Morgan Stanley was disappointed with the additional cost increases sustained by Adbri in the March quarter that meant overall capital expenditure estimates were double initial expectations.

The broker suspects an attractive return is unlikely as costs blow out at Kwinana, as even though the company reiterated the project will be NPV positive it is likely to be below the initial 15% estimate.

Equal-Weight retained. Target is $1.80. Industry view: In-Line.

Sector: Materials.

Target price is $1.80.Current Price is $1.56. Difference: $0.24 - (brackets indicate current price is over target). If ABC meets the Morgan Stanley target it will return approximately 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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