AMP Limited 

A Look at Recent Update:AMP Limited (ASX: AMP) had recently published a release stating that Priority One Agency Services Pty Limited as manager of the Progress 2010-1 Trust noted that following actions would be initiated because of change in the ratings:
 

• Balance of funds which are in AMP Collection Account would be transferred across to the Trust’s bank account which is held by Westpac.
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• Collateral would be posted for fixed rate swap as needed under the swap agreements in the span of 10 business days.
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The company reported underlying profit amounting to A$680 million in FY 2018 which reflects the fall of 35% on the YoY basis. Thisweakness was a result of lower earnings for Australian wealth management which was offset by growth in AMP Capital and AMP Bank. On 25 October 2018, AMP announced that it had entered into a sale and purchase agreement with Resolution Life for the sale of AMP Life. This effectively includes the Australian and New Zealand wealth protection and mature business units. Reported results for AMP will continue to include earnings for the sold businesses until the sale completes. The company’s total AUM amounted to A$258 billion in FY 2018 reflecting the rise of A$1 billion on the YoY basis.


FY 2018 Profit Summary (Source: Company Reports)

What to Expect From AMP: AMP is committed towards making changes which are needed to transform the business and reposition it to deliver significantly better performance and value in the long term. The company’s priorities for 2019 primarily revolves around strengthening of risk management, internal controls and governance, transformation of Australian wealth management, driving growth in AMP Bank, grow the New Zealand wealth management and maintain growth momentum in AMP Capital.

Stock Recommendation: On the monthly chart of AMP, Exponential Moving Average or EMA has been applied and default values were used for the purposes. After observation, it was noted that the stock price has crossed the EMA and moved downwards after the crossover reflecting the bearishness. Meanwhile, the stock has generated negative YTD return of 3.69% and is hovering around its 52-week low. We believe that there is a lack of any positive catalyst at the current juncture which can boost the stock higher. It can be said that because of short term challenges, leading rating provider S&P downgraded AMP’s ratings. Hence, considering aforesaid facts and current trading level, we advise to investors that they can avoid the stock at the current market price of $2.370 and wait for further business developments.
 
 

Suncorp Group Limited

Unloading of Australian Life Business: Suncorp Group Limited (ASX: SUN) had earlier made an announcement about the successful completion of the sale of its Australian Life Business to TAL Dai-ichi Life Australia Pty Ltd. The company added that total consideration is expected to be $725 million. After considering separation and transaction costs, hybrid capital and other provisions, SUN expects to give around $600 million of capital to the shareholders. The company delivered a net profit after tax amounting to $250 million for the half-year ended 31 December 2018. Its half-year result reflects robust growth of 3.2% in top-line even though there was moderating banking environment. Over the half year, there was an improvement in Insurance (Australia)’s underlying margins thanks to ongoing benefits achieved with the help of Business Improvement Program (BIP) as well as remediation in commercial portfolio.



1HFY19 Result’s Overview (Source: Company Reports)

Understanding Suncorp’s Priorities: Suncorp Group had stated that foundations have been built to convert better customer experiences into broader and more frequent customer interactions as well as increased revenue. The company had listed out certain priorities which revolve around consolidation to a single app for the banking customers, promoting and leveraging the reward and recognition platform to drive the retention and embed single customer view throughout assisted channels. Its other priorities include new payments platform, open banking, transparency & choice as well as enhancing the digital sales capability.

Stock Recommendation: On the daily chart of SUN, Exponential Moving Average or EMA has been used and default values were applied for the purposes. It was noted that the stock price has crossed the EMA and trended in an upward direction after the crossover reflecting bullishness.

Also, the company’s annual dividend yield stood at 4.89% which is higher than the industry median (Insurance) of 3.8%. The company is having a dividend pay-out ratio of 81%. In the meantime, the has fallen 11.06% in the past six months as at 05 March 2019 and trading at PE multiple of 20.35x. Hence, we maintain our “Hold” rating on the stock at the current market price of A$13.700 per share (up 1.406% on March 06, 2019), considering aforesaid facts and current trading level.
 

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