Macmahon’s priorities are clear: a capital light model, a focus on free cash flow, and lower leverage. We revisit assumptions from FY25 in this light, assuming higher asset turn on the back of proportionally more civils and underground revenue growth. This sees growth capex pared back, lifting free cash flow, and reducing net debt and leverage forecasts. We are below Macmahon’s ROACE target primarily due to caution around recently acquired Decmil. The changes lift our valuation to $0.36 (prior $0.30) and we upgrade to BUY (prior HOLD). We expect the market to reward Macmahon for delivery of a capital light strategy.
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