SUN has been a strong performer since finalising the sale of its banking division to ANZ. We expect a combined capital return and a smaller special fully franked dividend of ~$3 in 2025. Together with next year’s ordinary dividends, this represents around 22% of the current market cap, which has lifted the stock’s appeal to local investors. SUN is screening relatively cheaply compared to IAG, and we believe this differential is likely to contract over time, making SUN our standout preferred option as the business can focus on its knitting following the sale of its banking division. We do prefer SUN over WBC at current levels, but both still feel rich at current levels.
- We remain a keen buyer of SUN around its August lows after the insurer divested its banking division.
MM is bullish on SUN ~$16
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