The pre-released 1H21 earnings (EBITDA) rise of 168% was driven by strong demand, cost-out and new products and businesses, explains Morgans. Also, tight inventory and material margin expansion were considered contributors.
Dividends (interim of 10 cents) recommenced according to the 50-70% payout policy and management noted demand strength and inventory constraints have continued into the 2H.
The Hold rating is retained and the target is decreased to $2.70 from $2.86 as FY22 is now included in forecasts. Demand conditions are expected to have normalised by then, explains Morgans.
Sector: Retailing.
Target price is $2.70.Current Price is $2.48. Difference: $0.22 – (brackets indicate current price is over target). If MTO meets the Morgans target it will return approximately 8% (excluding dividends, fees and charges – negative figures indicate an expected loss).
