Boral result proves the shorters wrong

Matthew Haupt

Wilson Asset Management

Following today's results announcement, Boral’s share price is experiencing a relief rally which we believe will continue in the short term. And as the market gains confidence in both Boral’s Australian and US divisions, we expect the share price will increase further over time.

A stronger than expected outlook for its Australian business was the key takeaway from Boral’s full-year results released today. The company reported net profit after tax of $441 million, a 41% increase on FY2017.

Results across the business prove concerns unfounded

Boral said the result reflected significant growth from North America with a full year contribution from the acquired Headwaters businesses.

Concerns around the US business leading up to the result were unfounded, with Boral announcing the delivery of US$39 million of synergies in year one, against a target of US$35 million.

The business also saw higher earnings from Boral Australia and a solid result from the USG Boral joint venture.

Overall, the guidance issued today provided a relief. Although the share price had been falling, this was due to short interest, and we believe the company’s outlook alleviated concerns around earnings.

The outcomes following the upcoming investor day held in the US in September will be a key indicator whether the share price will continue to rise.

We also believe the market is underappreciating the potential for Boral to beat its guidance issued today.

The company said it expects to deliver high single-digit earnings before interest, tax, depreciation and amortisation (EBITDA) growth in Australia, at least in line with last year. Boral also expects its North American division to increase EBITDA by around 20% or more in FY2019.

A potential political tailwind to consider

Given the election campaigns that will be undertaken over the next year, with NSW elections in March, and Federal elections which must happen before November 2019, we believe the market is underestimating the infrastructure spend that is associated with election campaigns.

Election cycles promise big infrastructure spend - and we expect the potential for an extension of the cycle in 2019.


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Wilson Asset Management takes advantage of short-term mispricing opportunities in the Australian equity market, providing investors with diversified exposure to a portfolio of undervalued growth companies. Find out more.


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Matthew Haupt
Lead Portfolio Manager
Wilson Asset Management

Matthew has more than 15 years’ experience in the investment industry working as both a portfolio manager and analyst. Matthew is the Lead Portfolio Manager responsible for WAM Leaders.

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