The company has indicated the outlook is difficult and plans to cut 1500 jobs. The prospect of breaking even on earnings (EBIT) in the fourth quarter, which usually represents 40-45% of annual EBIT, highlights the downside associated with any return to more restrictive lockdown measures, Credit Suisse asserts.
No update was available on construction provisioning. The broker envisages some potential for FY22 earnings to improve as the full benefits of cost reductions come through. Neutral maintained.
The broker remains confident in the company’s ability to navigate its covenants. Target is reduced to NZ$3.78 from NZ$5.39.
Current Price is $2.98. Target price not assessed.