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Suncorp share price: what to know before FY21 results

We examine some of the key things traders and investors need to know about Suncorp before the company reports its FY21 results next Monday.

Suncorp share price: FY21 earnings preview Source: Bloomberg

When will Suncorp release its FY21 results?

Insurance and banking group Suncorp (SUN) is set to release its full-year, FY21 results next Monday, August 9.

Suncorp share price performance

The Suncorp share price has performed strongly in CY21 – rising 19.80%, finishing Thursday’s session at $11.80 per share. At those price levels, the company has an implied market capitalisation of $15.14 billion.

That compares favourably to the broader market, with the ASX 200 gaining 12.3% YTD, to last trade above the 7,500 point mark.

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The analyst view

Looking at the broker consensus, Suncorp currently remains overwhelming liked by analysts, with the stock carrying a Buy recommendation, on average and according to Market Index.

On a more granular level, this average rating is made up of 6 Buy ratings, 7 Hold ratings and 0 Sell ratings.

With all this in mind, below we revisit some of the recent developments from the financial heavyweight.

The RACT deal

In early July Suncorp’s management updated the market on the divestment of its 50% stake in RACT Insurance.

With the stated aim of simplifying its portfolio, the company said it had agreed to sell its RACT stake for a total consideration of $83.75 million, implying an 18.1x earnings sale multiple, to its joint venture partner, the Royal Automobile Club of Tasmania.

Analysts from Morgan Stanley described that exit price as reasonable while also saying 'we and consensus do not have a return of capital in our forecasts, this looks increasingly likely at the August result. Overall, this is a reassuring update.’

The investment bank has an Equal-weight rating and $11.00 price target on the diversified financials company.

On a more granular level and from a pre-tax earnings basis, profits from the sale are expected to come in at between $65 million to $70 million.

Commenting on that deal, Suncorp's CEO – Steve Johnston said:

‘Suncorp and RACT have enjoyed a successful relationship in Tasmania since 2007. We have mutually agreed that now is the right time for RACT to take full control of the insurance entity. THis is consistent with our focus on simplifying the Group and driving improvement in our core insurance and banking businesses.'

In that same market release, the company also told the market that it had renewed its reinsurance program for FY22: Revealing the upper limit for its Home, Motor and Commercial portfolio to be $6.5 billion, while its natural hazard allowance was $980 million.

Further details on the program would be provided as part of the company's FY21 materials.

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