Analyst Note| Mark Taylor |
We maintain our AUD 34 fair value for narrow-moat Ansell following Neil Salmon’s appointment to succeed CEO Magnus Nicolin on Sept. 1, 2021. Salmon first joined Ansell in 2013, serving as CFO for six years before being appointed to lead the industrial global business unit in 2019. While we see little risk in the internal transition, we still expect pricing and volumes for Ansell’s products to normalise as supply eventually catches up with demand. Our long-term estimates are unchanged and consistent with management’s target range of 3% to 5% revenue growth in a normal year. Ansell is also benefitting from operating leverage and lower marketing spend due to travel restrictions, but we don’t think this is sustainable and leave our midcycle EBIT margin forecast of 15% unchanged. Shares continue to screen as overvalued at current levels.