SUN spiked to new highs following the insurer’s strong result, with earnings ~11% ahead of consensus. However, this was driven by the big variable: lower claims, something that could adversely change with one weather event. The business can focus on its knitting following the sale of its banking arm to ANZ, but as is a common factor across the ASX, its stock has already run hard. Dividends/capital returns are a focus of many investors following the sale of its banking arm:
- SUN declared an Interim dividend per share 41c and are forecast to yield ~4.4% fully franked in 2026/7.
- $4.1 billion of net proceeds from the sale of Suncorp Bank will be returned to shareholders through a $3.8 billion capital return and a $300m fully franked special dividend, equating to $3.00 and a 22c, respectively.
NB SUN will trade ex the $3 capital return and ex the ordinary + special dividend on the 17th Feb.
We like SUN, but from a valuation and growth perspective, it’s in a similar position to IAG.
- We like SUN back around $18, or ~10% lower.
MM is neutral SUN around $20
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