Hi Guys,
JHX has been a tough one over recent months struggling due to shareholder discontent of their purchase of AZEK for around $US8.75bn combined with soft construction markets at home, and in the US. Its getting harder to be bullish after the stocks 40% recovery from its April low:
- We remain cautiously bullish towards JHX with rate cuts, deregulation and tax bills set to help construction in the US but its hard to see it trading back above $50, where it was before the AZEK announcement, in 2025. Hence we are now closer to being a seller than a buyer, especially following JHX’s downbeat guidance in May.
- “We are prudently planning for market volumes to contract in FY26, including a fourth consecutive year of declines in large-ticket repair and remodel activity.”
On Friday ZIP was still trading around $3.10 so we’re not sure the downgrade by Jefferies is that influential; they tweaked Zip from a Hold to Underperform while at the same time lifting their price target from $1.80, to $2.10, i.e. their fiinger is not too close to the pulse on this one! The view was predicated on US customer growth estimates being too high after Zip’s trading update in mid-June when they guided for cash EBITDA to be at least $160mn, up from $US153mn.
- We can see some consolidation by Zip around $3 but at this stage we’re happy with our $3.50 initial target.
