The Brickworks Limited (ASX: BKW) share price is now up around 10% since the company yesterday revealed a full year adjusted net profit of $234 million sales of $919 million for the financial year ending September 30, 2019. The profit and sales were up 4% and 17% over fiscal 2018 in what analysts widely considered a strong result given the cyclical downturn in Australian residential building developments.
According to financial news wires the analysts at Morgans have upgraded their rating on the stock and slapped a $17.15 price target on the shares. That may be a little conservative according to the market though with the stock currently trading at $18.19.
Brickworks has a slightly controversial cross shareholding in investment conglomerate Washington H. Soul Pattinson Ltd (ASX: SOL), where the two businesses are major shareholders in each other. In total Brickworks owns 39.4% of Soul Patts or 94.3 million shares, although it did sell 7.9 million over fiscal 2019 at $26.37 a share to raise $208 million.
The cross shareholding structure helps the businesses management team chaired by Robert Milner keep control of both groups, although other shareholders have claimed more value could be unlocked if the cross shareholding was removed.
Over fiscal 2019 Brickworks managed to lift total dividends a respectable 6% to 57 cents per share, which means it offers a yield of 3.13% plus full franking credits. Underlying earnings per share came in at a $1.56 to mean it trades on just 11.6x trailing EPS to suggest the business offers decent value.
Apart from Morgans, other analysts at a leading investment bank have also taken a positive view on the result, but retained a 'price target' a little lower than what shares change hands for today.
For defensively minded income seekers both Brickworks and Soul Patts could be worth putting on the research list.
