A few things are niggling at me:
- How much of the 1Q21 export growth is from the two NZ businesses acquired in 2Q20?
- How much is excessive restocking after the mar-apr collapse and sudden surprise surge in demand?
- What happens to the market multiple when a vaccine is released and the world travel market slowly starts to normalise?
- What happens to the market multiple when growth rates return to long term averages? Or even below long term averages for a few years after the domestic car holiday fad inevitably fades.
- What happens to the market multiple if 10 year gov bond rates rise at some point over say the next 5 years?
- What happens when tradies decide they probably should'nt spend too much more dough on their utes?
The large short-term step up changes in demand, market multiples and exchange tailwinds can easily become gradual step down changes as growth reverts to mean.
I am a bit of a worry wart, but further sustained risk to the upside has to be weighed against the potential for medium term downside risks.
I note the trailing P/E multiple is now higher that CSL's.
ARB Price at posting:
$32.21 Sentiment: None Disclosure: Held
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