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Question asked 21/03/2026

AUB

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

Answer

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:

Firstly, AUB raised $400 this year at $29.40 to fund the acquisition of UK-based insurance broker Prestige, effectively putting a short-term lid on the stock ~$30.
Secondly, Insurance stocks were hit by AI disruption fears in early February, driven by a new AI insurance app and although it was a short, sentiment-driven sell-off rather than a fundamental shift the likes of AUB and Steadfast haven’t really managed to recover.

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.

MM is neutral towards AUB ~$23.50.

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AUB Group Ltd (AUB)

LAST UPDATED 18/03/2026 15:49

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