We Expect Fletcher to Achieve Its 10% EBIT Margin but Question Whether It Can Be Maintained

We maintained our NZD 6 (AUD 5.70) per-share fair value estimate for no-moat Fletcher Building following the release of half-year results. While we maintained our fair value estimate, we’ve increased our fiscal 2022 and 2023 EBIT forecasts by 4% and 9%, respectively. We anticipate Fletcher will achieve its 10% EBIT margin target in fiscal 2023 with solid progress made toward this goal over the remainder of fiscal 2022. Our fiscal 2022 EBIT forecast is consistent with guidance of NZD 750 million and our fiscal 2023 EBIT forecast of NZD 871 million represents an EBIT margin of 10%.