No-Moat Orica Still Facing Headwinds Including Coronavirus; Fair Value Estimate Reduced to AUD 16.10

We reduce our fair value estimate for no-moat Orica Limited by 8% to AUD 16.10. We now think headwinds facing the firm will persist for longer than we’d allowed for. The international explosive supplier’s first-half underlying NPAT to March 2021 suffered a 44% decline to AUD 73.40 million due to the coronavirus and China trade restrictions. At the time of release in May 2021, Orica said ammonium nitrate volumes in the fiscal second half were expected to be better than the first half, though ongoing COVID-19-related disruptions, and trade issues between Australia and China create some uncertainty. It anticipated a fiscal second-half 2021 EBIT result lower than the PCP's AUD 296 million print.