Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
Hi guys AUB is a stock that has had a fall from a 52 week high of $40 to current price $21.81 and a fully franked yield of 4.3% on current price. 1 half "26 NPATA of $90.4m was up 13.9%YoY. There was a $400 m equity raise to fund acquisitions which seemed to spook the market but guidance is for a full year profit of between $220m-$230m Could you kindly provide your views? Regards , Ray
Hi Ray,
AUB Group runs an asset-light insurance broking model, earning commissions and fees by placing insurance rather than taking risk. It combines a network of equity-owned brokers with underwriting agencies, generating recurring, high-margin revenue with strong cash flow and minimal exposure to claims. The problem for the stock comes in two forms:
While we agree that valuation looks good with the stock trading over 35% below its 5-year average valuation, sentiment isn’t good, and we do see risks around their model in the medium to longer term. In the world of AI, we think it is these sorts of businesses, that ultimately operate as the ‘middle man’ that could be disrupted, as direct to consumer sales channels before easier to construct. Our fundamental view is that AI will change how we all consume, reducing the levels between product manufacturer and end user. For that reason, we are likely to avoid these sorts of businesses.
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