My final piece of the puzzle is what happens to UNPAT when equity markets drop 35%?? Asset allocations are roughly 60% International and Australian Equities, 30% Cash/Fixed Interest, 8% Property and 2% Other. Presumably FUMA will drop significantly - perhaps 25% or even more and this will hit the Gross Margin hard. With a fixed cost base there will be a big hit to UNPAT this year. We know that there will be $300m odd in expenses (I can't see why this would be significantly reduced because of the current Coronavirus crisis). The question becomes how low will the roughly $500m GM drop in the current market and how long will it take to recover?
There is lots of uncertainty here having already been through the wringer over the past couple of years. I'm wondering if the market has just put it in the too hard basket? The Order of Oddfellows now IOOF has survived everything from the 1890's recession, the 1930's great depression, a couple of World Wars, 9/11 and the GFC so I'm hoping it can get through the Coronavirus! At this price it strikes me as a good long term bet on an eventual market recovery.
I'm sure there are plenty of rookie errors in the above analysis and I'd be very keen to hear an alternative view! Please feel free to pull it apart!
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