Fletcher Building: Transferring Coverage; Fair Value Estimate Raised 10% to NZD 3.20

We raise our fair value estimate for Fletcher Building by 10% to NZD 3.20 (AUD 2.90) per share, with the transition of coverage to a new analyst. A key driver of the upgrade is a lower weighted average cost of capital, now 9.4% and in line with our other Australasian industrial coverage, from almost 10% previously. We also forecast a 5% increase in midcycle operating income, driven by new acquisitions and strategic growth projects in the building product and distribution segments, and a better-performing Australian business.