EMECO HOLDINGS LIMITED (EHL)
Share Price Analysis and Chart

23/08/2024

1

Outperform

$1.18

59.46%

Emeco Holdings' FY24 operating earnings were largely in line with Macquarie. Margins were up on increased higher-margin earnings from rental, decreased low margin earnings from underground and better cost and contract management.

Emeco's strategy of focusing on its core rental business, return on capital and free cash flow is gaining momentum, the broker suggests. The company is making good progress refocusing on the core rental business, improving returns on its assets and reducing contractual risk.

Target rises to $1.18 from $1.03, Outperform retained.

FORECAST
Macquarie forecasts a full year FY25 dividend of 0.00 cents and EPS of 14.60 cents.
Macquarie forecasts a full year FY26 dividend of 4.70 cents and EPS of 15.80 cents.

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28/08/2024

3

Downgrade to Neutral from Overweight

$0.85

14.86%

FY24 EBITDA from Emeco Holdings was largely in line although Jarden notes the negative response from the market was driven by the increased uncertainty in the outlook.

This is particularly apparent in guidance for higher depreciation and the increased growth required from rental to replace underground earnings.

The company has fleshed out a three-year plan to improve its return on capital to a target of 20% by FY26, from 15% in FY24. In the near term priorities, remain with generating greater returns from capital already invested in the core fleet.

While remaining positive, Jarden believes the benefits from initiatives must be demonstrated over FY25 to provide upside to its current investment view and the rating is downgraded to Neutral from Overweight. Target is reduced to $0.85 from $0.90.

FORECAST
Jarden forecasts a full year FY25 dividend of 0.00 cents and EPS of 12.60 cents.
Jarden forecasts a full year FY26 EPS of 14.80 cents.