Brickworks Limited (BKW), headquartered in Horsley Park NSW and operating throughout Australia and New Zealand, is our largest brick manufacturer, consisting of four divisions: Building Products Australia, Building Products North America, Industrial Property and Investments. Investments represent a 39% interest in Washington H. Soul Pattinson [1]. This long-standing investment has provided a stabilizer to the often volatile Building Products earnings stream. Brickworks has developed industry property assets in conjunction with its partner the Goodman Group [2].
“Brickworks recently presented to the Morgans network,” Raymond said.
“Overall, the presentation was positive, with management pointing to an incrementally improved outlook for the Australian residential housing market (and in turn the Australian brick business), along with the industrial real estate market that should continue to see rental growth offset cap rate expansion.
“That aside, it has caused us to temper our expectations for property revaluation growth in financial year 2024/25.
“This note sees us set our terminal cap rate assumptions at c.4.8% (previously 4%) for the Industrial Property JV by c.2HFY25.
“This non-cash adjustment has adversely impacted our forward earnings forecasts.
“We retain our ADD rating, with our target price remaining broadly unchanged at $26.10/sh (previously $26.25/sh).
Brickworks (BKW) – April 18 to April 23
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