Brickworks Limited ASX Code: BKW Price: $18.78 12 Mth Target … · Brickworks Limited (BKW) is...
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Business Summary Brickworks Limited (BKW) is engaged in the manufacture of a diverse range of building products across Australia and North America and is also involved in development and investment activities to realize surplus manufacturing property and participate in diversified investments as an equity holder. Building Products: The division manufactures vitrified clay, concrete and timber products used in the building industry. Major product lines include bricks, masonry blocks, pavers, roof tiles, floor tiles, precast walling and flooring panels, fibre cement walling panels and timber products used in the building industry. Property Division: BKW utilizes opportunities associated with land owned by the Group, including the sale of property and investment in Property Trusts. Investment: BKW holds investments in the Australian share market, both for dividend income and capital growth, and includes the investment in Washington H. Soul Pattinson and Company Limited (WHSP). Latest Research Trading Update: NSW construction bans hit brick sales Brickworks’ update highlights the disruption caused by the NSW construction lockdowns. While construction has re-commenced, reduced on-site capacity will moderate activity levels, likely pushing out the sales lift. While lockdowns have too impacted development activity within the Trust, asset values should continue to surprise to the upside. We expect the property revaluations to be larger and more persistent than market expectations. We remain Buy rated on Brickworks with a TP $27.20. Brickworks will report their FY21 result on 23rd Sep 2021. For more information see research 10 Aug 2021. GICS - Materials Brickworks Limited ASX Code: BKW Price: $24.78 12 Mth Target Price: $27.20 Rating: Buy Important Disclaimer - This may affect your legal rights: Because this document has been prepared without consideration of any specific client's financial situation, particular needs and investment objectives, a Bell Potter Securities Limited investment adviser (or the financial services licensee, or the proper authority of such licensee, who has provided you with this report by arrangement with Bell Potter Securities Limited) should be consulted before any investment decision is made. While this document is based on the information from sources which are considered reliable, Bell Potter Securities Limited, its directors, employees and consultants do not represent, warrant or guarantee, expressly or impliedly, that the information contained in this document is complete or accurate. Nor does Bell Potter Securities Limited accept any responsibility to inform you of any matter that subsequently comes to its notice, which may affect any of the information contained in this document. This document is a private communication to clients and is not intended for public circulation or for the use of any third party, without the prior approval of Bell Potter Securities Limited. This is general investment advice only and does not constitute advice to any person. Disclosure of Interest: Bell Potter Securities Limited receives commission from dealing in securities and its authorised representatives, or introducers of business, may directly share in this commission. Bell Potter Securities and its associates may hold shares in the companies recommended. Snapshot Date Market Cap. Shares on issue 12 Month High 12 Month Low 15 August 2021 $3,757m 151.6m $25.64 $16.73 Rating Rating 12 Mth Target Price Capital Gain Gross Yield Implied Total Return Buy $27.20 11.1% 3.6% 14.6% Investment Fundamentals FYE 31 Jul 2020A 2021F 2022F 2023F Profit $m 146.0 257.0 213.0 174.0 Profit (norm)* $m 146.0 257.0 213.0 174.0 EPS* ¢ 98.0 170.0 141.0 115.0 EPS Growth % -37.2 73.5 -17.1 -18.4 P/E* x 25.0 14.4 17.4 21.3 P/E Relative % 0.0 0.0 0.0 0.0 DPS ¢ 59.0 60.0 61.0 62.0 Yield % 2.4 2.4 2.5 2.5 Franking % 100.0 100.0 100.0 100.0 * Adjusted for goodwill and unusual items Source: Based on Citi estimates Share Price Chart Total Return on $10,000 Investment
Transcript of Brickworks Limited ASX Code: BKW Price: $18.78 12 Mth Target … · Brickworks Limited (BKW) is...
Business SummaryBrickworks Limited (BKW) is engaged in the manufacture of a diverse rangeof building products across Australia and North America and is also involvedin development and investment activities to realize surplus manufacturingproperty and participate in diversified investments as an equity holder.
Building Products: The division manufactures vitrified clay, concrete andtimber products used in the building industry. Major product lines includebricks, masonry blocks, pavers, roof tiles, floor tiles, precast walling andflooring panels, fibre cement walling panels and timber products used in thebuilding industry.
Property Division: BKW utilizes opportunities associated with land owned bythe Group, including the sale of property and investment in Property Trusts.
Investment: BKW holds investments in the Australian share market, both fordividend income and capital growth, and includes the investment inWashington H. Soul Pattinson and Company Limited (WHSP).
Latest ResearchTrading Update: NSW construction bans hit brick sales
Brickworks’ update highlights the disruption caused by the NSWconstruction lockdowns. While construction has re-commenced, reducedon-site capacity will moderate activity levels, likely pushing out the saleslift. While lockdowns have too impacted development activity within theTrust, asset values should continue to surprise to the upside. We expectthe property revaluations to be larger and more persistent than marketexpectations. We remain Buy rated on Brickworks with a TP $27.20.Brickworks will report their FY21 result on 23rd Sep 2021.
For more information see research 10 Aug 2021.
GICS - Materials
Brickworks Limited
ASX Code: BKW Price: $24.78 12 Mth Target Price: $27.20 Rating: Buy
Important Disclaimer - This may affect your legal rights: Because this document has been prepared without consideration of any specific client's financial situation, particular needs and investmentobjectives, a Bell Potter Securities Limited investment adviser (or the financial services licensee, or the proper authority of such licensee, who has provided you with this report by arrangement withBell Potter Securities Limited) should be consulted before any investment decision is made. While this document is based on the information from sources which are considered reliable, Bell PotterSecurities Limited, its directors, employees and consultants do not represent, warrant or guarantee, expressly or impliedly, that the information contained in this document is complete or accurate.Nor does Bell Potter Securities Limited accept any responsibility to inform you of any matter that subsequently comes to its notice, which may affect any of the information contained in this document.This document is a private communication to clients and is not intended for public circulation or for the use of any third party, without the prior approval of Bell Potter Securities Limited. This is generalinvestment advice only and does not constitute advice to any person.Disclosure of Interest: Bell Potter Securities Limited receives commission from dealing in securities and its authorised representatives, or introducers of business, may directly share in thiscommission. Bell Potter Securities and its associates may hold shares in the companies recommended.
Snapshot
DateMarket Cap.Shares on issue12 Month High12 Month Low
15 August 2021$3,757m151.6m$25.64$16.73
RatingRating12 Mth Target Price
Capital GainGross Yield
Implied Total Return
Buy$27.2011.1%3.6%14.6%
Investment FundamentalsFYE 31 Jul 2020A 2021F 2022F 2023F
Profit $m 146.0 257.0 213.0 174.0Profit (norm)* $m 146.0 257.0 213.0 174.0
EPS* ¢ 98.0 170.0 141.0 115.0EPS Growth % -37.2 73.5 -17.1 -18.4P/E* x 25.0 14.4 17.4 21.3P/E Relative % 0.0 0.0 0.0 0.0
DPS ¢ 59.0 60.0 61.0 62.0Yield % 2.4 2.4 2.5 2.5Franking % 100.0 100.0 100.0 100.0* Adjusted for goodwill and unusual itemsSource: Based on Citi estimates
Share Price Chart
Total Return on $10,000 Investment
Profit & Loss ($M)2016A 2017A 2018A 2019A 2020A
Sales Revenue 746 762 819 916 952Total Revenue ex. Int. 828 843 823 1,029 957EBITDA 223 274 302 350 281Depreciation & Amort. -27 -28 -29 -37 -75Goodwill Amortisation -- -- -- -- --EBIT 196 246 273 312 206Net Interest -14 -12 -14 -23 -26Profit Before Tax 182 234 259 290 180Income Tax -35 -37 -55 -60 -33Outside Equity Int. -- -- -- -- --Profit after Tax 147 196 204 188 130Significant Items after Tax -69 -10 -29 -33 169Reported Profit after Tax 78 186 175 155 299Preferred Dividends -- -- -- -- --
Cash Flow ($M)2016A 2017A 2018A 2019A 2020A
Receipts from Customers 816 811 909 945 1,000Funds from Operations 57 54 80 43 73Net Operating Cashflow 149 115 171 123 75Capex -55 -61 -43 -49 -104Acquisitions & Investments -23 -13 -95 -160 -117Sale of Invest. & Subsid. 28 6 33 223 39Net Investing Cashflow -47 -67 -104 17 -173Proceeds from Issues -- -- -- -- --Dividends Paid -68 -73 -78 -82 -87Net Financing Cashflow -93 -60 -66 -89 212Net Increase Cash 8 -11 2 51 115Cash at Beginning 23 31 20 21 75Exchange Rate Adjust. -- -- -- 3 -3Cash at End 31 20 21 75 187
Ratios and Substantial Shareholders2016A 2017A 2018A 2019A 2020A
Profitability RatiosEBITDA Margin % 29.91 35.93 36.92 38.20 29.46EBIT Margin % 26.24 32.28 33.33 34.12 21.60Net Profit Margin % 19.76 25.76 24.94 25.11 15.34Return on Equity % 8.02 9.98 9.86 10.61 6.08Return on Assets % 6.25 7.54 7.45 7.97 4.29
Debt/Safety RatiosNet Debt/Equity % 14.60 14.86 14.63 11.51 23.46Interest Cover x 14.36 20.15 19.28 13.67 7.89
Top 5 Substantial ShareholdersWashington H Soul Pattinson and Co Ltd 45.4%
Balance Sheet ($M)2016A 2017A 2018A 2019A 2020A
Cash & Equivalent 31 20 21 75 187Receivables 107 133 122 133 129Inventories 188 196 207 247 278Other Current Assets 18 8 11 24 43Current Assets 344 357 368 495 637Prop. Plant & Equipment 488 499 510 598 764Intangibles 208 213 216 179 179Other Non-Current Assets 18 8 11 24 43Non-Current Assets 2,172 2,363 2,507 2,598 3,196Total Assets 2,516 2,720 2,875 3,093 3,833Interest Bearing Debt 299 312 324 324 751Other Liabilities 378 440 480 601 678Total Liabilities 677 752 804 926 1,429Net Assets 1,838 1,968 2,071 2,167 2,404Share Capital 337 341 346 351 356Reserves 311 310 309 283 293Retained Earnings 1,190 1,317 1,416 1,533 1,755Outside Equity Int. -- -- -- -- --Total Shareholders Equity 1,838 1,968 2,071 2,167 2,404
Current Analyst Recommendations *
* Source: Morningstar. This chart shows the spread of recommendations from thosebroker analyst's in Australia with research coverage of this stock.
Principals & DirectorsPrincipals
Company Secretary Ms Susan L Leppinus
Directors
Mr Michael John Millner(Non-Executive Director,Non-ExecutiveDeputy Chairman)Mr Robert Dobson Millner(Non-Executive Director,Non-ExecutiveChairman)Hon Robert James Webster(Non-Executive Director)Mr Lindsay R Partridge(Managing Director)Mrs Deborah Ruth Page(Non-Executive Director)Ms Robyn Narelle Stubbs(Non-Executive Director)Mr Malcolm Peter Bundey(Non-Executive Director)
To access further Research or for information regarding our recommendations and ratings please seewww.bellpotter.com.au
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Brickworks Limited
Bell Potter Securities Research
AFS Licence No. 243480 ABN 25 006 390 772
Email [email protected]
Website www.bellpotter.com.au
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