Suncorp Group Limited (SUN)
BUY

Reaffirms outlook

 10 Nov 2022
Sector: Financials

2022 INVESTOR DAY

Need To Know

  • Insurance earnings guidance reaffirmed.
  • Bank sale process continues. 1Q23 margins ahead of guidance range.
  • Flags capital management – unwind of business interruption provisions. Estimated at ~12cps.    

Investment Implications

A solid update from SUN across the insurance and banking business. Confirms the operating environment for the insurance business remains favourable despite the la-Nina weather impact on claims/reinsurance costs.

We see SUN’s earnings recovering strongly over FY23E as several one-off issues from FY22 don’t recur.

Ordinary dividends should also recover strongly from 40cps in FY22 to 70cps in FY23E. 

On top of the ordinary dividend, the unwind of the business interruption provision is estimated at ~12cps – at 1H23 Results. Combined, this puts SUN on a dividend yield of 6.8%.

Should the pending sale of the SUN bank to ANZ occur, SUN will look to return the majority of proceeds to shareholders as a combination of a fully franked special dividend and capital return and a share consolidation. In our view, this is not likely to 1H24 post approvals for the sale.

We rate SUN a BUY, given earnings recovery and prospects for capital management over 2023.

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Stock overview

Share Price

Company overview

Suncorp Group is an Australia-based company that provides insurance, banking and wealth products and services through various brands in Australia and New Zealand.

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