AUB Group Limited (AUB)
BUY

Pre-released

 22 Feb 2023
Sector: Financials

1H23 RESULT

Need To Know

  • Strong result (pre-released) with solid growth throughout the half
  • Guidance upgraded ~5% (pre-released)
  • Re-iterate Buy Rating 

Result Highlight

Net Profit After Tax (NPAT) of A$46.7m was 8% ahead of the market.

Underlying Australian Broking EBIT A$87.8m vs A$68.2 1H22.

EBIT margin grew 0.10% to 31.3%.

EPS of 48.2cps (+19.6% growth on 1H22).

DPS 17cps slightly ahead of the market. 

Guidance Upgrade (Pre-Released 16 Feb 2023)

Investment View

Trading conditions remained robust throughout Nov/Dec which was in-line with industry peers. Premium rates continue to see strong growth in Australia and New Zealand which should drive organic growth in 2H23. 

Tysers is outperforming expectations, being a significant driver for the increased guidance. AUB's acquisition of Tysers drove a significant ~5x PER point valuation discount compared to domestic peers (SDF). The strong performance of Tysers should boost the markets confidence in the acquisition and potentially lead to a re-rating in the PER.

Natural catastrophes and inflation impacts are continuing to remain prevalent which is yet to be fully reflection in claims. In the medium-term, we expect the rate environment to drive strong organic growth. 

Overall, a strong result but given it was pre-released its unlikely we see much of a share-price reaction. 

We maintain our BUY rating. 

Figure 1: FY23 underlying NPAT breakdown. 

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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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