GWA’s Stock Climbs Up On The Day Of 2018 Annual General Meeting

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GWA’s stock price is pushing higher on the day of it Annual General Meeting held today in Sydney. At the time of writing, 26 October 2018 (2:13 PM AEST), GWA stock has edged up 0.969% or $0.025 to trade at $2.605.

Shareholders have given a green card to grant up to 220,000 performance rights to Managing Director Mr. Tim Salt and up to 45,000 rights to acquire GWA’s shares to the Executive Director Mr. Richard Thornton. But when the company proposed to increase remunerations of Non-Executive Directors from $1,095,000 to $1,350,000 p.a., shareholders were not completely satisfied as 11.26% shareholders voted against the pay hike.

Further, the group informed that review of executive remuneration is currently underway with the results to be announced by the end of calendar year 2019.

Chairman Darryl D McDonough stated that proposed modification in pay structure is to ensure that GWA’s remuneration policies are well in line with the industry standards. 

In the trading update for first quarter of FY19, the company informed that Bathroom & Kitchen sales has gone up 2% on prior corresponding period while EBIT margins are maintained at 21.2%. During September 2018, GWA has pushed the prices up and hedged ~77% to 30 June 2019 at US$77.3 cents. Further, the group aims to achieve identified cost saving of $9 million – $12 million over three years, i.e. Fiscal 2019 to Fiscal 2021.

To set the standard for innovation in the bathroom space GWA has recently launched Caroma Smart Command which provides an intelligent bathroom solution, enhancing water conservation. The company plans to increase its investments in this intelligent bathroom system during Fiscal 2019.

Market is expected to remain relatively resilient with continued momentum in New South Wales and Victoria that can partially offset the slower conditions in Queensland, Western Australia and New Zealand.

Furthermore, in Fiscal 2018 the group has delivered increased earnings per share third time in a row. This translates 4.3% growth in EPS of 21.2 cents underpinned by profitable gains in the market share.  Bathrooms & Kitchens segment has been the highlight, it has outperformed all the other segment of the group with $1.4 billion addressable market. Going forward, the group intends to draw its complete focus on Bathrooms & Kitchens so that it can get benefitted from the emerging growth opportunities.

Meanwhile, GWA Group (ASX: GWA) has divested its Door & Access System business for $107 million so that it can focus on water solutions in the commercial and consumer segments. Net profit after Tax (NPAT) during FY18 climbed to $56.0 million, up 4.3% on FY17. This led full year dividend to increase for the third consecutive year to $0.18 per share.

On balance sheet front, GWA has presented strong financial position with substantial headroom of $225 million syndicated banking facility, maturing in October 2020. As at 30 June 2018, company’s net debt was $97.7 million, providing financial flexibility to invest in strategic organic and inorganic growth initiatives.

GWA closed at $2.610 with PE of 12.520 x and market capitalization of $680.98 million as on 26 October 2018. The stock has seen a performance change of -3.01% over the past one year.


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