What is Happening to the Share Price of Adelaide Brighton Ltd?

What does Adelaide Brighton Ltd do?

Adelaide Brighton Ltd [ASX:ABC] manufacture and supply a range of cement products, lime, aggregates and sand to the building, construction and infrastructure industries.

What’s moving the ABC share price?

Principally it’s the boom in east coast housing construction which is driving record profits and the share price higher. Adelaide Brighton CEO Martin Brydon said the company is struggling to supply enough concrete to meet housing construction needs.

The company released their full year results on 25 February. Some highlights:
• Revenue of $1,413 million, up 5.6%;
• Profits of $208 million, up 20%
• Earnings per share up 19%.

The Adelaide Brighton share price was slightly down in today’s trading, but continues to punch around all time highs.

What now for ABC shares?

The share price went ex-dividend on 10 March, forming a subsequent low on 16 March. That gives us something to watch going forward.

Should the share price form a higher low on the company price chart, it would be bullish for ABC shares. Let’s see what unfolds.

The company is struggling to supply enough cement. It does show strong continued demand for housing. While there is such demand, it is hard to see property prices collapsing this year as some fund managers have been predicting.

This demand should provide some support to property prices for the year at least, so a property collapse in 2016 is unlikely.

All that construction implies jobs, and is bullish for employment.

For property prices to collapse this year we need to see a major spike in unemployment levels. So far it looks unlikely.

So far the economy is unfolding just as we expected, following the 18 year real estate cycle. If you want to learn what awaits the economy over the next decade, click here to find out more.

Cheers,
Terence Duffy,
Research Analyst, Cycles, Trends and Forecasts

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Terence Duffy is an analyst and chartist, specialising in researching economic trends and cycles.  His primary focus is housing and land affordability. But you can also depend on him to offer his unique analysis of stock market charts. As Terence will show you, the charts often forecast, well in advance, the good or bad news to come.


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