SUN has rallied this week after posting a mixed 1H23 update – Cash NPAT was around 7% below consensus at the group level, however, the 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 company reaffirmed key guidance measures and the momentum, particularly at the top line (gross written premiums of $4.9bn up 8%) was good. 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 it’s no longer on the MM banking radar.
MM is neutral to bullish SUN around $13
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