ABC was hammered over -20% in October following a profit downgrade and the departure of its CEO. The company blamed wet weather and additional cost inflation (particularly energy & diesel) for the ~20% reduction in earnings guidance, with the 2H recovery they had previously flagged proving elusive. The key point was around prices, and their inability to raise them to offset cost pressures and protect margins. As the industry struggles this $1.22bn Adelaide-based business has struggled and we don’t believe we’re at the stage of the cycle to be chasing deep value in case things get worse through 2023/4.
- We like the stock technically but would rather buy strength following some positive company news.
MM is mildly bullish on ABC
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