Stocks’ Details
Insurance Australia Group Ltd
Forecasting low-single-digit growth in GWP for FY18:Insurance Australia Group Ltd (ASX: IAG) is forecasting low-single-digit growth in gross written premium for FY 2018 on an insurance margin in the range of 12.5%-14.5%. The guidance includes the ongoing rating response to short tail claims inflation, especially in motor. There is an assumption for further traction with commercial rates, in Australia and New Zealand. Moreover, the guidance also includes the loss of up to $60 million of gross written premium from exiting certain channels in the Swann business. Additionally, in FY17, IAG had posted GWP growth in line with the updated guidance the company had provided in February, in part due to better-than-expected retention rates in the commercial business. The company had reported margin of 14.9%, which was in the upper half range of the guidance IAG provided in June, and it had included the higher reserve releases than originally expected, which were partially offset by natural peril claims being $140m above expectations. Overall, the earnings’ growth over next couple of years can provide better returns. Meanwhile, IAG stock has risen 12.5% in six months as on November 14, 2017 and trades at a higher level. We maintain a “Hold” recommendation at the current price of $7.10
FY18 Outlook (Source: Company Reports)
MNF Group Ltd
Expects to deliver profit growth of 24% in FY18: MNF Group Ltd (ASX: MNF) in FY18 expects to deliver profit growth of 24% over the current financial year. The earnings per share is expected to come in at 20.5 cents which would represent growth of 18%. However, the forecasts still look low given the organic growth and impact from addition of any new client. The projection nevertheless includes the increase in expense for further substantial investment in the R&D resources to support strong growth well into the future. The increase in expense for additional office accommodation required for future growth has also been factored in. Meanwhile, MNF stock has risen 17.50% in three months as on November 14, 2017 and is trading at a very high price to earnings level. We give an “Expensive” recommendation on the stock at the current price of $5.72
FY18 Outlook (Source: Company Reports)
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