Citi updates US cost data to account for a reversal in the decline in lumber prices. Transport rate inflation remains modest, which the broker expects will provide a tailwind for costs from the second half.
Organic volume trends for US food & beverage retailers remain solid and should underpin revenue growth. Citi forecasts flat CHEP Americas underlying margins in the first half.
The broker acknowledges competition will need to remain rational in order to realise the benefits from lower inflation in FY20. Buy rating and $13.30 target maintained.
Sector: Commercial & Professional Services.
Target price is $13.30.Current Price is $12.35. Difference: $0.95 – (brackets indicate current price is over target). If BXB meets the Citi target it will return approximately 7% (excluding dividends, fees and charges – negative figures indicate an expected loss).
