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Leading General insurance broker group, Steadfast Group Limitedâs (ASX:SDF) has released its half-year results for FY 2019. For the half-year period, the company has reported Underlying revenue of $320.9m which is 22.6% higher than the previous corresponding period. Further, the company reported Underlying EBITA of $86.5 million which was 21.3% higher than pcp.
The company also announced an interim dividend (fully franked) of 3.2 cents per share (cps), up 14.3% (PCP). The target for full-year dividend payout ratio is 65% to 85% of underlying NPAT. Ex-dividend date has been set on 25 February 2019, record date on 26 February 2019, dividend reinvestment plan (DRP) record date on 27 February 2019, and payment date on 21 March 2019.
The company reported Statutory NPAT of $40.5 Mn which was up 19.8% on pcp, slightly higher than growth in underlying NPAT due to net non-trading gains. The strong set of results were predominantly driven by price and volume growth through underlying organic (+13%) and acquisition (+8%) EBITA growth by the group. Eleven new brokers joined the Network bringing the total to 388 across Australia, New Zealand, and Singapore.
The companyâs network delivered record first-half gross written premium (GWP) of $2.9 Bn, a growth of 12%. This was driven by insurer price rises, an increase in volume and new brokers joining the Network. The organic GWP growth of 7% was reported across the Australian SME portfolio (excluding statutory classes) compared to H1 FY2018.
Groupâs portfolio of equity brokers grew aggregate underlying EBITA to $57.4 Mn, up 14% compared to H1 FY18. Both organic and acquisition growth contributed to this performance as the brokers benefited from net fee and commission uplifts as the market continued to harden.
Steadfast Underwriting Agencies (SUA) produced underlying EBITA of $42.6 Mn which is a growth of 49% compared to H1 FY2018 on a like-for-like basis and was driven mainly by significant organic growth and some acquisition growth. SUA delivered $558 Mn of GWP in H1 FY2019, an increase of 24%, resulting in over $1 Bn of GWP being written in the past calendar year, primarily due to the price increase by insurers creating opportunities for the agencies to grow volume.
The company reported $99 Mn of unutilized corporate debt facilities along with a gearing ratio of 24.1%, which was within the board-mandated maximum of 30%. It aims to execute its strong acquisition pipeline which is underway subject to the Groupâs disciplined due diligence and acquisition. Its net assets were reported to be $1.06 Bn on 31 December 2018.
Strong H1 FY2019 earnings support FY2019 guidance of underlying EBITA between $190 Mn and $200 Mn, and underlying NPAT between $85 Mn and $90 Mn, on the expectation of moderate premium price increase.
Steadfast Groupâs shares last traded at $2.950, down 3.595% as on February 20, 2019 with the market capitalization of ~$2.43 Bn. Its current PE multiple is at 31.0x. Its 52 weeks high has been noted at $3.14 and low at $2.33. Its absolute return for the last 3 months, 1 year, and 5 years are 11.68%, 14.61%, and 94.67% respectively.
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