Macquarie reduces forecasts as follows (it had previously been way above consensus):
FY22 EBITDA: $314m NPAT: $176m
FY23 EBITDA: $324m NPAT: $179m
Points out that on an EV/EBITDA multiple, SWM is trading at half the valuation of NEC, so opportunity for ongoing re-rate.
Believes that the biggest negative to the half-year results was the failure to pay a dividend, especially since Management had previously indicated that dividends would be suspended until refinancing of the debt facility, and this was completed in October 2021.
Now believes that it will embark on a $100m share buyback (would take debt/ebitda to 1.3x from the current 0.9x, and still be in the target band of 1.0 - 1.5x).
Lifts its valuation from 91c to 92c and rates Outperform.
SWM Price at posting:
69.0¢ Sentiment: Buy Disclosure: Held
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