Ashtead：与同行相比交易折扣，但拥有行业领先的自由现金流收益率

RatingOutperformPrice TargetAHT.LNAshtead: Trading at a discount vs peers, but with a sector leadingFCF YieldRental revenue growth is likely still around 1-2%, per commentary on May but in this lowgrowth environment, cash generation stands out. Ashtead trades on a 7%+ FCF yield vs peersandwidermachinerynames on3-5%drivingscopeforre-rating intoaUslisting (Feb).Wedowngrade EPS c5% in FY26 and FY27on lower revenues butmaintain our Outperformwitha new target price of 6, 150GBpWe remain at the mid-point of rental guidance. Based on data from Dodge and WolfTrac,sentiment in the market appears to be in a "wait and see mode" and likely challenged giventhe subsequent effect of tariffs on select building materials; we expect for the market toremain challenged for the rest of 2025. At the FY results May organic growth was c2% andbased on industry data we expect June has remained ig th 1-2% range. We forecast grouprental revenue growth of 2.8% (cons: 3%, guide: 0-4%) driven by Specialty growth of 6%offsetby GeneralToolat 1%.Expect low levels of growth capexSHaving overbought fleet through 2023 and 2024,we expect Ashtead to land inAwer end of its FY26 guidance range of $1.4-$1.7bn(BERNe: $1.5bn). We anticipatgrbWth capex will be biased to Specialty segments. Withmost suppliers lead times at c2 months Ashtead have good flexibility to step up capex asdemand dictates. Residual values appear to be slowly recovering but there is also scope toage the fleet from the current est. 49 months (North America).Lower capex drives strong a 7.3% FCF yield in FY26. With lower capex, we model FY26FCF of $2bn (7.3% FCF yield at 4,742p) which provides strong optionality for M&A andbuybacks. The recent US tax bill provides a c$200m (10%) uplift to FCF.Overall we move EPS down 5% due to lower revenue growth in the US. We forecastfor group rental growth at 2.8%, however, muted by a continued decline in used and newequipment growth. We subsequently forecast an adj. EBITDA margin of 46.6% and an adj.fleet.Investment ImplicationsGietacEresilient but notaacelerating market Wentalue the shares on artachanged 2.7xF27EOLDSource: Bloomberg, Bernstein estimates and analysis.See the Disclosure Appendix of this report for required disclosureimportantinformation.Alternatively,visitour Global ResearchDisclosureWebsite. 6,150.00 GBp (6,250.00 OLD)e4.43 Close DateAHT.LN Close Price (GBp)Price Target (GBp)Upside/(Downside)27%52-Week RangeEDMFYEAprDiv Yield1.7%Market Cap (GBP) (M)20,627EV (GBp) (M)38,183Performance12MAbsolute (%)(6.6)EDM (%)13.0Relative (%)(19.5)Source: Bloomberg, Bernstein estimaPrice Performance, 1YR5500pCAGRValuation Metrics3.543.95Adjusted P/E (x)15.53.94Reported P/E (x)16.5es,analystcertifications andother DETAILSONE BIG BEAUTIFUL BILL ACT (OBBA) - IMPACT WILL BE SEEN IN FCF VIA DEFERRED TAX LIABILITIESare placed in service on or after the 19 January 2025. The reinstatement of the bonus depreciation will benefit the privatenon-residential construction market, with the introduction of a new category of depreciable property, called qualifiedproduction property; this consists of any facility used in the manufacturing, production or refining of tangible assets. The bonusdepreciation includes both the equipent and facility.The U.S.Construction and Machineryteam,lead by Chad Dillard,provided aOBBA TAX CHANGES DRIVE A $2OOM FCF UPLIFT.From an accounting perspective, the 100% bonus depreciation reduces the cash tax rate from 34% to c25%. The effectivetax rate within the income statement is largely unchanged with the difference treated as deferred tax. This scenario holdsdepreciation. In other periods of 100% bonus depreciation (e.g. 2017-2023 TCJA), customer behavior, in terms of rent vs buy,hasnot changed.Indeed, duringperiodsofexceedingly cheapdebtcombinedwithbonus depreciation,rental penetrationstillprogressed.ROOM FOR THE VALUATION GAP TO CLOSE UPON ITS LISTING IN THE USIn 1Q26, Ashtead will initiate its primary listing on the New York Stock Exchange, joining its construction & machinery peers.With a reduced capex guidance into its FY26e (FY+1), an analysis of the FCF yield shows the degree of separation betweenitselfandpeers suchasUnitedRentalsand Herc;as wellaslistednames suchas Oshkosh,Deere&Co,etc.Consensusof ~4.5% and that of United Rentals at 4.5% and Herc at 2.6%. However, on an EV/EBITDA FY+1, Ashtead trades at a 16%discount relative for a FCF Yield that is 1.6x times greater than URI.stark contrast to United Rentals, which enjoys a/EV/EBITDA 16% higher at 8.7x with a FCF Yield FY+1 of 4.5%FCFYieldto EV/EBITDA25.0x20.0x15.0x10.0x5. 0x0.0×0.0%Basedonmarket close07/07/2025.Ashtead is covered by Will Kirkness and United Rentals is covered by Chad Dillard. Bernstein does not cover Herc Holdings.Source: Visible Alpha, Bloomberg, Bernstein analysis and estimatesEUROPEAN BUSINESS SERVICES ecFCF Yield FY+1FCF Yield FY+2FCF Yield FY+3SURI (FY+1)·O URI (FY+2).URI (FY+3)AHT (FY+1)● HRI (FY+1)AHT (FY+2AHT (FY+3)HRI (FY+2)O HRI (FY+3)4.0%6.0%