Growth Portfolio: Fleetwood Corporation Ltd (ASX: FWD)

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Published 15-JUN-2017 00:00 A.M.

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2 minute read

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Overview: Fleetwood Corporation Limited ("Fleetwood", "the Company") is an Australian consumer company focused on recreational vehicles (‘RV’) and housing solutions. Fleetwood‘s RV business includes the manufacture and sale of caravans, parts, and accessories. In addition, the company supplies transportable homes and modular buildings for the residential, education, tourism, and resource sectors.

Catalysts: Fleetwood is showing early signs of a turnaround following a number of restructuring initiatives that were designed to simplify the operating model whilst reducing capital expenditure. Recent management changes and a renewed focus on key growth markets have helped the company lift revenue in every half-year period since 2H15. Continuation of the recent trajectory may enable management to reward shareholders via capital management initiatives as early as FY18.

Hurdles: The Company’s recreational vehicle business has experienced operational challenges which resulted in downgrades and impairment charges. Earnings have been lumpy and there is no guarantee that the mixed trend won’t continue. Further deterioration in business activity may restrain management from creating shareholder value and further dilution appears inevitable.

Investment View: Fleetwood offers transitional exposure to demand affordable housing solutions and recreational vehicles. We are attracted to recent management changes and Fleetwood’s improving operational performance. However, the company experienced operational challenges during the past few years and there is no guarantee the recent recovery is sustainable. As the business stabilises, a return to positive EBITDA may see the reintroduction of a dividend that ceased in 2014. Seeking to monitor recent business momentum and acknowledging the company's 'turnaround' potential, we initiate coverage with a ‘buy’ recommendation.



General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

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The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

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