Australia's Austal's equity raising may aid future growth, Citi says

Austal

16/03/2025 21:40

** Citi acknowledges shipbuilder Austal's ASB.AX equity raise, which initially was considered unexpected due to previous indications of debt funding for the $300 million capex for FA2

** Brokerage notes stock value doubling over the past six months, decreasing future NTA discount and indicating a strategy for lower gearing in high-risk periods

** Citi also observes that with funding for co's major capex programs now largely sorted and ASB is better placed to execute future programs

** However, cautions about increasing execution risk and the founder selling 41% of his stake - Citi

** Brokerage cuts FY25e to FY27e EPS by -1% to -13% due to the issue of ~52.6 million shares through a fully-subscribed institutional placement, offsetting the +2% and +1% increase in NPAT in FY25e and FY27e due to lower net interest

** Citi trims target price by 5% to A$4.09; Maintains  "Neutral" rating

** 2 of 4 analysts rate the stock "buy", 2 as "hold"; their mean PT is A$4.50 – LSEG data

** Stock up 25.8% YTD

 (Reporting by Kumar Tanishk in Bengaluru; editing by Diane Craft)

 ((Tanishk.Kumar@thomsonreuters.com; X: @thatstanishk;))