CSR Limited (ASX: CSR) – SELL at AUD 5.54

CSR Limited is a manufacturer and distributor of building products. CSR owns and manages manufacturing facilities and distribution centers in Australia and New Zealand.

Investment Rationale – SELL at AUD 5.54

• Profit Booking: CSR’s stock price has breached the ‘Resistance 1’ level given in the report on 5 April 2023, and presented a profit booking opportunity.
• Technical Indicator: CSR’s stock price has breached the upper Bollinger Band and is trading in the overbought zone; and thus, the stock price can face correction in the short term.
• Overvalued Multiples: On a 12–month forward basis – key trading multiples (EV/EBITDA, Price/Earnings, Price/Book, and Price/Cash Flow) are higher than the median of the Basic Materials sector.
• Uncertain Outlook: Due to monetary tightening and cost volatility amid global inflationary pressures and economic slowdown, the Company can fail to continue its growth prospects.

CSR Daily Chart

 (Source: REFINITIV, Analysis by Kalkine Group)

Valuation Methodology: Price/Earnings Approach (FY24E) (Illustrative)

Considering that the resistance level, and risks associated, it is prudent to exit at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current price of AUD 5.54 (as of 13 July 2023, at 3:25 PM GMT+10).

Note: This report may be updated with details around fundamental and technical analysis, price/ chart in due course, as appropriate.

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 13 July 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.

Note 4: Dividend Yield may vary as per the stock price movement. 

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.

Disclaimer

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