Equity Analysis /
Australia

AU : Reliance Worldwide - Toughing it out

    Alexander Lu
    Alexander Lu

    Analyst - Industrials

    CGS-CIMB
    1 May 2022
    Published by

    RWC’s 3Q22 trading update overall was weaker than we expected, with sales growth broadly in line but underlying EBITDA was impacted by higher costs despite the company’s efforts to mitigate through price rises. Divisional EBITDA growth (3Q22 YTD): Americas -0.5%; APAC (in AUD) -6.1%; EMEA (in GBP) -5.1%. Management said demand remains strong in most markets with ongoing price rises applied to offset cost inflation. We decrease FY22-24F underlying EBITDA by 7% and underlying NPAT by 9%. Our target price falls to $4.83 (from $5.30) and we maintain our Add rating.