PAS broker report - Taylor Collison

Speculative Buy 29c

We remain of the view that PGR is well prepared to benefit from any uptick in retail conditions with clear direction for retail brands and a wholesale business in Designworks taking market share. We believe the FY18 result is bottom of the cycle earnings for PGR with investment expenses muddying the result and lower than expected revenue out of the wholesale business. Although PGR remain debt-free, the $5.5m impairment of White Runway led to no final dividend being announced. The ensuing 10% share price decline leads us to believe many yield investors have exited and there is currently zero positive news priced in. We expect Designworks to continue winning contracts and see any positive news as reason for share price appreciation. Trading on 6.6x our FY19E EPS, PGR remains a speculative buy.

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