Our 12-month target price of A$19.45/sh is based on the average of our DCF and SOTP valuations.


• DCF valuation of A$19.87/sh based on WACC of 9.8% with equity beta of 1.1 and a real terminal growth of 3.5%; and
• SOTP valuation of A$19.00/sh with ~19x EV/EBIT applied to our 12mth forward EBIT forecast. For Commodities, we have applied a premium to the average multiple of both ALS's global and domestic peers to reflect improving topline and margin resilience from diversification.

Key downside risks to our positive view and achieving our target price include:

• Sustained downturn in exploration with further step down from current levels;
• Regulatory risks;
• Highly competitive market particularly with respect to Life Sciences; and
• Risks associated with FX exposure.