Wagners Holding Company Limited

WGN Details

Wagners Holding Company Limited (ASX: WGN) is the diversified Australian construction materials and services provider as well as an innovative producer of New Generation Building Materials.

Results Performance (1 July 2021 to 31 December 2021)

• In H1 FY 2022, the company’s revenue from continuing operations amounted to $171.09 Mn, which implies a rise of 10% on the YoY basis.
• The company’s results were influenced by the increased revenue from the Cement, Concrete, Steel & CFT which was offset by reduced revenue from Precast following completion of the initial Cross River Rail project.
• Its operating EBIT declined from H2 FY 2021 was mainly because of the lower contribution from CRR.
• In H1 FY 2022, the company witnessed continued expansion costs for the USA as well as increase in EFC growth investment.

Source: Analysis by Kalkine Group

Outlook

In H2 FY 2022, the company is planning to start manufacturing of CFT at its Texas facility as well as begin manufacturing EFC via the facility in outer London. The company is also planning to continue to deploy towards low carbon technology.

Key Risks

The COVID-19 pandemic could have an impact on many companies’ supply chains and many companies might experience logistics delays, lack of availability of raw materials as well as the resulting increase in the costs of raw materials and services. These issues could cause project delivery delays as well as potential loss of profitability.

Valuation Methodology: EV/Sales Based Relative Valuation (Illustrative)

Technical Overview:

Daily Price Chart

Source: REFINITIV, Note: Purple color line reflects Relative Strength Index (14-Period)

Stock Recommendation

The company is focused towards margins and revenue growth is anticipated without the corresponding increase in the costs. It is anticipating to recover supply chain cost increases.

The stock has been valued using an EV/Sales multiple based relative valuation (on an illustrative basis), and the target price so arrived reflects a rise of low double-digit (in % terms). In addition, a slight premium has been applied to EV/Sales Multiple (NTM) (Peer Average) (approx) considering decent outlook as well as future developments.

Considering the factors above, we give a “Buy” recommendation on the stock at the closing market price of $1.41 per share, up by 0.714% as of 22^nd April 2022.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Wagners Holding Company Limited (WGN) is a part of Kalkine’s Global Real Estate Product

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined:-

Support: A level where-in 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 where-in 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: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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