ASX 200 | A B C D E F G H I J L M N O P Q R S T U V W X
TO MAKE THE WORLD SMARTER, HAPPIER, AND RICHER.
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
It’s been a year of hurt for CSR, but now it could be an opportunity.
You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More
The CSR Limited (ASX: CSR) share price has fallen 22% in 2022. That compares to a drop of 11% for the S&P/ASX 200 Index (ASX: XJO). CSR is a relatively small ASX 200 share within the index though.
There is a lot more uncertainty in the local and global economy at the moment. Inflation is rising in Australia and worldwide for a number of reasons. One of those reasons includes higher energy prices amid the Russian invasion of Ukraine.
The current situation is having an impact on the company’s valuation. But, it’s this valuation that is now attracting some professional investors to the business as a potential opportunity.
Let’s have a look at what one analyst is thinking about the business.
The investment team at Wilson Asset Management recently held an investment webinar to outline their current thoughts on some holdings and sectors.
Sam Koch, a senior analyst at Wilson Asset Management, was answering a question about whether WAM was looking at any companies in the building and construction sectors. His response:
I guess the sector has been heavily beaten up. Everyone is worried about the macro uncertainty with the housing market falling off a cliff, and the like. We’re actually seeing a number of really interesting opportunities. We’re positive on CSR Group, and Maas Group Holdings Ltd (ASX: MGH), which we’ve talked to in the past, both of which actually have significant property holdings which underpin their valuations and have strong order books as well, which will drive stable earnings over the next few years.
We’ve always looked for an attractive entry point, and there’s no better one than when everyone’s worried about the housing market. So we’re seeing a number of really interesting opportunities given the macro uncertainty.
At the end of June 2022, CSR announced an on-market share buyback of up to $100 million. This is in addition to the company’s existing dividend policy. Keep in mind that share buybacks can be supportive of the CSR share price.
CSR CEO and managing director Julie Coates explained that the building products side of the business continues to perform well, with improved operational and customer outcomes across diversified market positions. Its investment plans are to lift capacity, improve performance and drive growth.
Coates said that its “robust balance sheet and strong operational performance” allow it to invest in growth while also increasing returns to shareholders through the buyback.
CSR Chair John Gillam said:
CSR has a strong balance sheet, which supports continued investment in the growth and performance strategy for our building products business. We are also progressing major property development projects that will deliver short and long-term earnings, alongside the hedged aluminium position. This highlights CSR’s strength and prospects for the coming years.
A few months ago, the ASX 200 share outlined the strong pipeline of detached housing projects. CSR expects this to continue in the year ahead as completion times lengthen.
In FY23, the company expects its property division earnings before interest and tax (EBIT) to be around $52 million. In aluminium, it has a significant hedge position. It indicated an earnings range for FY23 between $33 million to $49 million based on the current pricing and cost scenarios. Significant aluminium price and cost volatility are expected to impact the final result.
Over the last month, ASX 200 share CSR’s price has dropped around 2%.
Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
Is FBR considering a capital raising while Brickworks is thinking about a takeover bid?
Brickworks shares are having a strong day. Here's why...
Shares are dropping amid the company raising $2.5 billion for a stake in the Skyway Concession company.
Why is the Atlas share price on ice?
Rising interest rates and geopolitical tensions are shaking up tomorrow’s potential stock winners.
Qantas has released its 2022 sustainability report. Here are the details.
Are these two businesses about to build a closer partnership?
DGL shares are severely in the red this week amid the company posting a generally positive FY22 earnings card yesterday.
In this FREE STOCK REPORT, Scott Phillips, and his team at Motley Fool’s Share Advisor have released a special free report, detailing 5 ASX stocks that they think could be fantastic stocks to own as investors prepare for their retirement.
Sign Up for Take Stock Investment news, stock ideas, and more, straight to your inbox.
Get Started Investing You can do it. Learn about investing with our Investing Education hub.
Win at Retirement Our latest articles and strategies for the post-work life you want.
Listen to Our Podcast Hear our experts take on shares, the market & how to invest.
Join Our Premium Community Join our flagship membership service, Share Advisor.
To make the world Smarter, Happier, And Richer
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show and premium investing services. The Motley Fool launched its Australian presence in 2011, and since then has grown to reach over 1 million Australians.
Read more about us >
This Service provides only general, and not personalised financial advice, and has not taken your personal circumstances into account. The Motley Fool Australia operates under AFSL 400691. For more information please see our Financial Services Guide. Please remember that investments can go up and down. Past performance is not necessarily indicative of future returns. The Motley Fool Australia does not guarantee the performance of, or returns on any investment.
© 2010 - 2022 The Motley Fool Australia Pty Ltd. All rights reserved.
Australian Financial Services Licence (AFSL): 400691
The Motley Fool Australia, PO Box 104, Isle of Capri, Qld 4217
Contact Details: Phone: (03) 8592 4841 Email: [email protected] Our friendly customer service team will happily get back to you as soon as they can.