Solid Half for No-Moat Cromwell; AUD 0.95 FVE Maintained, but Debt Reduction Imperative.

We make no changes to our fair value estimate of AUD 0.95 following Cromwell’s first-half results for fiscal 2021. Cromwell demonstrated resilience despite a turbulent period with an underlying operating profit of AUD 99.1 million, or AUD 3.79 cents per share, that is on track to meet our full-year forecast. We reduce our full-year distribution estimate to AUD 0.07, down from 0.075, in line with updated guidance provided by management. We make no change to our earnings forecasts. Cromwell has challenges in parts of its portfolio and high gearing is a risk, but we believe the sell-off in the securities is overdone and see Cromwell securities as undervalued.