Fletcher Building Limited

Section 1: Company Overview and Fundamentals Insights

1.1 Company Overview

Fletcher Building (FBU) is engaged in the manufacturing and supplying building products and construction materials across New Zealand and Australia. The company participates across the construction value chain as it is a residential developer and constructor in the New Zealand market.

1.2 The Key Positives, Negatives, Investment Highlights, and Risks

1.3 Top 10 Shareholders: The top 10 shareholders together form ~21.72% of the total shareholding. The Vanguard Group Inc. and Schroder Investment Management (Australia) Ltd. are holding a maximum stake in the company at ~3.99% and ~3.71%, respectively.

1.4 Key Metrics: In 1HFY22, the company's current ratio stood at 1.63x higher than the Industry Median figure of 1.54x. The Asset Turnover ratio also improved to 0.51x, higher than the Industry Median of 0.30x.

Section 2: Business Updates and Financial Highlights

2.1 Recent Developments:

2.1 Results Highlights of 1HFY22 (Period Ended 31 December 2021): The company recorded NZD 4,062mn cash receipts during 1HFY22 vs NZD 3,968 million in 1HFY21. The relaxation of COVID-19 restrictions aided growth in the company's revenue, which may lead to a positive order book for the future and a positive EBIT margin outlook for FY22.

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary

4.1 Price Performance and Technical Summary

4.2 Fundamental Valuation

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: The reference data in this report has been partly sourced from REFINITIV

Note 2: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.

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