SUN has shed the burden of its banking arm to ANZ, allowing it to focus on what it does best: insurance. Shedding the load should be an easy transition for SUN, and with margins improving, the stock looks good, having rallied over +18% year-to-date, just like QBE. The stock still looks cheap compared to IAG after the sale of the banking assets. If/when we reconsider the sector, it will be under the MM microscope.
- We can see value in SUN back around $15, or 8% lower. Depending on the respective prices at the time, it’s an alternative to QBE for sector exposure.
However, the key takeout from this morning’s quick look at the sector is that although we prefer both QBE and SUN over IAG, the sector itself does not fit our broader macroeconomic views around the likely trajectory of interest rates from here.
MM is neutral SUN above $16
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