AMP Limited (AMP)
BUY

Buyback increased

 27 Feb 2023
Sector: Financials

SHARE BUYBACK

Need To Know

  • Buyback increased by a further 500m shares
  • Equates ~15% of shares on issue, post completion of the current buy-back 
  • Further simplification initiatives are likely over 2023

After flagging additional on-market share buybacks and the recent FY22 result, AMP has announced an additional 500m shares (perhaps worth $500-700m) to be bought back post the completion of the existing program (A$350m, with $60m outstanding). The existing program is likely to complete before the end of March 2023.

Since the 2H22 result, AMP has been back in the market purchasing 15-20% of the average daily volume. With the expanded share buyback, it’s possible that AMP could continue at this rate to the end of 2023 (and possibly beyond).

Since the FY22 Result, AMP share price has fallen ~25% on what was messy below expectations results. The market reaction has been savage, with investors selling more on grounds of frustration vs fundamentals in our view.

Investment View

The AMP restructuring story has contained many bumps along the way. We think the current share price weakness should be bought.  The company is flush with capital which is seeing the buyback increase and the reinstatement of the ordinary dividend. 

Whilst we wait for further restructuring initiatives, investors at the current price are receiving a 4% dividend yield.

AMP continues to progress with finding ways to return the A$1.5bn-A$1.6bn excess capital to shareholders. This equates to ~40% of AMP’s current market cap. We expect capital returns will likely continue over FY23-24 given the significant size of the held excess capital.

Our investment case on AMP is based on the ongoing turnaround of the Group. The earnings potential of AMP in the FY22 Results was masked by short-term impacts in a small part of the Australian Wealth Management business, which we don’t think will repeat. 

We reiterate our Buy rating.

Specific Disclosure: MST discloses that it may, from time to time, provide paid services to AMP and may be receiving fees for such services.

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Stock Overview

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Company Overview

AMP Limited is a wealth management company. It offers advice on retirement, wealth management, mortgages, technology investment, real estate, equities, and funds.

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