DAVY VIEW

The momentum seen at Hill & Smith (HILS) in the first four months of FY24 continued into May and June, driven by US infrastructure tailwinds. H1 adjusted EBITA was ahead of our upwardly revised estimate, although the Board has maintained full year guidance. While slightly disappointing, there are no small upgrades at this point; given the mixed US macro data and FX volatility, this is understandable. We see little scope for consensus movements today but note the high-top end range. The strong EBITA margin improvement in H1, up 120bps to 16.2%, makes a new target of 16%, or even 17%, look more likely in the near term. We reiterate our ‘Outperform’ rating and 2,350p price target.