ARB Corporation: Too many FY27 unknowns - d/grade to Neutral

研报英文原文证据摘录

ARB Corporation: Too many FY27 unknowns - d/grade to Neutral

ARB Corporation UBS Research

UBS Research THESIS MAP Thesisa guideMapto our thinking and what´s where in this report

Pivotal Questions Q: Can Aus Aftermarket revenue achieve +4% 4yr CAGR (FY25-29e)?

No, and rev growth will be back-end weighted. We forecast +3.3% 4yr rev CAGR, however we also

have FY26E -4% and FY27 -1% as we incorporate a cyclical downturn from 2H26. In our view, the

flow through impact of higher interest rates, and potential negative wealth effect stemming from

recent changes to capital gains and negative gearing will weigh on large ticket consumer items (new

vehicles). Furthermore we see risk that ARB enthusiasts may get the essentials and add additional

products later (ie smaller initial basket size). We see a strong recovery in FY28/29 (Aftermarket rev up

+10% CAGR), but it is not enough to lift the 4yr CAGR to +4%.

Q: Can ARB generate operating leverage over the medium term?

Longer term possibly, but near term we est. not materially. UBSe -1.9% FY26 EBITDA mgn

compression, in FY27 stronger pricing increases and FX tailwinds should help partially offset higher

steel costs and with some cost control, EBITDA mgn contraction is contained to -0.2%. We recover

c.75% of the mgn contraction over FY28/29, then allow for marginal 0.2% annual improvements.

UBS VIEW We like the long-term ARB story. A very strong brand, EV transition is less disruptive vs other auto

stocks (EV trucks likely more skewed to metro tradies - less so ARB customers), opp. to leverage the

brand strength into the much larger US market, low-cost manufacturing capacity, and a founder-led

track record of o/performance vs XSO. That said - in our view the outlook for the next 12-18mths

could prove very challenging.