PWR Earnings: Strong Result in Aerospace, but We Expect Shares to Come Back to Earth

We lift our fair value estimate for shares in PWR Holdings by 6% to AUD 9 following the release of interim fiscal 2024 results. Net profit after tax lifted 26% on the previous corresponding period, or PCP, to AUD 10 million. The result was driven by robust growth in aerospace and defense, which increased segment revenue by 124% as the size and number of contracts continued to increase. Motorsport revenue increased 19%, still the majority of revenue, as demand for emerging technologies like cold plates for battery cooling was strong. PWR Holdings has carved a formidable position in high-performance automotive cooling, with a presence across practically all motorsport competitions—notably Formula One, where PWR supplies every car on the grid. This presence underpins PWR’s narrow economic moat. We expect earnings to remain second-half-weighted, given the seasonality of motorsport. We lift our fiscal 2024 NPAT forecast by 4% to AUD 28 million, about 23% higher than the PCP.