Our view. We expect the Group to report that trading conditions remained difficult in Q3, with full year profit guidance unchanged. We would not expect the new CEO to say anything radical about further cost savings or strategy at this stage. He is more likely to focus on how they can improve, with added impetus, the underlying operational delivery across the Group. The focus from here is also likely to be on recent trends and what this might suggest for the nature of the anticipated recovery from FY25. Numerous macro lead indicators (see note) are pointing to better trading next year with a more normal price inflation backdrop. The valuation looks unstretched in the context of what the Group could deliver over the medium term, helped by market recovery, although the FY25E valuation is, arguably, pricing in some market recovery for 2025. The shares look well-placed as virtually a pure UK play on a residential recovery with a new, well-regarded management team. Q3 and estimates. Challenging trading conditions are expected to have continued in Q3. We expect Merchanting to have seen price deflation, albeit moderating, with timber deflation easing and the volume backdrop expected to have been sluggish, but with an extra working day. We expect Toolstation to have seen a similar outcome in Q3 as Q2 with LFL growth of c.2%, mainly price inflation. Overall, we would expect full year guidance to be broadly unchanged, with the market likely to focus on what the new CEO might say about his initial thoughts and the anticipated recovery from FY25. We tweak numbers with no material changes made to our estimates. Valuation. The shares trade on a FY25E PE of c.16 times and an EV:Sales multiple of 0.55 times. The valuation looks undemanding given the potential medium-term potential. Q3 update on 24th October 2024.