Brambles (BXB) Update

Submitted by Share Trading on 28 March, 2008 - 12:19

Brambles (BXB) has an outperform recommendation and a 12 month share price target of $12 from the analyst: Macquarie Research Equities.

BXB: A Defensive Global Logistics Firm

Macquarie Research Equities (MRE) reinforces the notion that Brambles (BXB) is a defensive stock largely due to the exposure the firm maintains to the Fast Moving Consumer Goods (FMCG) sector. This predication was also underpinned by the company’s 1H08 results with CHEP Americas and CHEP Europe both delivering results that seemed to oppose a slowing global economy. BXB also comprises a new management team and the market will be firmly focused on their untested ability to deliver on its strategy growth…

The Team & Market Focus

BXB management team encompasses a new CEO, CFO, chairman, secretary and group presidents for CHEP and Recall. Hence the market will be somewhat focused on the team’s ability to deliver the firms’ growth strategy. Despite the new team, aging pallet pool and emerging competition, CHEP’s 75% exposure to the defensive FMCG sector and sheer scale should protect it from wholesale market share losses due to the capacity constraints of its competitors.

Action & Recommendation

MRE maintain an Outperform recommendation on the stock with a 12-month price target of $12.00. The impetus behind the firms success will hinge on the continued momentum in the US, driven by new customer wins despite concerns over a slowdown in the US economy. MRE also indicate that Asciano (AIO) is likely to sell off its 3.44% stake in the company within the next few months, a major hindrance in the share price will be removed.