AUB Group Limited (AUB)
BUY

First FY24 guidance

 22 Aug 2023
Sector: Financials

RESULTS

Need To Know

  • Result is pre-announced, no surprises.
  • First NPAT FY24 guidance $154-164m, consensus $160m.
  • AUB has a track record beating (conservative) guidance; strength of the insurance cycle and importance of May/June renewal service, and the potential for further bolt-on acquisitions.

FY23 Results Overview (vs consensus)

PBT $360m vs $357m

NPATA $129m vs $127m

DPS 64cps vs 64cps, 100% franked

Cash conversion >100% (ex-acquisition costs)

Balance sheet: net debt $474m, ND/EBITDA 1.7x

Recently acquired Tysers profit contribution was ~5% ahead of AUB expectations.

Mid-point of FY24 guidance implies mid-20% earnings growth into FY24. AUB assumes continued strong insurance premium increases and allowance for further premium rate increases.

Four out of five AUB medium-term ambitions on margins upgraded. The upgrades are primarily a result of increasing scale and fine-tuning of operating systems.

Investment Implications

A low-impact result given AUB pre-announced earnings in early August. 

First guidance for FY24 is unlikely to change market estimates.  AUB guidance has typically been conservative in recent years – helped along by a strong insurance cycle, acquisitions, and inherent conservatism of management. 

The balance sheet remains in a good place to facilitate further acquisition activity over 2024, which is not captured in market estimates. 

We continue to like the earnings prospects for AUB. Retain the Buy rating.   The next AUB update on earnings is expected at the AGM 2 Nov 2023.

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Stock Overview

Share Price

Company Overview

AUB is an insurance company in Australia and New Zealand providing insurance broking, advisory services, and technology solutions to SME clients.

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