Brambles faith to be rewarded ?

It’s been a long hard slog for Brambles shareholders these last couple of years, with even the most loyal questioning their faith in management’s ability to glean the inherent value from the company’s CHEP business, but according to analysts at SB Citigroup, that leap of faith may now be narrowing.

Following meetings with management, competitors and participants, the analysts are now more confident that the CHEP recovery is sustainable and they feel that if the company can deliver the returns the “high quality” asset base should be generating then it could be trading above $9.00 within the next two years.

For the first time in five years, the broker points out, the company is in a profit upgrade cycle with the key variables seen as CHEP pricing, capex assumptions, cashflow and currency fluctuations.

Following the meetings, the analysts have lifted their FY05 profit forecasts by 4.5% and FY06 by 4.9, after upgrading CHEP UK revenue growth numbers, and using slightly lower USD, EUR assumptions.

The broker’s 12 month target has also been increased by 7.9% to $8.30, while the analysts point out that the company’s Sydney AGM on November 16 is the next key date for the stock.