Just had a quick look at and couple of lift-outs from the H1 report and presentation:
- H1 looks in line with Nov guidance
- Gotta keep a close watch at the cost of sales creeping up
- The consistent build-up of trail asset movement looks good from an annuity perspective
- Company is investing in both new products as well as customer retention (stickiness of customers keep paying year-on-year as generally a "set-and-forget")
Sales may fluctuate as the company also calls out, however as long as margins are healthy and the company can keep building up that trail commission stream over time.
Taking market share off banks (big fours are divesting their non-core businesses) in the direct insurance space means Freedom could become a dominant niche player over time, which generally makes an attractive takeover target especially on a low multiple relative to other ASX peers.
There is little moat (barrier of entry) in the business however there's also very little goodwill on the balance sheet so there is low risk of impairment/writedown from an acquirer. Pretty much a margin and annuity play as a bolt-on.
FIG Price at posting:
42.5¢ Sentiment: None Disclosure: Held
