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Just got this in an email ...Mon, 12 Dec at 9:34 am


Monday, 12 December 2022

SIQ - SMARTGROUP CORPORATION LIMITED

Citi rates SIQ as Initiation of coverage with Buy (1) - Citi initiates coverage with a Buy rating on two of Australia’s leading salary packaging providers with a preference for McMillan Shakespeare over Smartgroup Corp. It's felt defensive customer bases for both will afford protection from macroeconomic headwinds.

The broker considers the current valuation for Smartgroup is undemanding and notes an attractive dividend yield.

The analyst's preference for McMillan Shakespeare stems from its diversified business model (with 22% of revenue deriving from novated leased compared to 58% for Smartgroup)

Overall, the analyst expects FY23 to be a relatively stagnant year for lease volumes before rebounding in FY24. A target price of $6.60 is set for Smartgroup.

Target price is $6.60 Current Price is $4.71 Difference: $1.89 If SIQ meets the Citi target it will return approximately 40% (excluding dividends, fees and charges). Current consensus price target is $6.04, suggesting upside of 28.3%(ex-dividends)The company's fiscal year ends in December.

Forecast for FY22:

Citi forecasts a full year FY22 dividend of 38.00 cents and EPS of 46.20 cents . At the last closing share price the estimated dividend yield is 8.07%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.19. How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 48.0, implying annual growth of 5.7%. Current consensus DPS estimate is 36.1, implying a prospective dividend yield of 7.7%. Current consensus EPS estimate suggests the PER is 9.8.

Forecast for FY23:

Citi forecasts a full year FY23 dividend of 42.40 cents and EPS of 47.10 cents . At the last closing share price the estimated dividend yield is 9.00%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.00. How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 45.8, implying annual growth of -4.6%. Current consensus DPS estimate is 36.3, implying a prospective dividend yield of 7.7%. Current consensus EPS estimate suggests the PER is 10.3.

Market Sentiment: 0.5All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources