Helia Group Limited (ASX: HLI)
Helia Group Limited (ASX: HLI) reported its financial results for the half-year ended 30 June 2024 (1H24), showcasing strong profitability despite ongoing challenges in the mortgage insurance market. The company posted a statutory net profit after tax (NPAT) of $97.0 million, with an underlying NPAT of $106.5 million. Reflecting its solid financial standing, Helia declared a fully franked interim dividend of 15.0 cents per share establishing its position among top dividend stocks. Although underlying NPAT was lower compared to the prior corresponding period (pcp), this decline was attributed to a smaller benefit from negative incurred claims, as claims experience remained unusually low in both FY23 and 1H24. Nonetheless, Helia’s robust capital position has enabled the company to maintain disciplined capital management, including ongoing share buybacks.
New business volumes were subdued during the period, driven by reduced high loan-to-value ratio (LVR) mortgage lending, the impact of the Federal Government’s First Home Guarantee scheme, and an increase in lender self-insurance. In response, Helia has sharpened its strategic focus on defending and growing its Lenders Mortgage Insurance (LMI) market share, while collaborating with key stakeholders to expand the overall LMI market. Insurance revenue for the half-year declined 11% compared to the pcp, reflecting lower gross written premiums (GWP) in recent years and less favourable premium experience variations on top-up credits. Closing delinquencies increased 15% from FY23, as higher new delinquencies were partially offset by stable cure rates, raising the delinquency rate to 0.63%. During 1H24, Helia executed $42 million in on-market share buybacks, reducing its share count by 3.7%. The company has $92 million remaining under its current $100 million buyback program, which expires on 31 December 2024. Cash and financial assets fell 6% from FY23 to $2.8 billion, reflecting dividend payments and the share buyback program.
The Australian labour market remains a positive driver for Helia, with unemployment holding steady at 4.1%, supported by real wage growth aiding loan serviceability. However, rising mortgage rates and cost-of-living pressures have contributed to a modest rise in industry mortgage arrears. The Reserve Bank of Australia (RBA) kept its cash rate at 4.35% during 1H24, but economic uncertainty remains, with inflationary pressures continuing to affect the broader outlook. Helia’s strategic priorities include growing and defending its LMI market share, expanding the LMI market, enhancing operational agility, and delivering world-class performance. The company is actively working with lenders to broaden risk appetite, including opening investor lending to 95% LVR and easing underwriting restrictions in high-density areas. Despite a challenging new business environment, Helia remains committed to operational efficiencies and long-term growth, positioning itself to navigate potential economic uncertainties effectively.
SG Fleet Group Limited (ASX: SGF)
SG Fleet Group Limited (ASX: SGF) reported a solid set of results for FY24, with net profit after tax (NPAT) of $89.7 million, reflecting a 6.7% increase over the prior year (FY23). The company’s underlying NPAT showed even stronger growth, rising 19.2% year-on-year, signaling continued operational strength. Total net revenue for the period came in at $390.1 million, up 11.4% from FY23, while earnings per share (EPS) increased by 6.8% to 26.23 cents. Underlying EPS also improved significantly, up 19.2%. The company one of the best dividend growth stocks, declared a fully franked special dividend of 15 cents per share alongside a final dividend of 9.33 cents per share, bringing the total dividend for FY24 to 33.93 cents, a 109.6% increase on FY23.
SGF being one of the high growth stocks continued to maintain strong growth momentum across its key markets and channels, notably achieving record orders in both the Corporate and Novated segments. Improved vehicle supply, following earlier disruptions, allowed SG Fleet to register exceptional delivery volumes during the year, which, in turn, drove robust revenue growth across most business lines. These results underscored the resilience of SG Fleet’s business model, as well as its diversified revenue profile.
Looking ahead, SG Fleet anticipates realizing approximately $20 million in annual pre-tax cost synergies from the LeasePlan acquisition once the migration is fully completed. While management remains confident in the company’s earnings outlook, they acknowledge that the operating environment is gradually normalizing following an exceptional period in which supply chain disruptions and elevated used vehicle prices significantly boosted some revenue lines. As external conditions stabilize, certain financial metrics may moderate in the coming year. Nevertheless, SG Fleet remains optimistic about its earnings trajectory and expects to deliver an underlying NPATA of between $88 million and $95 million for FY25.
Overall, SG Fleet’s FY24 results reflect strong execution and continued growth across key business areas, bolstered by improving supply conditions and disciplined capital management. The company’s focus on delivering operational efficiencies, alongside the integration of LeasePlan, positions it well to sustain its growth trajectory and deliver value to shareholders, despite anticipated headwinds in the short term.
(Source: Company’s Report)
Veye Pty Ltd(ABN 58 623 120 865), holds (AFSL No. 523157 ). All information provided by Veye Pty Ltd through its website, reports, and newsletters is general financial product advice only and should not be considered a personal recommendation to buy or sell any asset or security. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation, or needs. You should look at the Product Disclosure Statement or other offer document associated with the security or product before making a decision on acquiring the security or product. You can refer to our Terms & Conditions and Financial Services Guide for more information. Any recommendation contained herein may not be suitable for all investors as it does not take into account your personal financial needs or investment objectives. Although Veye takes the utmost care to ensure accuracy of the content and that the information is gathered and processed from reliable resources, we strongly recommend that you seek professional advice from your financial advisor or stockbroker before making any investment decision based on any of our recommendations. All the information we share represents our views on the date of publishing as stocks are subject to real time changes and therefore may change without notice. Please remember that investments can go up and down and past performance is not necessarily indicative of future returns. We request our readers not to interpret our reports as direct recommendations. To the extent permitted by law, Veye Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss, or data corruption) (as mentioned on the website www.veye.com.au), and confirms that the employees and/or associates of Veye Pty Ltd do not hold positions in any of the financial products covered on the website on the date of publishing this report. Veye Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services.