The CSR Limited (ASX: CSR) share price is currently down by around 4%. The business has gone ex-dividend.
Ex-dividend means that new investors buying CSR shares today are not entitled to the FY22 half-year dividend. New investors buying shares yesterday are entitled to receive the half-year dividend.
CSR is going to pay a dividend of $0.135 per share in a month from now. That dividend, at yesterday's CSR share price, equates to a fully franked dividend yield of 2.1%. So that could explain some of the decline.
CSR dividend
The CSR half-year dividend of $0.135 per share was a sizeable increase from 8.5 cents from the prior corresponding period. That represents an increase of 58.8% from HY21.
This half-year dividend was at the top end of its dividend policy. This policy is to pay dividends of between 60% to 80% of full year profit after tax (before significant items).
What was the HY22 profit?
CSR said that for the six months to 30 September 2021, its net profit after tax (NPAT) before significant items was $86.6 million, an increase of 30%.
Statutory net profit after tax was $156.6 million. CSR said this included a significant item relating to the recognition of $71.2 million in carry forward capital tax losses. In HY21, it made a statutory net profit of $58.7 million.
There were three core operating divisions that CSR told investors about.
The building products division saw earnings before interest and tax (EBIT) of $120.6 million, up 25%, which CSR said reflected the demand for detached housing, a strong operational execution, manufacturing performance and good cost control in a COVID constrained environment.
CSR's property division saw EBIT was $6.6 million was delivered after the Moss Vale site sale. The final transaction at Horsley Park was secured in July 2021. By the year ending 31 March 2025, this project is expected to generate proceeds of $408 million.
Finally, CSR's aluminium EBIT increased $18.3 million, up from $6.2 million in the prior corresponding period thanks to improved spot pricing and the hedged position.
The company continues to look to unlock value from its property assets. It has secured the sale of the 41 hectare site at Warner in Queensland, with EBIT of around $30 million expected to be completed in the year ending 31 March 2023.
Outlook for the rest of FY22
The CSR share price can be impacted by the company's outlook for the upcoming financial year.
Management said that it's expecting activity in the second half, which has fewer trading days than the first half, to reflect the traditional seasonality of the building industry. Completion times for projects continue to lengthen, reflecting supply chain congestion, cost pressures and labour constraints which are impacting the broader industry.
CSR said its buildings product business is performing well in the current market and is progressing its strategy to diversify and grow the business for the future.
It pointed out that group earnings will also be supported over coming years by contracted transactions from property and a "strong" hedge position in aluminium.
Is the CSR share price an opportunity?
The brokers at Citi think that it is a buy, with a price target of $7.20. That suggests a double digit potential upside over the next 12 months, if the broker is right.
Based on the broker's estimate, the CSR share price is valued at 16x FY22's estimated earnings.
