BLX provided FY21 NPAT guidance of A$35.5-37.5m. The provision of guidance this early suggests to us enough profit was banked in the first four months of 2H21. Persistently strong trading momentum, higher GM and contained costs all contributed to the stronger-than-expected guidance. We are prepared for LFL sales growth momentum to move into negative territory as extreme comps start to be cycled. However, we expect/forecast two-year stack growth will remain significantly above 2019 levels which is key. BLX looks healthy with a robust balance sheet, housing/trade tailwinds and growth options outside of pure retail. We see an eventual normalisation of earnings occurring at levels well above pre-COVID. A$2.01 PT; Hold rating.
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