James Hardie Industries PLC

This report is an updated version of the report published on 17 January 2023 at 3:55 PM (GMT+11) AEST

Section 1: Company Overview and Fundamentals Insights

1.1 Company Overview

James Hardie Industries PLC (ASX: JHX) is engaged in producing and marketing high-performance fiber cement siding and backerboard. The company has four operating segments, namely, (1) North America Fiber Cement, (2) Europe Building Products, (3) Asia Pacific Fiber Cement and (4) Research and Development.

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

1.3 Top 10 Shareholders: The top 10 shareholders together form ~40.70% 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: In 2QFY23, JHX recorded a net margin of 16.8%, compared to the year-ago figure of 16.6%. The asset-to-Equity ratio stood at 2.83x in 2QFY23, lower than the year-ago figure of 2.99x. The below picture depicts the gross margin and current ratio trend:

Section 2: Business Updates, Financial Highlights, and Historical Performance

2.1 Recent Updates:

2.2 Results Highlights of 2QFY23 (for the period ended 30 September 2022): In 2QFY23, Global net sales went up by 10% YoY on flat Global Volume, as all three regions (North America, Asia Pacific, and Europe) continued to offer value added solutions to JHX’s customers.

2.3 Historical Highlights

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 Per Share 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 neither an Indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is January 17, 2023. 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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