The Brickworks Limited (ASX: BKW) share price has been a strong performer on Tuesday.
In morning trade, the building materials company’s shares are up 6% to $21.76.
Why is the Brickworks share price zooming higher?
There have been a couple of catalysts for the strong gain by the Brickworks share price today.
The first is the release of the New Hope Corporation Limited (ASX: NHC) full year result this morning.
Brickworks is a major shareholder of the coal miner, which means it will be benefiting from the bumper dividend payment announced today.
The company was able to declare a fully franked 31 cents per share final dividend and a 25 cents per share special dividend thanks to sky high coal prices.
What else?
Also giving the Brickworks share price a big boost this morning is a broker note out of Morgans.
According to the note, the broker has upgraded the company’s shares to an add rating with a trimmed price target of $23.00.
Morgans commented:
The stock trades at a c.30% discount to the last disclosed NTA-A (Jan-22) and an 11% discount to our valuation ($23.00/share). At the current share price investors can buy several quality businesses well below replacement cost, which are likely to deliver a consistent and increasing dividend stream through time.
Expectations reduced across the board. We estimate the US building products division is trading at a c.67% discount to NTA, the Australian building products at a c.40% discount and the property trusts at a c.40% discount to NTA.
We estimate the building product divisions are trading at an implied c.7.5x FY23F EBIT, with the property trust reflecting an implied cap rate of 5.19% (10-year levered IRR of c.10%). This leaves the interest in Washington H Soul Pattinson & Company Ltd (SOL), which we estimate trades at a 10% discount to our marked-to-market NTA of $14.88/BKW share.
