Boral still demonstrating few to no durable competitive advantages - Brokerage

Boral

08/02/2023 19:28

** Analysts at Morningstar say H1 results of Australia's
Boral  BLD.AX  were weaker than expected despite operating
margins improving by 50 bps to 5.7%; keeps fair value estimate
at A$4 
    ** Brokerage lowers annual EBIT forecast for cement products
maker by 29% to A$200 mln ($138.62 mln), ahead of co's guidance
of A$190 mln; trims estimates due to a realignment in margin
expectations amid rising inflation
    ** Morningstar sees scope for modest improvement in margin
for H2 on back of lower fuel and energy costs coupled with the
management's transition to a more dynamic pricing system
    ** Says company fails to demonstrate few to no competitive
advantages as the sector remains crowded
    ** Analysts at another brokerage Jefferies say volumes,
price and cost have to work together for Boral to reach its goal
of 10-12% EBIT margin in Australia; adds industry behaviour will
be key for the company in achieving the target
    ** With costs high for the industry, pricing outcomes in
2H23 should be favourable for BLD, as they were in 1H23 -
Jefferies
    ** Boral on Wednesday beat consensus earnings estimates,
rallying its shares over 12% with CEO saying co is capable of
much more 
    ** Stock fell 19.4% in 2022
($1 = 1.4428 Australian dollars)
 (Reporting by Rishav Chatterjee in Bengaluru)
 ((Rishav.Chatterjee@thomsonreuters.com;))