Credit Suisse observes the first quarter trading update has confirmed previous disclosures regarding margin compression in fuel retailing and poor refiner margins. The broker believes retail fuel margins are likely to remain an uncertain factor for the remainder of the first half.
A softening of retail fuel margins has had a -$38m impact on earnings (EBIT). In addition, the company has flagged an unfavourable variance of -$8m in profit on the sale of assets.
Credit Suisse maintains an Outperform rating and $30.50 target, noting a flat year-on-year performance in the second quarter would achieve its first half forecasts.
Sector: Energy.
Target price is $30.50.Current Price is $26.18. Difference: $4.32 – (brackets indicate current price is over target). If CTX meets the Credit Suisse target it will return approximately 14% (excluding dividends, fees and charges – negative figures indicate an expected loss).
