FY18 results were slightly below Macquarie’s expectations. The broker recognises the current regulatory landscape is challenging but believes a significant discount in valuation to take account of this is not really justified, given the growth profile following completion of the OnePath acquisition.
Cost performance was the highlight of the result but, with margin compression to continue, discipline will need to prevail, in the broker’s view. Outperform rating. Target reduced to $11.20 from $11.40.
Sector: Diversified Financials.
Target price is $11.20.Current Price is $8.70. Difference: $2.50 – (brackets indicate current price is over target). If IFL meets the Macquarie target it will return approximately 22% (excluding dividends, fees and charges – negative figures indicate an expected loss).