First half results for Orica beat Morgans expectations assisted by a 5% rise in global explosive volumes year-on-year. Group earnings rose 24% though the margin fell to 12.9% from 13.1%.
Management expects margins and earnings to increase in FY22 as a result of volume growth, increased adoption of its technology, supply chain efficiencies and falling overhead costs.
The broker’s target price rises to $16.20 from $14.89 reflecting improved pricing power, greater uptake of its technology and lower interest charge. The Hold rating is unchanged with shares trading around valuation.
Target price is $16.20.Current Price is $16.40. Difference: ($0.20) – (brackets indicate current price is over target). If ORI meets the Morgans target it will return approximately -1% (excluding dividends, fees and charges – negative figures indicate an expected loss).