WA economic weakness continues to impact CLX, as evidenced by recent 1H20 guidance of $7.0m EBITDA and $1.5m PBT. With earnings typically first-half weighted, and a broader WA economic recovery proving elusive, we now pencil in FY20 earnings below FY19. Further, we have been more circumspect in our longer term forecasts, particularly with regard to margins. Our valuation falls to $0.80 (prior $1.00), largely underpinned by property values. However, we feel a HOLD call (prior BUY) is more appropriate pending evidence of an earnings turnaround and improving returns on assets.
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