Stocks’ Details_Financial Parameters (Company Reports and Thomson Reuters)
 

Boral

Decent Outlook: Boral Limited (ASX: BLD) is a manufacturer and supplier of building and construction materials in Asia, United States and Australia. FY18 marked a significant year for the company as it was in transformation phase with the successful integration of the Headwaters business into Boral North America and received gains from Boral Australia business. On the analysis front, the company delivered strong full-year results wherein total sales grew by 34.0 percent and amounted to $ 5,869 Mn in FY18 over the last year. It was largely driven by growth in Boral Australia and Boral North America business including a full year of revenues from Headwaters. NPAT before significant items stood at $ 441 Mn in FY18, displaying solid growth of 49.0 percent on a Y-o-Y basis. Resultantly, RoE turned around to be positive and recorded 7.1% in FY18 which is broadly in-line with the industry median of 7.9%. In addition to this, the current ratio stood at 1.75x in FY18 while debt to equity ratio decreased from 0.47x to 0.44x. It reflects a healthy balance sheet which will support to execute growth plans without affecting the financial performance of the company.


FY18 Financial Highlights (Source: Company Reports)

Stock movement: Meanwhile, the share price has fallen 8.48 percent in the past six months and traded lower low PE level of 18.08x. Hence, we maintain our “Buy” recommendation on the stock at the current market price of $6.860, considering decent outlook ahead.
 

CIMIC Group

Winning key project: CIMIC Group Limited (ASX: CIM) has recently announced that CIMIC Group companies Pacific Partnerships and CPB Contractors, along with their consortium partners, have reached a contractual close with the New Zealand Government to deliver the Waikeria Corrections and Treatment Facility Public Private Partnership (PPP) project. We expect that this will provide a business opportunity to the group thereby increasing topline growth in years to come.

Decent Outlook: In the first half of FY 2018, CIM reported revenue of $6,937.4 million which is 10.5% higher as compared to $6,279.4 million a year ago. Company’s EBITDA increased by 11.4% to $794.3 million as compared to $713.3 million in the prior corresponding period (PCP). Company’s EBIT increased by 16.1% to $535.8 million as compared to $461.5 million a year ago. Company’s Profit before tax increased by 13.9% to $503.0 million in 1H FY18. NPAT increased by 12.4% to $363.0 million as compared to $322.9 million a pcp. Based on the 1HFY18 performance, the company is expecting an increase in NPAT of around 3% to 11% amounting to $720 million to $780 million in FY 2018.


Company’s financials (Source: Company’s reports)

CIMIC Group was trading at a price of A$50.25 at the time of writing which reflects that the stock is inclined towards its higher range and hence, we maintain our “Expensive” rating on the stock. As of September 21, 2018, the company had market capitalization of $16.32 billion.
 

Lendlease Group

Well Diversified Business:Lendlease Group (ASX: LLC) primarily works in three segments namely: construction, investments as well as development. The company’s development division recorded earnings before interest, tax, depreciation, and amortization or EBITDA amounting to $673.2 million in FY 2018 which implies the YoY growth of 22%. Of the total company’s operating EBITDA in FY 2018, the division made up 47%. The division’s invested capital stood at $4.3 billion while its ROIC or return on invested capital stood at 13.4%.
In FY 2018, the development division was helped by Australia as the region saw an increase of 11% YoY with respect to EBITDA that stood at $551.3 million. However, the division was also aided by the European region as the region recorded EBITDA amounting to $110.4 million while in the prior year it was $68.3 million. The management has a favorable outlook towards the development division. The division has projects of $71.1 billion in its pipeline which implies an increase of 44% on the YoY basis. The majority of the projects (79%) relates to the urbanization while the remaining 21% represents communities’ projects.


Portfolio Management Framework (Source: Company Reports)

Work secured:In FY 2018, the construction business garnered EBITDA amounting to $78.2 million implying a fall on the YoY basis. In the previous year, EBITDA was $338.3 million. This segment made up 6% of the company’s total operating EBITDA in FY 2018. In every region, building business witnessed the positive momentum. However, the performance of the division got adversely affected by Australian Engineering business. In FY 2018, the investment division generated an EBITDA amounting to $668.9 million which reflects the YoY growth of 35%. The investment division of the company made up for 47% of the company’s total operating EBITDA. The management of the company views that this segment could help in generating recurring earnings. At the end of FY 2018, the segment managed funds under management amounting to $30.1 billion reflecting an increase of 15% on the YoY basis. 

Over the past six months, Lendlease Group’s stock price delivered a return of 7.6%. At the time of writing, the stock was trading at $19.34. The stock price of the company is hovering around its higher range. The company has a market capitalization of $10.97 billion while the stock looks “Expensive” at the current price.
 

Basic Normalized EPS  for Boral Ltd, CIMIC Group Ltd, LendLease Group (Source: Thomson Reuters)
 
 

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