Hansen: Initiating With a Fair Value Estimate of AUD 3.85 and a Narrow Moat Rating

We initiate coverage on Hansen with a fair value estimate of AUD 3.85 per share and a narrow economic moat rating. We view Hansen as a company whose products have high switching costs and whose customers are of high quality. However, we see limited organic growth opportunities nor do we expect meaningful contribution from inorganic growth opportunities. We forecast revenue to grow organically at a 10-year CAGR of 4% over the next decade and EBIT margins to remain flat at 18%. We use a weighted cost of capital of 8.7%. We assign Hansen a Morningstar Uncertainty Rating of Medium and a Capital Allocation Rating of Standard.