JHX Final: We Remain Buyers

Research evidence excerpt

JHX Final: We Remain Buyers

ment siding, 19% premium to our BP coverage on an EV/EBITDA basis. We believe a

a premium product that is capturing an increasing share of the premium valuation is warranted given JHX's superior growth profile relative

US siding market, with JHX accounting for more than 90% share to our coverage. While current market conditions are weighing on FY26

of the US fiber cement siding market. JHX completed the fundamentals, we believe JHX will return to strong EBITDA growth in FY27,

acquistion of AZEK on July 1, accelerating the company's supporting the premium multiple implied by our price target.

EBITDA growth profile.

Positives Negatives

1. Structural growth categories due to vinyl to fiber cement and 1. Slowing New Residential end markets, trade down, and inventory

wood to synthetic conversion, better EBITDA growth versus our destocking are creating volume volatility, pausing the EBITDA

coverage. outpeformance story.

2. Reduced CapEx spend should drive improved FCF generation. 2. Large-ticket, discretionary product category likely underperforms during

3. Track record of margin expansion. Annual pricing should recession

continue supporting margins. 3. AZEK acquisition brings on synergy risk as the company expects to drive

4. Exposure to affluent customer base suports demand in $125M in cost synergies and $500M in revenue synergies over the next

current environment. several years.

Valuation Commentary

JHX trades at 10.0X our FY27 EBITDA estimate, a 19% premium to our Building Products coverage ex QXO. On a P/E basis, JHX trades at 14.2X our FY27 EPS

estimate versus our BP coverage's 14.1X. We believe a premium is warranted given the company's superior EBITDA growth and EBITDA Margin profile.

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