Corporate Action: Fletcher’s Equity Raise Dilutes Owners, but Tames Risk; Take Up Rights Offering

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Equity Bottom-Up

We have cut our fair value estimate to NZD 7.10 from NZD 8.00, following a 15% downgrade to fiscal 2017 earnings guidance and a reassessment of longer-term profit margins. Fletcher Building is now guiding to EBIT of NZD 610-650 million from NZD 720-760 million previously due to estimated losses within the building and interiors segment of the construction division which makes up 20% of earnings. While Fletcher’s core building products and distribution divisions, 40% and 27% of earnings, respectively, continue to trade in line with management’s expectations, these losses are disappointing, given earnings guidance was provided just four weeks ago.The downgrade reflects poorly on management, highlighting inadequate reporting systems and design and subcontractor challenges across two projects. Despite this, we expect the broader construction division to remain profitable in 2017 and 2018, reflecting the strength of the current order book and moves under way to boost profitability.Analyst: Tim Mann

We have cut our fair value estimate to NZD 7.10 from NZD 8.00, following a 15% downgrade to fiscal 2017 earnings guidance and a reassessment of longer-term profit margins. Fletcher Building is now guiding to EBIT of NZD 610-650 million from NZD 720-760 million previously due to estimated losses within the building and interiors segment of the construction division which makes up 20% of earnings. While Fletcher’s core building products and distribution divisions, 40% and 27% of earnings, respectively, continue to trade in line with management’s expectations, these losses are disappointing, given earnings guidance was provided just four weeks ago.The downgrade reflects poorly on management, highlighting inadequate reporting systems and design and subcontractor challenges across two projects. Despite this, we expect the broader construction division to remain profitable in 2017 and 2018, reflecting the strength of the current order book and moves under way to boost profitability.Analyst: Tim Mann

Cutting Fletcher Building's FVE To NZD 7.10 Due To Construction Losses; Shares Overvalued