First half underlying earnings exceeded Morgans forecast by 13% as revenue in the key formwork division jumped 46%. This was largely driven by an additional four-month contribution from the Uni-span acquisition and strong performances from Melbourne civil and Natform.
Industrial Scaffold was also strong with underlying revenue up 25%, while Commercial Scaffold remains a drag with revenue down -13% on the back of ongoing weakness in the high-rise construction market, according to the broker.
Record new hire contracts secured over the past six months and a strong pipeline of opportunities providing a good lead indicator for the second half FY21, notes the analyst. Add rating and target is increased to $0.50 from $0.40.
Sector: Capital Goods.
Target price is $0.50.Current Price is $0.37. Difference: $0.13 – (brackets indicate current price is over target). If ACF meets the Morgans target it will return approximately 26% (excluding dividends, fees and charges – negative figures indicate an expected loss).