Despite better earnings, margins remain well below normal at ABC but balance sheet stresses are improving and there remains the option to accelerate land divestments should earnings not recover as expected. We note that there is no earnings-based leverage covenant, and the interest coverage looks set to remain within acceptable levels even with any significant EBITDA miss.
- We can see ABC testing $4 through 2023/4 but the risk/reward is more appealing below $2.20 – a potentially strong recovery play, especially if yields turn lower.
MM is neutral to cautiously positive ABC around $2.50
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