Australian Finance Group Ltd (AFG)
LATEST THOUGHTS ON AFG THHNK YOU REGARDS JOHN
The Latest Q&A
Answer
Hi John,
AFG is a $500m Australian mortgage broking and financial services company that provides technology, lending solutions and support to a large network of independent mortgage brokers. Its core business is mortgage aggregation, giving brokers access to lenders, platforms and support to arrange home loans for customers.
The companies 1H earnings delivered last month were solid and the stock enjoyed its best session in 4-years:
- Revenue for the six months $715mn, up from $625.6mn YoY.
- Underlying earnings of 8.9c per share, up from 6.2c YoY.
- A dividend of 4.7c per share compared to 3.8c YoY.
However, over the last 6-months the stock is down ~35% due to margin pressure, housing market uncertainty and earnings concerns. Also, AI Disruption worries that have swept through global equities are likely to have played a role although AI is more likely to augment AFG’s business rather than disrupt it, but the company will still likely face stiffer competition from digital lenders, fintech platforms and automated mortgage tools that could pressure margins over time.
- We like the stocks ~5.4% fully franked yield and fair valuation but we’re unsure how AI will potentially disrupt their model, hence it’s not on our radar.
