Suncorp Group Limited

SUN Details

Decent Outlook: Suncorp Group Limited (ASX: SUN) is working on a business improvement program to drive annualized operating expenses back to $2.7 Bn and expects a brighter outlook for FY19 and FY20 in term of performance. Further, the group is still targeting a banking cost to income ratio of around 50%, subject to regulatory reform costs, and its Net Interest Margin will be around 1.80% to 1.90% for FY19. As of now, the group has progressed well on its two strategic programs i.e., the Marketplace acceleration program and the Business Improvement Program, and has improved customer experience, while lowering the Group’s cost base and delivering a more resilient business model which embeds a culture of continuous improvement across the organization. The group is also trying to manage the short-term costs of increased regulation which are expected to deliver longer-term competition benefits.


Driving Shareholder value (Source: Company Reports)

On the financial front, the expense ratio stood at 25.3 per cent in 1HFY18 which is inched up over the prior corresponding period (pcp). The combined ratio and investment ratio recorded at 93.4% and 28.6% in 1HFY18. Meanwhile, the stock price was up by 9.27 per cent in the past six months and by 1.68% in the past one month as at July 26, 2018. At present, the stock is trading towards the high level, thereby we maintain our “Hold” recommendation on the stock at the current market price of $15.100 by looking at long-term potential into the business.
 

SUN Daily Chart (Source: Thomson Reuters)
 

Insurance Australia Group Limited

IAG Details

Changes in board and Full Year Result: Insurance Australia Group Limited (ASX: IAG) announced that Mr. Chris Bertuch has decided to leave the company as a Group General Counsel and Company Secretary, effective 30 September 2018. In turn, Ms. Rebecca Farrell will proceed as an Acting Group General Counsel and Company Secretary for a while. The company will continue to search for a substitution of Mr. Bertuch within the organization and outside as well. Besides this, the group had signed a sale agreement for its consolidated operations in Thailand, Indonesia, and Vietnam and stated that these businesses would be identified as a discontinued operation for accounting purposes. Moreover, IAG’s interests in Malaysia and India will continue to be treated as associates but will be reclassified from ‘Asia’ to ‘Corporate & Other’ within the geographic segment reporting.


Earnings Contribution by Countries ($ Mn) (Source: Company Reports)

Moreover, the Capital Group Companies, Inc. ceased to be the substantial holder of the Group since 25 July 2018. Meanwhile, the stock was up by 18.45 per cent in the past one year and by 9.79 per cent in the past six months as at July 26, 2018. The stock price slipped by 7.23 per cent in the past one month owing to some volatility and profit booking ahead of the full-year result which is expected to be announced on August 15, 2018. Hence, we maintain our “Sell” recommendation on the stock at the current market price of $ 8.020.
 

IAG Daily Chart (Source: Thomson Reuters)
 

QBE Insurance Group Limited

QBE Details

Share Buy-back Cancellation Update: QBE Insurance Group Limited (ASX: QBE) announced the cancellation of 6,900,000 QBE shares as a part of the on-market share buy-back event. Following this cancellation, the total number of shares on issue has been 1,349,265,477. Besides this, the Group bought back about 1,300,000 more shares (as of 18 June 2018) from the market for the consideration of $12,183,990.0 and before that it has already bought back 9,098,292 shares via on-market trade. However, the group eyes on product innovation and cost reduction to support the overall growth of the company in the years to come. Based on this, the group anticipates property earnings to be at the high end of its guidance range of $55-$65 million of EBITDA for FY18. In the meantime, the share price has fallen 8.58 per cent in the past six months but was up by 4.16 per cent in the past one month as on July 26, 2018. At present, the stock is trading above 52-week low level, and we maintain our “Buy” recommendation on the stock at the current market price of $ 10.110 by looking at its ongoing developments to ensure future growth of the company.
 

QBE Daily Chart (Source: Thomson Reuters)

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