CSR has surged +37% year-to-date, and while we like the business, our concern towards its valuation is rising as it makes new 15-year highs. The company’s 1HFY24 result was solid, with weak aluminium and softer-than-expected property earnings offset by an excellent building product result. Their focus remains on what happens when the housing cycle finally turns, which could “pop” earnings due to strong building product margins and ongoing pricing power. The government is facing the worst rental crisis in living memory, and however they settle the issue, it’s likely to create a tailwind for CSR and its peers.
- We like CSR into dips, but it’s hard to get excited from a risk/reward perspective above $6.
MM is neutral to cautiously positive toward CSR, around $6.50
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