DAVY VIEW

The positive reaction to Kingspan’s recent trading update is instructive. We believe it highlights the “credit in the bank” the group has accumulated given investors’ willingness to look beyond near-term margin pressure. It also underlines how deep the de-rating of the stock has been and the extent to which a material downturn in profits next year is discounted. This debate has still to be resolved, but our view remains that the extent of this risk is likely overstated with the equity risk/reward attractively positioned.