Portfolio Revaluations and Improved Housing Outlook Drive FVE Increases for WHSP and Brickworks

Having reviewed our sum-of-the-parts valuations for Brickworks and Washington H. Soul Pattinson, or WHSP, we increase our per share fair value estimates for the no-moat-rated names to AUD 17.70 and AUD 19.00, respectively. The upgrade to Brickworks’ fair value estimate represents a 9% uplift relative to our prior valuation and is the result of an improved near-term outlook for Australian housing starts and our increased valuation of WHSP. WHSP is Brickworks’ largest contributor to its valuation--accounting for an approximate 60% of Brickworks’ enterprise value--by virtue of the cross-shareholding between Brickworks and WHSP. Modest increases to the valuation of a number of WHSP’s long-term holdings drive the 2% upgrade to our WHSP valuation. While Brickworks’ shares screen as approximately fairly valued, trading at a slim 3% discount to our revised valuation, WHSP shares screen as materially overvalued, trading at a sizable 45% premium to our revised fair value estimate.