Adbri: Valuation Inches Up on Higher Earnings Expectations

We raise our fair value estimate by 5% to AUD 2.00 per share for no-moat Adbri. The company provided an update on the Western Australian Kwinana upgrade project, with fiscal 2023 capital expenditure expected to be about 7% less than previous estimates at the midpoint. Additionally, the company updated earnings guidance. It now expects full-year fiscal 2023 underlying EBITDA of AUD 310 million to AUD 315 million given strong product demand. We lower our fiscal 2023 and 2024 capital expenditure forecasts and lift our fiscal 2023 EBITDA forecast to AUD 310 million from AUD 308 million. Adbri’s share price has risen about 10% since the update and we think it is slightly overvalued now.