James Hardie’s FVE Raised 4% to AUD 35.40; Outlook for Fiscal 2023 Is Strong

We increase our fair value estimate for narrow-moat James Hardie by 4% to AUD 35.40 (USD 26.00) per share following the release of third-quarter results. Hardie had previously released fiscal 2022 guidance, so the strong third-quarter results were anticipated. However, the fibre cement siding company provided incremental guidance for fiscal 2023, which materially exceeded our prior forecast. Our fiscal 2023 net income forecast is increased by 19% to USD 770 million, sitting slightly below the midpoint of management’s USD 740 million-820 million guidance. The strength of the U.S. residential housing market and Hardie’s success in shifting its sales mix toward higher-value products being the predominant drivers of the uplift. We also slightly increase our full-year fiscal 2022 net income forecast by 2% to USD 626 million, toward the midpoint of management’s upwardly revised full-year guidance of USD 620 million-630 million. At our updated fair value estimate, shares in Hardie continue to screen at a material premium.