Aussie building sector may benefit from dry start to 2023 - Morgan Stanley

Adbri

06/06/2023 04:47

** A materially drier start to 2023 vs wet 2022 should benefit the Australian building
materials sector, says Morgan Stanley
    ** Brokerage remains "cautious" on the sector on other headwinds such as rising cost
pressures and a weak housing market
    ** Significantly drier weather conditions collectively in five capital cities - Sydney,
Melbourne, Brisbane, Perth, and Adelaide - could prove beneficial to the sector
    ** Brokerage, however, continues to monitor the sector considering other data pointing to a
slowdown in Australian housing construction market
    ** Expects improved weather, better pricing outcomes and some cost relief to benefit Boral
Ltd  BLD.AX 
    ** Says headwinds to Australian housing market, and peaked activity in Reece Ltd's  REH.AX 
key markets could put downward pressure on earnings growth
    
       Company         Price Target      Rating     Reported net profit
                                                     estimate (A$ mln)
                                                    FY23   FY24   FY25
 Adbri Ltd  ABC.AX        A$1.80      Equal-weight   90     107    114
 Boral Ltd  BLD.AX        A$3.00      Underweight   151.7  165.3  195.5
  CSR Ltd  CSR.AX         A$5.50      Equal-weight   303   176.9  161.2
 Reece Ltd  REH.AX       A$11.00      Underweight    357    346    365
 

 (Reporting by Sameer Manekar in Bengaluru)
 ((Sameer.Manekar@thomsonreuters.com; Twitter: https://twitter.com/sameer_manekar))