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Recommendation: Buy |
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Note: Marker indicates price at previous close |
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INVESTMENT RATING (Last update: 28/02/2008)
SUN's acquisition of Promina made it the second-largest domestic general insurer and the group has a strong regional banking franchise. So far the integration and extraction of cost synergies is going well. SUN's future now lies with the domestic insurance cycle, synergies with Promina and growth in the banking business. SUN is a regular investment for long-term portfolios - more of an income than a capital growth story given the defensive motivation for acquiring Promina and the lack of meaningful revenue synergies. Large insured events occur without warning and claims trends are largely beyond the control of management in the short term. The decline of SUN´s surplus long-tail reserves is a risk to its ability to smooth profits when disasters occur. Reinsurance protection mitigates the risk to some extent.
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Previous Close |
52 week High |
52 Week Low |
|
$12.650 |
$21.500 |
$11.080 |
| Sector |
Banks |
| Market Cap |
$12,087 Million |
|
|
Total Shareholder Return (avg annual rate) |
|
| 1yr |
3yr |
5yr |
10yr |
-30.3% |
-9.0% |
6.7% |
11.4% |
|
|
Intrinsic Valuation |
|
$20.50 |
| Moat Rating |
Narrow |
| Business Risk |
Medium |
| Pricing Risk |
Medium |
| Company Beta |
0.50 |
| Sector Beta |
0.79 |
|
|
Year |
6/06A |
6/07A |
6/08E |
6/09E |
|
| NPAT ($m) |
916.0 |
1064.0 |
1200.0 |
1530.0 |
| EPS (c) |
166.6 |
158.6 |
128.9 |
164.3 |
| % Change |
10.3 |
-4.8 |
-18.7 |
27.5 |
| DPS (c) |
97.0 |
107.0 |
108.0 |
111.0 |
| Franking (%) |
100.0 |
100.0 |
100.0 |
100.0 |
| Yield (%) |
4.9 |
5.1 |
8.5 |
8.8 |
| PER (x) |
7.6 |
8.0 |
9.8 |
7.7 |
Source: Aspect Huntley analyst estimates |
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Index Participation |
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Price Chart |
|
Index Name |
Weight |
|
S&P/ASX 100 |
1.30% |
S&P/ASX 20 |
1.95% |
All Ordinaries |
0.96% |
S&P/ASX 50 |
1.50% |
S&P/ASX 100 INDUSTRIALS |
1.95% |
S&P/ASX 200 INDUSTRIALS |
1.80% |
S&P/ASX 300 INDUSTRIALS |
1.77% |
S&P/ASX 200 |
1.19% |
S&P/ASX 300 |
1.16% |
S&P/ASX 200 Insurance (Industry Group) |
21.77% |
S&P/ASX 300 Insurance (Industry Group) |
21.70% |
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Business Description
Suncorp-Metway Ltd (SUN) is a Queensland-based financial services conglomerate offering general insurance, retail and business banking, and wealth management services
Aspect Huntley – 04072008
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