Sunday 22 September 2019

'Negative valuation' claim for CRH European assets

'One market source claimed that the Redburn approach was
'One market source claimed that the Redburn approach was "questionable", particularly the negative multiple for a business generating ebitda of €1bn' (stock photo)
Samantha McCaughren

Samantha McCaughren

The current market valuation of CRH is putting a negative valuation on the group's European and Asian assets, according to new analysis of the company.

Redburn, a British equity research house, did a 'sum-of-the-parts' evaluation of the business, comparing the larger divisions with listed peers to get an estimated breakdown.

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After estimating the multiples being applied to CRH's Americas Materials division and its Americas Products division, it concluded that, "incredibly", the rump valuation for the European and Asian assets owned by the firm had moved into negative territory, "at -1.3 times enterprise value/ebitda". Redburn said: "If the European and Asian assets were small, this would matter little.

"But they are forecast to deliver €1.15bn of ebitda, and €1.25bn in 2020."

However, a new note from UBS has placed robust valuations on all of CRH's business divisions.

One market source claimed that the Redburn approach was "questionable", particularly the negative multiple for a business generating ebitda of €1bn.

UBS said it believed the market was pricing in only a very modest margin improvement for CRH "not anywhere near the company's targeted 300bps target".

Sunday Indo Business

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