Risk Reward Update

研报英文原文证据摘录

Risk Reward Update

UpdateM

RiskRisk RewardReward– Diploma- DiplomaPLC (DPLM.L)PLC (DPLM.L)

Differentiated, Decentralised Distribution

PRICE TARGET 8,700p OVERWEIGHT THESIS

mid-to-high single-digit organicWe value Diploma on a DCF basis, using a 7.5% WACC and 3% terminal growth rate. ▪Resilient,

growth, bolstered by structural end-market 8,125p

growth, geographic penetration and product

Consensus Price Target Distribution 7,000.00p 9,000.00p extensions, alongside stable low 20s %

MS PT

margins.Source: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates ▪Market share gain opportunities in

fragmented markets. Diploma has a proven

track record of completing acquisitions at

RISK REWARD CHART attractive multiples and returns significantly

ahead of WACC. Acquisition spend should

continue, given that the company has

GBp 11,100p11,100p(+47.61%)11,100p(+47.61%)(+47.61%) significant balance sheet firepower.

valuation to distributor peers, ▪Premium

10000 given Diploma's value-add, solutions-based

offering, which generates sector-high

8,700p8,700p(+15.69%)8,700p(+15.69%)(+15.69%) margins and returns.

7500 7,520p7,520p7,520p

Consensus Rating Distribution

5000 75% Overweight

4,750p4,750p(-36.84%)4,750p(-36.84%)(-36.84%) 25% Equal-weight

0% Underweight

MS Rating

Source: Refinitiv, Morgan Stanley Research

JUL '25 JAN '26 JUL '26 JUL '27

Risk Reward ThemesKey: Historical Stock Performance Current Stock Price Price Target

Pricing Power: Positive

Secular Growth: Positive

Self-help: Positive

View descriptions of Risk Rewards Themes here

BULL CASE 11,100p BASE CASE 8,700p BEAR CASE 4,750p

Acceleration in organic growth and M&A High-single-digit organic growth and 22% Organic declines and margins drop

spend margins

Our bear case assumes that organic growth