Weekly Reports | Mar 28 2024
Broker Rating Changes (Post Thursday Last Week)
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INSURANCE AUSTRALIA GROUP LIMITED ((IAG)) Upgrade to Buy from Overweight by Jarden.B/H/S: 0/0/0
Jarden sees growing potential for positive earnings surprises for General Insurers on the ASX.
After upgrading Insurance Australia Group to Buy from Overweight, the broker's order of preference becomes QBE Insurance (leading on gross written premium growth), then Insurance Australia Group followed by Suncorp Group.
Now that there are two purer-play domestic general insurers, following Suncorp Group's yet-to-be-completed Bank sale, Jarden compares Suncorp to Insurance Australia Group.
The broker prefers Insurance Australia Group for its increasing optionality and because it is trading at a greater discount to historical valuation multiples.
On a relative basis, the analysts see greater upside risk to Insurance Australia Group's underlying insurance trading ratio (ITR), which is set to eclipse management's 15% target from the 2H of FY24.
Jarden also see scopes for $400m per year of buybacks over FY25-FY27. Target $6.95.
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29METALS LIMITED ((29M)) Downgrade to Underweight from Neutral by Jarden.B/H/S: 0/0/0
Jarden downgrades its rating for 29Metals to Underweight from Neutral and lowers the target to 30c from 38c following suspension of operations at Capricorn Copper due to heavy rainfall in the March quarter.
Capricorn Copper's earnings forecasts are largely removed from the broker's financial model and a $50m valuation is now assumed.
With the new Managing Director Mr Palmer commencing on May 1, the analysts are hopeful of a full reset on the Capricorn asset.
Jarden continues to believe additional liquidity will be required with a forecast for the existing cash balance to be depleted by the end of 2024. A $60m liquidity event is assumed.
MMA OFFSHORE LIMITED ((MRM)) Downgrade to Hold from Buy by Moelis.B/H/S: 0/0/0
MMA Offshore has entered a binding scheme implementation deed with Cyan MMA Holdings for acquisiton of all shares at $2.60 per share.
As per Moelis, the offer reflects a valuation of $1.03bn for the company, representing an 11% premium to the previous closing price.
MMA Offshore's board has unanimously recommended voting in favour of the bid, feeling it offers compelling value. A shareholder vote is expected by mid-July.
The rating is downgraded to Hold from Buy and the target price increases to $2.60 from $2.30.
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