DAVY VIEW

We expect no change to current year underlying forecast assumptions following Grafton’s trading update. This may not come as a surprise but is a decent outcome at the present time and we sense the balance of risk may be tilting towards the upside. In any case Grafton, with its diversified portfolio, market-leading businesses, astute management of capital and cash rich balance sheet, remains well placed once market conditions finally become more favourable. However, the stock continues to trade at a low multiple of what we think will prove to be bottom-of-the-cycle earnings. This is harsh, and we continue to believe Grafton offers good value at current levels.