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Blue-Chip

Two stocks that dipped in prices - Westpac Banking and Suncorp

August 14, 2016 | Team Kalkine
Two stocks that dipped in prices - Westpac Banking and Suncorp

 
Westpac Banking Corp


WBC Details
  • Distribution updates: Westpac Banking Corp (ASX: WBC) stock fell 1.33% on August 12, 2016 after the bank notified about the distribution of final dividend of Computershare Ltd (CPU). The payment date is on or about September 13, 2016 while ex-distribution/entitlement date is August 16, 2016. WBC is as issuer of Self-Funding Instalments (“SFI”) over securities in Computershare Ltd (CPU). Meanwhile, WBC has become a substantial shareholder for PropertyLink Group.
  • Recommendation: We give an “Expensive” recommendation on the stock at the current price of $29.62
 
Suncorp Group Ltd


SUN Details
  • Mixed FY16 Result: Suncorp Group Ltd (ASX: SUN) traded ex-dividend on August 12, 2016 and accordingly fell 4%. In the recent FY16 results, SUN has reported NPAT of $1,038 million as compared to $1,133 million. This is due to the lower returns from investment markets and a reduction in reserve releases. The General Insurance underlying ITR is of 10.6% due to the increased cost of settling claims and lower investment returns and the total GWP increased by 1.8% to over $9 billion. Suncorp Bank net profit after tax grew 11.0% due to continued home lending growth, improved net interest margins and ongoing improvement in credit quality. Suncorp Life net profit after tax grew 13.6% and the underlying profit increased by 9.7% to $124 million. The underlying profit included the positive lapse and claims experience of $21 million. In addition, after accounting the dividend payment, the Group is well capitalized with $346 million in CET1 capital held above its operating targets. Additionally, SUN expects to get a sustainable return on equity of at least 10% which means an underlying ITR of at least 12%, and to maintain the dividend payout ratio of 60% to 80% of the cash earnings. Meanwhile, SUN stock has risen 28.04% in six months as on August 11, 2016, and the company has a decent dividend yield.
  • Recommendation:Based on the foregoing, we give a “Buy” recommendation on the stock at the current price of $13.15
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