US shipbuilding margins have improved in each of the last 4 halves, and averaged 8.5% in FY18 (well ahead of ASB’s 6-8% target and FY17’s 6.8%). With 60% of group revenue from US ships, and another 15% (and growing) from Support work, we feel this helps underpin earnings. Meanwhile, investment in new designs and technology, and expanding capacity in Australasia, sets ASB up to take advantage of growing demand in the commercial ferry market. We expect a turnaround from FY18 losses in Australasia to help drive up EBIT by 15% in FY19. BUY maintained on a $2.25 blended valuation (prior $2.10).
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