Ann: Investor Presentation May 2023, page-25

MoneyTalks: Why Goldman Sachs has slapped Buy recommendations on Maas Group

Residential property a tailwind for Maas GroupGoldman Sachs has slapped a Buy rating on Maas Group (ASX:MGH), with a 12-month price target of $3.85 (versus current price of $2.52).Listed on the ASX in 2021, Maas was founded by former fringe South Sydney Rabbitohs first grader Wes Maas, who played a few games for the club in 2002.Maas Group provides construction materials, equipment and services with diversified exposures across the civil, infrastructure, mining and real estate markets.Following MGH’s investor day in June where the company revised its FY23 guidance from $150m-$180m to $150m-$165m, Goldman has downgraded its view on MGH.“We believe that the near-term residential environment will likely remain choppy until purchasers can gain greater comfort in the rate outlook,” said Goldman.However, despite this challenging near-term environment, Goldman says it remains positive on the fundamental strength of MGH’s real estate division given various factors at play including a severe shortage in the Australian housing market.“Furthermore, MGH outlined its strategy to recycle capital in its Commercial real estate business, with $70m of opportunities identified and expected to be realised in FY24,” said the broker’s note.Meanwhile, MGH’s Civil Construction & Hire (CCH) and Construction Materials (CM) segments are performing well, benefiting from strong spending on infrastructure and renewable energy.“Pricing has generally improved across CM, helped by industry leader Boral exercising pricing rationality under their new leadership,” Goldman said.Overall, the broker has revised its FY23, FY24 and FY25 EBITDA guidance for MGH to -11%, -5% and 1% respectively from yesterday’s figures based on lower near-term residential real estate settlements.“However, we continue to see MGH as being valued as an ex-growth industrial stock, with the market focused only on near-term headwinds.“We believe MGH’s valuation is missing the defensive infrastructure and renewables exposures of the CCH and CM segments; and the latent value realisation opportunity as its land bank is developed over time.”