Building products and property business, CSR Limited (ASX: CSR), has provided an upbeat half-year report to shareholders today, showing solid increases across a number of metrics.
Here're five key takeaways from the group's half-year report ended 30 September 2015:
- Revenue rose 14% to $1,144.5 million
- Net profit rose to $77.6 million
- An interim dividend of 11.5 cents (unfranked) was announced
- Earnings per share rose 13.2% to 15.4 cents; and
- The full-year outlook is for higher profits
CSR's Building Products business achieved EBIT (earnings before interest and tax) pre-significant items of $89.9 million, up from $63.1 million in the prior corresponding period. The improved result was put down to higher volumes and increased margins.
Aluminium profit (pre-significant items) rose a healthy 32% to $54.7 million on improved smelter performance and currency tailwinds.
The Property business was the only division to report a fall in EBIT, but this may be more a timing issue than anything because the group said, "CSR's effective tax rate for the half year was 25.7%, a decrease from 29.2% in the previous corresponding period… The decrease in the effective tax rate was mainly due to timing of property transactions, with certain property sales concessionally taxed." The company's full-year tax rate is expected to be around 27%.
The group's interim dividend of 11.5 cents per share represents a payout ratio of 63%; it will be payable 15 December 2015. CSR said the unfranked dividend fell comfortably within its targeted range of 60% to 80% of full year profit.
Outlook
Looking towards its full year, CSR said it expects, "that group net profit after tax (pre-significant items) for [the financial year] 2016 will be higher than the previous financial year and will be towards the upper end of the current range of analysts' forecasts of $128 million to $162 million (pre-significant items)."
Buy, Hold or Sell
CSR shares flew almost 10% higher on today's upbeat profit performance and guidance. However, according to analysts polled by The Wall Street Journal, CSR's fair value is $3.33 per share. Unfortunately, with CSR shares trading near $3.20, the margin of safety appears too small to justify an investment.
However, if you're bullish on housing markets, other stocks to consider adding to your watchlist are James Hardie Industries plc (ASX: JHX), Boral Limited (ASX: BLD) and Brickworks Limited (ASX: BKW).
