GUD was the best performer on the ASX200 on Monday closing up +3.9% after selling its Davey Water Products pumps business for $65m, thus enabling the company to become a pure-play automotive products company which is looking to position itself for the rise of EVs – our first reaction was to join the queue but on reflection, it does make sense to simplify and focus the business especially if their goal is the increasingly competitive EV space. The injection of funds from the sale will be used to reduce debt and to reinvest in the mentioned higher growth areas i.e. they’ve jettisoned the under-performer for the group – often the best approach to optimum portfolio performance.
- We can see GUD testing the $12-13 area on this move towards a more ESG-focused business model helped by its conservative valuation of 13.7x for 2023 and forecast 3.8% fully franked yield over the next 12 months.
MM is bullish toward GUD through the 2H
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