Morningstar flags premium valuation, trims FY26 EBIT forecast for Australia's SGH

SGH

12/08/2025 20:59

** Analysts at Morningstar say that at about A$47, Australia's SGH SGH.AX trades at a significant premium to its fair value, with the market remaining overly optimistic about public infrastructure firms

** Morningstar says the diversified conglomerate has been trading at a hefty one-year price-to-earnings ratio of about 20

** Reduces FY26 EBIT forecast by 5%, aligning with the high end of its A$1.6 billion ($1.04 billion) forecast, after company said it expects low to mid single-digit EBIT growth in FY26

** Assumes a five-year EBITDA CAGR of 6%, reaching A$2.6 billion by 2030, alongside an improvement in EBITDA margin to 19.5% compared to 18.1% in FY25

** Morningstar aligns with SGH's stable forecast for growth in company's industrial services segments - acknowledges potential for normalising new sales in WesTrac, and decelerating investment in Boral and Coates

** SGH reported a 2% increase in underlying fiscal NPAT to A$928 million on Tuesday

** Stock ended 8.5% lower on Tuesday following the results, bringing YTD gains to 2.9%

($1 = 1.5316 Australian dollars)

 (Reporting by Shruti Agarwal in Bengaluru)

 ((Shruti.Agarwal@thomsonreuters.com))