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DRC [MARKET PERFORM +5.5%] - Capex cycle reaching end but depreciation starts to drag - Update

Company Research

29 Nov 2018

We upgrade DRC to MARKET PERFORM with a projected TSR of 5.0%, despite raising our target price only 4.8%, as DRC’s stock price has fallen 23% in the last three months. Our revised TP mainly reflects our DCF roll-over, amplified by the end of DRC’s major capex cycle in 2018, and increasing our DCF valuation weighting to 100% from 90%. On the other hand, we increase our G&A/revenue assumption from 2020 onward as we believe DRC will lift wages when NPAT starts to increase in 2020.
Tags: DRC

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