CSR Limited

A mix of fundamentals while stock is trading near 52-week low: The company is into providing building products for residential and commercial construction. The company operates low-cost manufacturing facilities and a strong distribution network of its clients across Australia and New Zealand. The company has been actively working on a key solar project.

Key Project highlights:
1. 1-megawatt solar project installed at PGH Bricks in Golden Grove, SA
2.  Includes over 3000 solar panels which cover 6,000 square meters of land at the site
3.  The $2 million projects will provide over 20% of annual electricity consumption at the site
4.  This is a first major project completed with CSR’s Energy Improvement Fund dedicated to energy saving projects at CSR’s sites

Key Metrics:The revenue of the company stood at $2,606.2 million in FY 2018 as compared to $2468.3 million in FY 2017, reflecting an increase of 5.6% Y-O-Y. The operating income for the company stood at $297.8 Mn in FY 2018 as compared to $275.9 Mn in FY 2017, which is a growth of 7.9%. The operating expenses grew by 5.3% Y-O-Y. The PAT grew marginally by 0.7% Y-O-Y. The total assets stood at $2,137.9 Mn on FY 2018 as compared to $2097.1 Mn in FY 2017, an increase of 1.9% Y-O-Y. The Cash flow from Operations decreased marginally driven by a marginal rise in cash payments to suppliers. The ROE and pre-tax ROA have not seen any significant changes, with current ratio improving significantly. The asset turnover has been increasing in a stable way over the past years. The company has seen a stable increase in the dividend over the past years. The long-term debt, however, came down by 8.2% Y-O-Y. The ROCE also improved Y-O-Y to 23.2% in FY 2018. The latest half year result ended September 2018 demonstrated a decrease in group EBIT.


Five Years Key Metric (Source: Company Reports)

On the other hand, the segment-wise EBIT growth for the company in its core operations makes the business more balanced and resilient, with building products contributing significantly to the company’s earnings before interest and tax, with Aluminium segment and property segment to follow in FY 2018. Meanwhile, the share price has fallen 41.53% in the past six months as at December 20, 2018 and trading at PE multiple of 14.38x with an annual dividend yield of 9.6%.

Further, the latest updates entailing stepping down of CEO in 2019 while the group is undertaking strategic moves including the sale of Viridian Glass, provide a blended outlook for the group.

As of now, we give a wait and watch view on the stock at the current market price of $2.710, as the stock still faces certain challenges and has been beaten down a lot in the last few months.
 

Lendlease Group

Update on Buy-Back Event: Lendlease Group (ASX: LLC) is a part of property and infrastructure group. The company has an expertise in infrastructure, design, development, investments, and management and works to deliver a project from conception to completion. Recently, the group has updated the market about the progress on several transactions under its ongoing buy-back event. The group indicated to buy back shares with an aggregate total consideration of $500 million. As of now, the group has bought back a total of 201,31,011 shares via on-market trade for the total consideration of A$ 35,19,18,853.98. Following this, the remaining consideration to be paid for shares under the buy-back is $14,80,81,146.02. On the analysis front, the company recorded FY18 Net margin of 4.9% which is lower than industry median of 20.9%, indicating the inefficiency of the company to translate their revenue into Profit within the sector. Moreover, Lendlease has generated a return of shareholder’s fund with ROE at 12.7% in FY18 which is lower than the industry average of 13.3%.The asset turnover has increased by 3.7% Y-O-Y almost in line with past years. The Net borrowings, however, went up significantly Y-O-Y.
 

Key Financials (Source: Company Reports)

Meanwhile, the share has fallen 40.20% in the past six months as of December 20, 2018 and is trading towards the lower range.  Based on mixed performance in FY18 and current trading scenario, we have a wait and watch view on the stock at the current market price of $11.610 (down 1.443% on December 21, 2018.

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