Building material companies are closely linked to the Australian population growth story via their exposure to new home construction in Australia. We believe CSR is well-positioned to benefit from new home construction and increased building product volumes, it’s our preference over overseas earners such as James Hardie (JHX), who receive little benefit from domestic population growth. Two weeks ago, we wrote, “We can see CSR testing its post-COVID high into Christmas, but the risk/reward isn’t exciting ~$6.” Clearly, the risk/reward has now improved slightly.
CSR also has a significant property portfolio currently valued at $1.5b, which will play an extremely important role in helping accommodate a rapidly growing Australia. Our only concern with “sugars”, as it was called many years ago on the trading floor, is how quickly bureaucracy will allow CSR to ramp up its earnings.
- We like CSR into its current pullback, with initial support coming in around the $5.50 area.
MM is bullish toward CSR medium-term
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