What are MM’s thoughts on Suncorp & Lottery Corp?
Hi Market Matters Team, Can I have your current view on Suncorp and The Lottery Corp. Thanks Debbie
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Answer
Hi,
The Lottery Corp (TLC) $5.09 – This is a $11.3bn Lotteries & Keno business that was spun out of Tabcorp in 2022, its first set of FY22 results included revenue up over 11% to $3.27bn and a NPAT of $373mn. The stocks looks expensive trading on 32.6x Est 2023 earnings and it’s hard to see a significant catalyst that will propel the stock higher into 2023 however we thought that at $4 and were wrong plus gambling businesses love a recession!
Suncorp (SUN) $12.79 – the company delivered a mixed1H23 result this month which leaves us neutral the stock around $13. General Insurance (GI) margin was solid and their soon-to-be-jettisoned banking division did particularly well, with Net Interest Margins (NIM) of 203bps, ahead of expectations. i.e. good news for the buyer ANZ. The stock is inexpensive in our view, currently trading on an Est 12.7x PE for 2023, stripping out net proceeds from selling the Bank (i.e., estimated $4.1bn) implies SUN is extremely cheap compared to say IAG.
- We like SUN as an insurance play but importantly it’s no longer on the MM banking radar.
