Brickability has announced the acquisition of Topek Limited (a specialist cladding installation and remediation contractor), for an initial cash consideration of £27.3m (with a maximum payout of £45m dependent on earnouts). The deal is expected to be immediately earnings enhancing post-completion. Separately, the group has confirmed that trading during H1 has been in line with expectations, albeit the forecast reductions in industry volumes are expected to have a corresponding impact during H2. The net impact of the acquisition and underlying downgrade, to reflect tougher market conditions is a 2% reduction in EPS in FY24E and 6.8% decline in FY25E. With the shares trading on a FY24E PE of 5x and EV/EBITDA of 4x, we believe much of the downside risk has been factored in. This is a well-diversified business, and we continue to believe the long-term fundamentals of UK housing remain attractive. The re-rating potential could be significant from here, underlined by our 95p 12-month multiples-based price target.
