ACG [OUTPERFORM +19.2%] - Expanded distribution cushions weaker market demand

We reiterate our OUTPERFORM rating for ACG despite raising our target price by 15% as we increase our aggregate 2023F-2025F NPAT by 13% and roll our target price horizon to from end-2023 to mid-2024.

We forecast flat revenue and earnings in 2023 despite a weak new home supply because (1) ACG has expanded its distribution network, helping it to gain market share, and (2) ACG’s products (home furnishing) are installed in final phases of construction, delaying the impact of the weak new home supply on home furnishing demand.

Our higher 2023-2025 NPAT forecast is due to the expanded distribution network. However, compared to our previous forecasts, this implies lower growth in 2024-2025 because of the above delayed effect.