UBS resumes coverage after a period of restriction. The company has announced net profit for the first five months of FY19 was down -42.4% and has removed its FY19 guidance. The main drivers of the underperformance are Grays and Right2Drive.
These are currently progressing through a sales process, with management confirming potential interest from a number of parties. UBS believes there is material upside potential from current valuation but stresses on the balance sheet need to be addressed.
Addressing these through the sale of the non-core businesses would likely be the most favourable outcome. UBS does not believe the company will breach corporate debt covenants at its first half result.
UBS has a Buy rating with a new target of $1.00, from $4.25 previously.
Sector: Diversified Financials.
Target price is $1.00.Current Price is $0.64. Difference: $0.36 – (brackets indicate current price is over target). If ECX meets the UBS target it will return approximately 36% (excluding dividends, fees and charges – negative figures indicate an expected loss).
