DAVY VIEW

Recent events are highly supportive of the Grafton investment case. The entry into Finland represents a new and exciting growth platform; the agreed sale price for the traditional Great Britain merchanting business was much higher than envisaged; and underlying trading continues to exceed expectations. The transition of Grafton into a higher margin business has accelerated, and the group will soon have an enhanced net cash position. The stock was on a 2022F EV/EBITA of over 13x, but this has slipped back to circa 11.5x. We remain very positive on the equity case and continue to view 1400p as a credible target.