SOLVAR LIMITED (SVR)
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21/08/2024

3

Hold

$1.30

3.17%

Solvar's FY24 result was broadly in line (with revenue falling a tad shy of consensus forecasts) and Bell Potter believes earnings have hit a low, expecting a recovery in FY25.

A $13m add-back of goodwill and legal expenses helped normalised net profit after tax into the top end of guidance, albeit still down on FY23, observes the broker.

The broker expects the NZ book will continue to drag as it runs down (closes) but this should release about $65m in capital, observes the broker, suggesting this will be redeployed into the Australian business.

EPS forecasts rise 5.6% in FY25; and 11.2% in FY26. Rating is upgraded to Buy from Hold. Target price rises to $1.30 from 91c.

FORECAST
Bell Potter forecasts a full year FY25 dividend of 11.70 cents and EPS of 15.20 cents.
Bell Potter forecasts a full year FY26 dividend of 14.70 cents and EPS of 18.10 cents.

06/08/2024

1

Buy

$1.50

19.05%

Solvar announced it has resolved to exit the New Zealand market and refocus its strategy on the Australian consumer lending and commercial markets, where it believes it can achieve higher returns on capital.

Canaccord Genuity agrees there is scope to redeploy capital into the Australian commercial lending market in particular but perceives management taking a measured approach to growing both the consumer and commercial books while also being front-footed on capital management initiatives.

Management has slightly lifted the FY24 guidance range and the company expects to declare a 5cps final dividend, in line with the broker.

Target falls to $1.50 from $1.55, Buy retained.

FORECAST
Canaccord Genuity forecasts a full year FY25 dividend of 11.00 cents and EPS of 15.00 cents.