Reece Ltd
ASX:REH
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Intrinsic Value
The intrinsic value of one REH stock under the Base Case scenario is 18.13 AUD. Compared to the current market price of 22.63 AUD, Reece Ltd is Overvalued by 20%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
Valuation Backtest
Reece Ltd
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Fundamental Analysis
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Reece Ltd. is a premier Australian distributor of plumbing and bathroom supplies, strategically positioning itself as a vital partner in the construction and renovation sectors. Founded in 1919, the company has transformed from a local plumbing business into a national powerhouse, boasting an extensive network of over 600 branches and a comprehensive online platform. Reece has built a reputation for quality and service excellence, catering not only to trade professionals but also to individual consumers seeking high-quality products. As the market experiences robust growth driven by population increases and infrastructure development, Reece stands out for its strong customer loyalty and inno...
Reece Ltd. is a premier Australian distributor of plumbing and bathroom supplies, strategically positioning itself as a vital partner in the construction and renovation sectors. Founded in 1919, the company has transformed from a local plumbing business into a national powerhouse, boasting an extensive network of over 600 branches and a comprehensive online platform. Reece has built a reputation for quality and service excellence, catering not only to trade professionals but also to individual consumers seeking high-quality products. As the market experiences robust growth driven by population increases and infrastructure development, Reece stands out for its strong customer loyalty and innovative approach to inventory management, allowing it to capture significant market share in both residential and commercial sectors.
Investors should be particularly drawn to Reece Ltd.’s commitment to sustainability and technological advancement, as the company invests in smart logistics systems and environmentally-friendly product lines. This forward-thinking strategy not only aligns with global trends toward sustainability but also enhances operational efficiency and drives profitability. With a robust financial position characterized by consistent revenue growth and strategic acquisitions, Reece remains well-equipped to navigate market fluctuations and capitalize on emerging opportunities. As the company continues to expand its footprint and adapt to evolving consumer needs, investing in Reece Ltd. represents a compelling opportunity for those looking to tap into the growing infrastructure and construction markets in Australia.
Reece Ltd is a leading Australian distributor of plumbing, bathroom, and HVAC (heating, ventilation, and air conditioning) products. The company operates primarily in the following core business segments:
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Plumbing: This segment includes the distribution of a wide range of plumbing products such as pipes, fittings, fixtures, and tools. Reece caters to both residential and commercial plumbing markets, providing solutions for new constructions, renovations, and maintenance.
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Bathroom Products: Reece offers a variety of bathroom supplies, including taps, showers, toilets, basins, and bathing products. This segment focuses on catering to customer preferences for aesthetics and functionality in bathroom design.
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HVAC: In the HVAC segment, Reece provides heating and cooling solutions, which include heating systems, air conditioning units, and ventilation products. The company services contractors and builders involved in the construction of residential and commercial properties.
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Trade and Services: Reece not only sells products but also provides trade services tailored to the needs of plumbing and HVAC professionals. This includes support with procurement, project management, and product specifications.
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Online Sales and Digital Services: The company has embraced digital transformation, offering a strong online presence where customers can browse products, manage orders, and access resources. This segment has gained importance as e-commerce continues to grow within the industry.
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Sustainability and Innovation: Reece is also focused on sustainability initiatives and innovative products that respond to market demands for environmentally friendly options. This includes offering energy-efficient and water-saving solutions.
Together, these segments form a comprehensive business model that positions Reece Ltd as a key player in Australia’s plumbing and building supplies market. The company's emphasis on customer service, product range, and digital tools supports its competitive advantage and growth strategy.
Reece Ltd, a leading supplier of plumbing and bathroom products in Australia and New Zealand, possesses several unique competitive advantages over its rivals:
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Strong Brand Recognition: Reece has established a well-recognized brand synonymous with quality and reliability in the plumbing industry. This brand equity helps retain existing customers and attract new ones.
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Comprehensive Product Range: The company offers an extensive range of products from plumbing supplies to bathroom fittings, catering to diverse customer needs. This one-stop-shop model simplifies the purchasing process for contractors and homeowners alike.
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Strategic Locations: Reece operates a wide network of branches across Australia and New Zealand. This extensive geographical presence enables quick service delivery, better customer relations, and localized marketing efforts.
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Investment in Technology and Innovation: Reece embraces technology through e-commerce platforms and an advanced inventory management system. Their focus on digital transformation enhances customer experience and operational efficiency.
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Strong Relationships with Suppliers: Reece has established long-standing relationships with various suppliers, allowing them to secure quality products at competitive prices. This advantage helps them maintain price competitiveness and product availability.
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Customer-Centric Approach: The company emphasizes customer service, offering expert advice and support to contractors and tradespeople. This commitment fosters loyalty and repeat business.
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Sustainability Initiatives: Reece is increasingly focusing on sustainable practices and environmentally-friendly products. This not only meets the growing consumer demand for sustainability but also differentiates them from competitors who may not prioritize these aspects.
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Training and Development Programs: Reece invests in training programs for its staff and customers, particularly tradespeople. By providing educational resources, they strengthen their customer relationships and enhance their own workforce skills.
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Financially Strong: With a robust financial position, Reece can invest in growth opportunities, new technologies, and expansion strategies that competitors may struggle to pursue.
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Market Positioning: By targeting both the professional trades and DIY markets, Reece can capture a broad customer base, providing stability against economic fluctuations in either segment.
These competitive advantages, combined with a focus on continuous improvement and adaptation to market trends, position Reece Ltd favorably against its rivals.
To assess the risks and challenges Reece Ltd may face in the near future, we would typically consider several factors:
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Market Competition: The plumbing and bathroom supplies industry can be highly competitive. New entrants and existing competitors may erode market share, necessitating ongoing investment in marketing and innovation.
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Supply Chain Disruptions: Ongoing global supply chain issues can impact the availability of materials, leading to delays and increased costs. Dependence on suppliers can also expose the company to risks related to quality and reliability.
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Economic Downturns: A slowdown in the economy or housing market could lead to reduced demand for construction and renovation services, directly affecting sales.
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Regulatory Changes: Changes in building codes, environmental regulations, or trade policies can create compliance challenges or necessitate adjustments to operations.
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Technological Advances: The rapid pace of technological advancement may require Reece Ltd to innovate continually or risk becoming obsolete. Adoption of new technologies may be costly.
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Labor Market Challenges: Finding and retaining skilled labor can be difficult in a robust labor market. This can affect service quality and operational efficiency.
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Digital Disruption: The shift toward e-commerce and digital services means that traditional business models may need to adapt. Failing to invest in digital transformation could hinder competitiveness.
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Environmental Sustainability: Increasing consumer preference for sustainable products means Reece Ltd may need to invest in green technologies and practices, which can involve significant costs.
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Cybersecurity Threats: As operations become more digital, the potential for cyber attacks increases. Protecting customer and business data is critical and can require substantial investment in security infrastructure.
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Customer Expectations: Rapidly changing consumer preferences for products and services may necessitate quick adaptation and enhanced customer service capabilities.
By closely monitoring these areas and implementing proactive strategies, Reece Ltd can position itself to mitigate these risks and challenges effectively.
Revenue & Expenses Breakdown
Reece Ltd
Balance Sheet Decomposition
Reece Ltd
Current Assets | 3.2B |
Cash & Short-Term Investments | 341.4m |
Receivables | 1.4B |
Other Current Assets | 1.5B |
Non-Current Assets | 3.9B |
Long-Term Investments | 23m |
PP&E | 1.8B |
Intangibles | 2B |
Other Non-Current Assets | 79.9m |
Current Liabilities | 1.5B |
Accounts Payable | 1.2B |
Other Current Liabilities | 238.6m |
Non-Current Liabilities | 1.7B |
Long-Term Debt | 1.7B |
Other Non-Current Liabilities | 35.3m |
Earnings Waterfall
Reece Ltd
Revenue
|
9.1B
AUD
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Cost of Revenue
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-6.5B
AUD
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Gross Profit
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2.6B
AUD
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Operating Expenses
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-1.9B
AUD
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Operating Income
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674.8m
AUD
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Other Expenses
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-255.6m
AUD
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Net Income
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419.2m
AUD
|
Free Cash Flow Analysis
Reece Ltd
AUD | |
Free Cash Flow | AUD |
REH Profitability Score
Profitability Due Diligence
Reece Ltd's profitability score is 52/100. The higher the profitability score, the more profitable the company is.
Score
Reece Ltd's profitability score is 52/100. The higher the profitability score, the more profitable the company is.
REH Solvency Score
Solvency Due Diligence
Reece Ltd's solvency score is 53/100. The higher the solvency score, the more solvent the company is.
Score
Reece Ltd's solvency score is 53/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
REH Price Targets Summary
Reece Ltd
According to Wall Street analysts, the average 1-year price target for REH is 22.85 AUD with a low forecast of 19.19 AUD and a high forecast of 30.61 AUD.
Dividends
Current shareholder yield for REH is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
Ownership
REH Insider Trading
Buy and sell transactions by insiders
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Profile
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Description
Reece Ltd. engages in supplying plumbing, bathroom, heating, ventilation, air-conditioning, waterworks and refrigeration products to customers in the trade, retail and commercial markets. The company is headquartered in Melbourne, Victoria and currently employs 8,000 full-time employees. The firm offers various products, including tapware and accessories, vanities an mirrors, showers, toilets, basins, baths and spas, pipe and fittings, sinks and troughs, hot water systems, bathroom and kitchen appliances, heating and cooling, irrigation and pools, tools and valves. The company also offers various tools and services, including hot water system selector, delivery, tool servicing department, tool hire, irrigation design, pool water testing and bathroom renovation guide. The company offers products of various brands, including ISSY, Laufen, Roca, Caroma, Methven, Omvivo, Milli, Memo, Posh, Nikles, among others. The firm operates across Australia, New Zealand and the United States.
Contact
IPO
Employees
Officers
The intrinsic value of one REH stock under the Base Case scenario is 18.13 AUD.
Compared to the current market price of 22.63 AUD, Reece Ltd is Overvalued by 20%.