This report is an updated version of the report published on 23 January 2025 at 3:13 PM AEDT.

Acrow Limited (ASX: ACF)

ACF is an Australia-based company that provides smart integrated construction systems across formwork, industrial services and commercial scaffolding in Australia. The company's portfolio includes falsework and shoring, screen solutions, Jacking Systems (Jumpform), and internal engineering capabilities.

Recommendation Rationale – Sell at AUD 1.125

• Financial Highlights: Cash and cash equivalents at the end of the year decreased by 59.60% YoY to AUD 2.0mn in FY24 vs AUD 4.94mn in FY23. Total liabilities increased by 48.30% YoY to AUD 171.49mn as on 30 June 2024 vs AUD 115.63mn as on 30 June 2023.
• Trading Near the Resistance: ACF’s stock is approaching its R1 level recommended on 22 November 2024. Therefore, share price can face resistance at the current levels.
• Overvalued Multiples: On a forward 12-month basis – key trading multiples (EV/Sales, Price/Book) are higher than the median of industrials sector.
• Market Risk: ACF operates in competitive markets, facing pricing pressures and margin challenges. Maintaining a strong reputation is vital. Any negative publicity or failure to meet client expectations can harm the company’s standing in the market.

ACF’s Daily Price Chart

Valuation Methodology: EV/Sales Approach (FY June'25E) (Illustrative)

The stock is expected to trade at a premium considering factors such as increased revenue and EBITDA in FY24, higher revenue and EBITDA guidance for 1HFY25 and FY25. For conducting the valuation, the following peers have been considered: Johns Lyng Group Ltd (ASX: JLG), MAAS Group Holdings Ltd (ASX: MGH), IPD Group Ltd (ASX: IPG), and others have been considered.

Considering that the stock is approaching its R1 level, share price movement, current trading level, and risks associated, the share price can face consolidation at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current price of AUD 1.125 (as of 23 January 2025, at 2:15 PM AEDT).

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 23 January 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Dividend Yield may vary as per the stock price movement.

Note 5: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.