Morningstar | No-Moat CSR’s Share Buy-Back Looks Small; More to Come in Fiscal 2020?
While we’re unsurprised by no-moat CSR’s decision to return capital to shareholders, the announced share buyback of AUD 100 million does appear light relative to recent divestments. In fact, we’d expected a buyback twice the size given sale proceeds of AUD 325 million (pretax) will be received by CSR over the coming 12 to 18 months. Proceeds include cash from the Viridian Glass divestment, two previously announced property transactions, and from the sale process of the Ingleburn industrial site which is currently progressing. Therefore, we anticipate CSR returning a further AUD 150 million in capital to shareholders via share buybacks in fiscal 2020. Nonetheless, we view the announced share buyback as an appropriate vehicle for return of capital, given CSR shares currently trade in line with our fair value estimate of AUD 3.30 per share.CSR also tightened its full-year fiscal 2019 full-year guidance to a range of AUD 180-187 million, from a prior range of AUD 180 million to AUD 205 million. We continue to forecast full-year fiscal 2019 adjusted net income of AUD 192 million, slightly above the top end of management’s updated guidance range.
CSR is engaged in the manufacture and supply of building products in Australia and New Zealand. Co. operates in four segments, Building Products, Glass, Aluminium and Property. The Building Products segment consists of Lightweight Systems, Insulation, AFS walling systems, Bricks, and Roofing. The Glass segment includes the operations of Viridian, an architectural glass provider and manufacturer of float glass and hardcoated performance products. Products from the aluminium business include aluminium ingot, billet and slab.. The Property segment sells former operating sites.
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