Formica Divestment Yields Balance Sheet Flexibility for Fletcher; FVE Unchanged on Analyst Transfer
We retain our fair value estimate of NZD 6.70/AUD 6.50 per share for no-moat Fletcher, following a transfer to another analyst. Expectations for Fletcher are largely unchanged. Shares continue to screen as cheap, trading at about 24% discount to fair value. We continue to expect the top line to grow at a 10-year CAGR of 0.5%, with the divestment of Roof Tile Group (RTG) and Formica Business contributing to the flat top line. We expect EBIT margins to rise to a midcycle level of just over 7.4%, e...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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