Steadfast Posts 45% Profit Growth; Provides Guidance for FY17
Underlying revenue, which excludes non-trading items, increased 54 per cent to $459.5 million, while underlying EBITDA rose 43 per cent to $129.6 million.
Insurance broking provider Steadfast Group (ASX:SDF) announced a 45 per cent lift in NPATA on the back of a 54 per cent rise in underlying revenue. As at the end of the financial year Steadfast had 343 brokers in 1,146 offices across Australia, New Zealand, Singapore and London.
Steadfast Experiences Growth in all Divisions; Management ups Dividend 20 Per Cent
Underlying revenue, which excludes non-trading items, increased 54 per cent to $459.5 million, while underlying EBITDA rose 43 per cent to $129.6 million. Underlying cash earnings per share (EPS) were 11 per cent higher at 11 cents per share.
The Steadfast network brokers placed total gross written premium of $4.5 billion during the financial year, 4.2 per cent above last year’s figure.
The board has declared a fully-franked final dividend of 3.6 cents bring the total dividend to 6 cents, a 20 per cent increase year-on-year.
Management Expects Further Growth in FY17
Robert Kelly, Managing Director and CEO of Steadfast was pleased with the “solid performance” of the brokers and agencies of the Steadfast network. He highlighted that the company was operating in a “flat pricing” environment and that the company made progress in improving top and bottom line performance.
Furthermore, he continued: “The acquisitions made in FY15 overall are performing in line with expectations, with the two transformational agency acquisitions performing ahead of expectations. Steadfast Underwriting Agencies now contribute 45 per cent of our earnings, compared to just 18 per cent two years ago.”
Management provided guidance for FY17 and expects underlying NPATA pf $85 - $90 million in a flat pricing environment and without any material acquisitions.
Steadfast offers profitable exposure to the insurance sector. GWP and earnings per share growth trends are attractive, while management has successfully integrated acquisitions to date. Further consolidation of the Steadfast broker network and exposure to premium trends stand as the primary share price drivers.
Author: Simon Herrmann
Aug 24, 2016
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.