Cutting Fletcher Building’s FVE To NZD 7.10 Due To Construction Losses; Shares Overvalued
We have cut our fair value estimate to NZD 7.10 from NZD 8.00, following a 15% downgrade to fiscal 2017 earnings guidance and a reassessment of longer-term profit margins. Fletcher Building is now guiding to EBIT of NZD 610-650 million from NZD 720-760 million previously due to estimated losses within the building and interiors segment of the construction division which makes up 20% of earnings. While Fletcher’s core building products and distribution divisions, 40% and 27% of earnings, respecti...Fletcher Building is a holding company. Through its subsidiaries, Co. operates in six divisions: Heavy Building Products, which manufactures, distributes and markets heavy construction material; Light Building Products, which manufactures a range of building products for residential and commercial markets; Laminates and Panels, which manufactures and distributes decorative surface laminates; Distribution New Zealand and Distribution Australia, which consist of building, plumbing, pipeline and steel distribution businesses in Australia and New Zealand; and Construction, which is a general contractor in New Zealand and the South Pacific and a builder of residential homes in New Zealand.
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