Industries Highlighted in Business Turnover Release
Key Statistics Favoring the Mining Industry
Key Investment in Transport Infrastructure Space
Short-term Challenges to Deal With
Decent Outlook to Support Building Materials and Transport Industry
Considering the developments in the business turnover of select industries, we have figured out two stocks on ASX that are set to see momentum.
(1) CSR Limited (Recommendation: ‘Buy’ at AUD 4.200, Potential Upside: Low Double-Digit)
(M-cap: AUD 2.06bn, Annual Dividend Yield: 7.41%)
Company Overview: CSR Limited (ASX: CSR) is a leading building products company in Australia and New Zealand.
Top-Line Aided by Resurgence in Commercial Construction: In FY22, CSR embarked upon an NPAT (before significant items) of AUD 193mn, up by 20% PcP. Statutory NPAT was clocked at AUD 271mn, including substantial items, incorporating AUD 86mn in carrying forward capital tax losses. Trading revenue surged by 9% to AUD 2.3bn.
Growing Bottom-line: Building Products’ EBIT was registered at AUD 228mn, considerably up by 24%, representing sizable housing activities, validated by higher volumes, improved factory performance, and operational execution. Property EBIT was registered at AUD 47mn, a dip from AUD 54mn recorded in FY21.
Outlook: Building Products segment is well-positioned to display encouraging results, with an exhaustive strategy to proliferate operating performance from robust brands portfolio and customer solutions. CSR’s earnings are well supported by contracted transactions in Property over the next three years with surged hedge position in Aluminium.
(2) Kelsian Group Limited (Recommendation: ‘Speculative Buy’ at AUD 5.890, Potential Upside: Low Double-Digit)
(M-cap: AUD 1.31bn, Annual Dividend Yield: 2.66%)
Company Overview: Kelsian Group Limited (KLS: ASX) is an integrated marine and land, public and tourism transport service provider.
A significant uptick in Fundamentals with Acquisition Impact: In FY21, underlying EBITDA stood at AUD 167.5bn, up by 85.2% alongside stable margins. KLS registered revenue of AUD 1.17bn, considerably up by 88.1% YoY due to the impact of new contract wins, TSG acquisition, and rebound witnessed in the Tourism industry.
Favourable Bottom-line and Expanding Margins: In 1HFY22, Underlying EBITDA was clocked at AUD 90.8mn, edged down by 4.1% YoY, and underlying NPAT was registered at AUD 21.9mn, a cut by 27.5% YoY. AUD 21.1mn of capital expenditure was deployed to build an advanced new vessel and replace the bus fleet.
Outlook: The company is pursuing the renewal of the Kangaroo Island Ferry licence and positioning itself for tender opportunities in international markets. The company is seeking to scale up on the back of Position Tower Transit London. KLS was awarded a new contract, up to 25 years, to operate ferries to Kangaroo Island beginning in July 2024.
Comparative Price Chart
Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.
Technical Indicators Defined: -
Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.
Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.
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