The company’s trading update has signalled net profit is down -42.4%, seven weeks following an update which indicated FY19 should be in line with FY18. Weakness is particularly noted in February.
The company has initiated a -10% reduction in operating costs and identified Right2Drive and Grays are non-core. Macquarie points out, until the company can provide more information to the market, including audited accounts, investors will apply a material discount and corporate activity will be on hold.
Should the company be able to stem the impact, corporate interest may return, the broker surmises. Macquarie retains an Outperform rating as the market reaction appears to have presented an opportunity. Target is reduced to $1.06 from $2.48.
Sector: Diversified Financials.
Target price is $1.06.Current Price is $0.79. Difference: $0.27 – (brackets indicate current price is over target). If ECX meets the Macquarie target it will return approximately 25% (excluding dividends, fees and charges – negative figures indicate an expected loss).
