The Lock-In Effect Isn‘t All Bad...

Research evidence excerpt

The Lock-In Effect Isn‘t All Bad...

Idea

July 27, 2026 10:12 PM GMT

Morgan Stanley Australia Limited+MJames Hardie Industries PLC | Asia Pacific Joseph Michael, CFA

Equity Analyst

The Lock-In Effect Isn't All Bad ... Joseph.Michael@morganstanley.comJulianna C Sick +61 2 9770-9225

What’s Changed Julianna.Sick@morganstanley.com +61 2 9770-1304

James Hardie Industries PLC (JHX.AX) From To

Price Target A$38.00 A$42.00

US housing remains constrained, but record home equity and

growing home equity lending could support JHX's R&R exposure James Hardie Industries PLC (JHX.AX, JHX AU)

over time. JHX's 1Q27 trading update reinforces its ability to Australia Industrials | Australia

outperform through share gains & margins, while an improving Stock Rating Overweight

Industry View In-Line

housing cycle provides additional upside. Reiterate OW. Price target A$42.00

Up/downside to price target (%) 9

Home equity lending is accelerating: Our US Housing Strategists continue to see Shr price, close (Jul 27, 2026) A$38.55

Sh out, dil, curr (mn) 547

the US housing market as constrained by elevated mortgage rates and the mortgage Mkt cap, curr (mn) US$14,703

lock-in effect (link). While this remains a headwind for new construction and housing EV, curr (mn) US$18,969

Avg daily trading value (mn) A$89

turnover, homeowners are increasingly choosing to stay put rather than refinance

Fiscal Year Ending 03/26 03/27e 03/28e 03/29e

historically low first mortgages. Reflecting this trend, 1H26 closed-end second-lien

EPS (US$)** 1.09 1.26 1.54 1.87

issuance increased 127% YoY ( Exhibit 9 ), making it the fastest-growing segment of Prior EPS (US$)** 1.05 1.24 1.52 1.76

the US non-agency mortgage market (link). We examine what this could mean for EPS (US$)§ 1.11 1.23 1.52 1.80