2Q Operational Update and Trading Statement
Key message: DIY products have experienced a remarkable uplift over the last six months, with activity levels holding up strongly over December.
- Cashbuild released a 2Q Operational Update and Trading Statement.
- Revenue for 2Q FY21:
- Group: +21% (existing stores +19% new stores +2%)
- Cashbuild SA: +23% (existing stores +21% new stores +2%)
- Cashbuild CM: +27% (existing stores +26% new stores +1%)
- Cashbuild Other: +24% (existing stores +25% new stores -1%)
- P&L – flat (existing stores -2% new stores +2%)
- Selling inflation was 4.5%.
- Sales through P&L continue to be disappointing.
- HEPS is expected to be up by at least 100% (to 1525c) for 1H FY21.
- Cement producers have confirmed that strong demand continued through December and Cashbuild may have grown market share in this sector as blenders have struggled for raw materials (Cashbuild sells product from integrated producers only).
- We update our forecasts on the back of this positive operational update. The DIY/small construction momentum has continued strongly through the last six months of 2020.
- We increase our diluted HEPS forecast for Cashbuild to 2677c for FY21 (from 1780c) and increase our Target Price to R300 (from R229). We consequently upgrade to on Overweight recommendation (from Neutral).
- The TCB acquisition should start to contribute from 2H FY21.