Citi downgrades Australia's CSR Ltd on near-term overhanging uncertainties

CSR

10/05/2023 22:30

** Citi cuts PT on Australian building products manufacturer
CSR Ltd  CSR.AX  to A$5.45 from A$5.80, downgrades rating to
"neutral" from "buy"
    ** Brokerage believes there are "too many uncertainties
overhanging the stock" to deliver near-term outperformance; with
weak aluminium unit outlook by CSR prompting earnings view cut
    ** CSR logged 17% growth in FY NPAT before significant items
and a 13% growth in trading revenue
    ** Brokerage says expect this momentum to continue into
1H24, with material price rises continued in Gyprock,
gypsum-based products manufacturing unit, and a solid backlog of
work yet to be completed
    ** CSR expects aluminium unit to log an EBIT loss of A$5 mln
to A$15 mln in FY24, vs A$8 mln EBIT profit in FY23, citing
commodity market volatility
    ** Citi cuts NPAT est "materially" through to FY25 citing
"weak aluminium guidance"
    ** "Near term we think the addition of the aluminium
overhang to softening lead indicators will be too much for
investors" - Citi
    ** 5 of 12 analysts rate the stock "buy" or higher, 5 "hold"
and 2 "sell" or lower; median PT A$5.45 – Refinitiv

 ($1 = 1.4743 Australian dollars)

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