James Hardie Industries plc

Section 1: Company Overview and Fundamentals Insights

1.1 Company Overview

James Hardie Industries plc (ASX: JHX) is a construction material company that provides fiber cement building solutions and is engaged in fiber gypsum and cement-bonded boards in Europe. The company operates under three business segments: North America Fiber Cement, Asia Pacific Fiber Cement, and Europe Building Products.

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

1.3 Top 10 Shareholders: The top 10 shareholders together form ~42.13% of the total shareholding. AustralianSuper and Pinnacle Investment Management Group Ltd are holding a maximum stake in the company at ~6.97% and ~5.38%, respectively.

1.4 Key Metrics: The company maintained a gross margin above the industry median of 32.0%. Notably in 1QFY23, it reported a gross margin of around 33.9%. Further, in 1QFY23, JHX reported a return on equity of 12.3%, above the industry median of 4.8%. Below is captured the trend of net margin and asset turnover ratio:

Section 2: Business Updates, Financial and Operational Highlights

2.1 Recent Updates:

2.2 Results Highlights of 1QFY23: The recent 1QFY23 results depicted the growth in both the top and bottom line as the EBIT increased from USD 183.0mn from 1QFY22 to USD 221.3mn in 1QFY23.

2.3 Strategy Update and FY24 Guidance: The company is working on increasing its capacity globally with plans such as fiber gypsum brownfield expansion in Oreja, and Spain by 4QFY24. Further, under North America capacity expansion, JHX expects to complete brownfield expansion in Prattville by 3QFY24. 

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary

4.1 Price Performance and Technical Summary

4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation (Illustrative)

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

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is September 6, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: 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 a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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