, for US$1.015 billion. Additionally, it is likely to exit its U.S. building products in 2021 as Boral refocuses on Australia and infrastructure. Under the new focus, Boral Australia is likely to account for 85% of sales with North America accounting for the remaining 15%.

Being diversified across the Australian and U.S. construction and building supply chains, Boral is well positioned to benefit from fiscal and monetary stimulus, as a result of the COVID pandemic in both regions, driving housing and infrastructure. The outlook will largely depend on managements execution of its strategic review, continuing cost cutting measures and exiting its low margin high capital U.S. buildings product business. That may help rerate the stock which trades as a 30% discount on an EV/EBITDA basis to the peer group average.

For the year ending June 2020 the company scrapped its dividend due to uncertainty around the economic outlook after reporting a net loss of A$1.14 billion compared with A$251 million a year earlier. The loss related to a non-cash write down of its North American assets including goodwill, intangibles and its investment in the Meridian Brick joint venture. After adjusting for exceptional items profit totalled A$177.3 million.

For the financial year ending June 2021 revenue is expected to dip slightly by -2.2% to A$5,548m before rising +4.8% in 2022 to A$5,813m. Adjusted earnings per share is expected to rise 67% to A$0.19 in 2021, recovering from a large decline in 2020 due to lower margins, and rise a further 29% in 2022 to A$0.25. Based on these estimates the stock trades on forward P/E multiples of 25.4 and 19.6 for 2021 and 2022 respectively, compared with peer group averages of 19.7 and 24.9.

The average target price of analysts covering the stock is $5.07 with 27% of analysts rating the stock as a buy, compared to 18% as a sell and 55% as a hold.

 

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