My ASX share for the week is Brickworks Limited (ASX: BKW), the building products business.

Overview of Brickworks

Brickworks is among some of the oldest businesses on the ASX. It was formed in 1934 during the depression to bring 26 brick manufacturers together to save them and create a combined business with a better performance. The new company was better able to market and distribute bricks and clay products.

These days Brickworks has a much wider range of building products on offer. It sells bricks and pavers, masonry and stone, roofing, specialised building systems, precast and cement. It’s a diversified group of products. Selling a wider range means the ASX share has the potential for more total revenue if it can take decent market share for that particular product.

The company has a few key brands including Austral Bricks, Austral Masonry, Bristle Roofing and Australia Precast.

Brickworks is the biggest clay brick manufacturer in the country. Austral Masonry is the second largest masonry manufacturer. Bristle Roofing has a strong presence in all major states.

The ASX share owns a 50% stage of a growing industrial property trust along with Goodman Group (ASX: GMG). Brickworks also owns 39.4% of investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

Brickworks hasn’t cut its dividend in over 40 years. It currently has a grossed-up dividend yield of 5.5%.

Why Brickworks is my ASX share for the week

At the time of writing, the Brickworks share price is down around 26% since 20 February 2020. It’s actually around the price that it was at on 23 March 2020 when many ASX shares hit their COVID-19 low.

Being 26% down is an attractive decline in my opinion. It shouldn’t be too surprising that Brickworks is down because there are predictions of a construction slowdown over the next 6-12 months due to COVID-19.  

I’m not too worried about a slowdown though. Construction goes through cycles. This will be painful in the short-term. But we should be long-term investors, look through the negativity and see the long-term value offered by this Brickworks share price. I think the Australian construction industry will bounce back by 2022. The $25,000 HomeBuilder scheme could also help Brickworks in the shorter-term.

Brickworks recently acquired three brickmakers in the US. That move was smart in my opinion, it’s now the market leader in the north east of the US. This opens up a very large market opportunity for Brickworks. Not many ASX shares have been successful at expanding into the US, Brickworks can bring its efficiency expertise to the less efficient US plants.

I think Brickworks looks good value even if you value the building products side of the business very cheaply. Its stake of the industrial property trust was worth $710 million at 31 January 2020. The Soul Patts shareholding is worth $1.83 billion. Together, that’s an asset value of $2.54 billion. Brickworks has a market capitalisation of $2.25 billion.

The Brickworks share price rose by 13% over May and I think it could keep going up if investors see today’s value and think about the likelihood of a longer-term construction recovery. The future return of immigration to a more normal level should also be beneficial for the construction industry.

Foolish takeaway

I think Brickworks is a high-quality ASX share with a lot of attractive assets and brands. I’d be very happy to buy shares at Brickwork’s current share price of under $15. It’s a robust business with a very attractive dividend track record. I believe it can comfortably endure whatever happens next with the economy.

More reading

• If I won the lottery I’d buy these 6 ASX shares
• 12 top ASX dividend shares to buy in June 2020
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• Have $1,000? You should pick one of these 8 ASX shares
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Brickworks. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post My ASX share for the week appeared first on Motley Fool Australia.

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The Super Retail Group Ltd (ASX: SUL) share price won’t be going anywhere on Monday.

This morning the retail group requested a trading halt while it undertakes an equity raising.

What did Super Retail announce?

This morning Super Retail announced that it is launching an underwritten accelerated pro-rata non-renounceable entitlement offer to raise approximately $203 million at $7.19 per share. This represents an 8% discount to its last close price.

Management believes this equity raising will allow the company to continue to execute its strategy and pursue strategic growth initiatives.

It will also put Super Retail in a position to take advantage of changing consumer trends by returning capital expenditure to historic levels of ~$90 million per annum, even if a softer trading environment emerges.

This includes the company investing in its omni-retail digital customer experience and analytics, the supply chain to facilitate omni-channel sales growth, the further simplification of its business model, footprint optimisation and organic market consolidation, and increased supplier promotional activity.

Trading update.

Super Retail also provided the market with an update on its performance since the reopening of its stores.

Following a sharp decline in April, the company’s group sales rebounded strongly in May. Group like for like sales increased 26.5% in May compared to the prior corresponding period. As a comparison, group like for like sales fell 26.2% in April.

The Supercheap Auto and Rebel businesses have been doing the heavy lifting. Their sales are up 4.6% and 2.1%, respectively, for the 47 weeks to May 2020. This has offset 0.6% and 10% declines, respectively, in the sales of the BCF and Macpac businesses over the same period.

“Robust trading performance.”

Super Retail’s Chief Executive Officer and Managing Director, Anthony Heraghty, was pleased with the company’s performance during the pandemic.

He said: “We are very pleased with the robust trading performance of the Group despite COVID-19 and thank our team members for their dedication to the business during the pandemic. The execution of our strategy has continued during COVID-19, with our four core brands well positioned to take advantage of shifts in consumer behaviour that have been observed through the pandemic. The equity raising enables us to continue the execution of our strategy, further strengthen our omni-retail capabilities and continue to organically grow our four core brands.”

More reading

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• Cheap ASX 200 retail shares to buy today
• These are the 10 most shorted ASX shares
• Leading brokers name 3 ASX 200 shares to buy right now
• These are the 10 most shorted ASX shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why the Super Retail share price is in a trading halt appeared first on Motley Fool Australia.

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