ABC, page-143

A reason for yesterday’s  price plummet?
(Adbri fell to a low of $2.83 yesterday before closing at $2.88)

cheers

[Go to M. Fool story on website here ]
Top broker warns this ASX 200 share may be next to issue a profit warning

Which company is tipped to be next in line to provide a revised profit downgrade?


Brendon Lau❯
Published April 13, 11:52 am AEST

Key points

• Adverse weather prompted Boral to issue a profit downgrade and Morgan Stanley believes Adbri is next in line to warn of an earnings hit
• The broker downgraded the Adbri share price to “equal-weight” and cut its price target by 20 cents to $3.40 a share
• Morgan Stanley also doesn’t see much upside for Adbri’s peers even though some may be better protected from weather impacts

Corporate earnings have proven to be resilient during these turbulent times, but there may be an S&P/ASX 200 Index (ASX: XJO) share that is about to issue a profit warning.
The company in question is cement and lime producer Adbri Ltd (ASX: ABC), according to Morgan Stanley.
The broker’s pessimistic view follows a profit warning issued by Boral Limited(ASX: BLD) due to adverse weather. Higher energy costs were another headwind.

Dark clouds over the Adbri share price

The devastating floods in New South Wales and Queensland were a blow to the sector. Plus, the bad weather could persist for a while yet — and the same could be true for energy costs.
“The five capital cities collectively recorded higher numbers of rain days in the quarter ending Mar 22 vs prior year’s corresponding period,” Morgan Stanley said.
“The increase in rain days was primarily driven by a wet February and March, particularly in Sydney and Brisbane, which have so far recorded 37 and 23 rain days respectively.”


Not all ASX 200 building shares are built the same

The broker reckons Adbri is most at risk. This is because of its exposure to construction material, which is most impacted by the weather.

What’s more, NSW and Queensland account for around 36% of Adbri’s earnings. For these reasons, Morgan Stanley has cut its FY22 earnings before interest and tax forecast by 5% to $213 million.
This, in turn, prompted the broker to downgrade the Adbri share price to “equal-weight” from “overweight”. It also lowered its 12-month price target to $3.40 from $3.60 a share.