ASB -9.01%: The shipbuilder that we recently added to in our Emerging Companies portfolio downgraded today by ~8% and the stock fell a similar amount. They blamed COVID for delays which will result in revenue for FY21 being $1.55b instead of the $1.65b they expected which means earnings (EBIT) will be $112-$118m, a $10m downgrade relative to current market expectations of $125m. While the news is clearly a negative, in a situation like this we review our thesis to see if it remains intact, and in this case it does. We’re expecting more uncertainty in the short term around earnings however we’re of the view that this presents a medium term opportunity as they push into steel shipbuilding with the support of the US Navy.
MM remains positive ASB although patience required
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