Daily ShareChat: Nuplex
By Jenny Ruth
With the recent decline in its share price, resins company Nuplex Industries' shares are looking inexpensive, says Forsyth Barr analyst John Cairns.
He values the stock at $3.63.
"Gobal resin demand is continuing to recover. However, with the exception of Asia, (it) is still tracking below 2008 levels," Cairns says.
"Raw material pricing is increasing and pass-through price increases are being implemented. Nuplex is refocusing its product mix on higher-margin specialist resins," he says.
He is forecasting Nuplex's earnings before interest, tax, depreciation and amortisation (EBITDA) for the year ending June 30 will be $131.4 million compared with the company's reiterated guidance of between $125 million and $135 million.
European demand is recovering but the impact of European fiscal austerity measures is far from clear, he says. Australasian demand is also continuing to recover, although volumes are still below prior year levels.
"Nuplex is continuing to move its product mix to higher specification resins, driven in part by regulations limiting toxicity and the ongoing commitment to develop new technologies in-house," Cairns says.
"The transition to new technologies and the reduction in low-margin resin sales is driving higher average margins."
Nuplex's extensive restructuring during the global financial crisis has resulted in a lower fixed cost base, he says.
Recommendation: Accumulate (raised from hold).
DISCLAIMER: To the extent that any of the content above constitutes advice, it is general advice that has been prepared without reference to investor’s objectives, financial situation or needs. Before acting on any advice, investors should consider the appropriateness of the advice and IRG recommend that investors should obtain appropriate financial, legal and taxation advice before making any financial investment decision. The report is based on information compiled from public information and private research. IRG have completed the report on a best endeavours basis and do not accept any liability of loss or damage. IRG suggest that clients use this as part of a decision making process and check key data before making any investment decisions.
Employees may have an interest in the securities discussed in this report.
Comments from our readers
No comments yet
Add your comment:
Nuplex cuts FY guidance again as Australian manufacturing splutters; stock drops
Nuplex 1H profit misses forecasts; annual guidance cut on strong kiwi, weak trading conditions
Nuplex looks at imputing future dividends, flags increased earnings
Nuplex plans restructuring in Australia, NZ to cut 2013 profit
Nuplex FY profit falls, guidance met
Nuplex raises US$105M in US private placement
Nuplex sees full-year earnings at bottom of range
Nuplex 1H profit drops 23% on Australasian weakness
Nuplex enters Russian joint venture
Nuplex shares plunge 7.8% after profit warning