DAVY VIEW

Grafton’s revenues have recovered much quicker than anticipated and current trends are encouraging. This informs our revised trading profit forecast of £108m for this year. While over 40% higher than our previous estimate, this would still represent a year-on-year fall of 47%. The group’s recovery should continue into next year with trading profit for 2021 forecast at £163m (prior estimate: £159m) with EPS of 47p (previous estimate: 45p). The latter puts Grafton on a 2021 P/E multiple of 14.5x. This is not overly demanding, especially given Grafton’s considerable financial optionality, but our view remains that the group’s share price will continue to track its peers in the next while.