While the dispute with DCG is today’s headline, we are more focused on the outlook. We assume the economic slowdown will impact near-term decisions, particularly in the commercial sector, and therefore the longer-term outlook for SXE given its involvement at the back end of projects. Lower forecasts see our valuation drop to $0.65 (prior $0.75), however our BUY call remains valid on value grounds, SXE’s diversification, a lower risk contracting profile, a strong balance sheet, and likely re-emergence of M&A opportunity.
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