Shares in ASX-listed building products giant James Hardie tumbled as much as 17% to $24.41 at the open before entering a trading halt. The pause was called with JHX around $26.70, down 9.4%, pending a further announcement.
The sell-off follows investor anger over the company’s pricey acquisition of US group Azek and sizeable executive bonuses, which culminated last week in the ousting of chair Anne Lloyd and directors Rada Rodriguez and Peter-John Davis at the AGM.
Bloomberg linked the declines to James Hardie’s removal from MSCI’s index and, in part, to US rival Trex cutting its full-year sales guidance overnight. In New York, James Hardie closed 7.6% lower at US$18.50 and fell more than 8% in after-hours trade. The stock is due to be deleted from the MSCI Australia Index on 24 November.
Citi analyst Samuel Seow said uncertainty around Trex could leave JHX “drifting” until its 19 November results. Even so, he believes guidance could still be upgraded, noting roughly half of JHX’s exposure is outperforming the double-digit decline assumed in guidance, the legacy business outweighs decking, and Azek’s second-quarter update implied share gains.