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Does MM like SUN after its strong rally?

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Does MM like SUN after its strong rally?

Hi James and Team, Can I have your current view on Suncorp. There is potential capital return if regulators approve the sale of its banking business to ANZ. Is this already priced in to its current valuation? What's the consensus on the sale being approved? What is the timeline for this approval? Sun has jumped over 3% today (19/1/23) Is this a hold or sell? regards Debbie


Hi Debbie,

Suncorp (SUN) has broken out to fresh 1-year highs this week in line with a largely strong Banking Sector e.g. At the time of writing CBA is up +6% and SUN +2.7% year-to-date.

On balance we believe the $4.9bn banking deal between ANZ and SUN will go ahead after being assessed by the ACCC and Queensland Govt. but there’s likely to be a few caveats imposed on ANZ’s purchase such avoiding rapid mass branch closures in QLD – the formal decision is expected in June 2023.

MM likes the banks/financial into 2023 but we are mildly underweight with holdings in Commonwealth Bank (CBA) and Macquarie Group (MGQ) reflecting our preferred companies.

As a standalone view we are neutral to bullish SUN as it trades above $12 with a healthy fully franked dividend looming in early February.

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Suncorp (SUN)
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