13th Aug 2024 11:48
(Alliance News) - Just Group PLC on Tuesday delivered an "excellent" set of interim results, well above expectations, that blow its previous guidance "out of the water", an analyst on Tuesday commented.
The Surrey, England-based financial services firm which provides retirement income products and services predicted full-year operating profit would "substantially exceed" previous 2024 guidance.
Chief Executive David Richardson said: "We have never been more confident in our ability to deliver sustainable and compounding growth.
"Given the strong first half outcome, the positive market dynamics, and our forward-looking pipeline, we expect to substantially exceed previous 2024 guidance of doubling 2021's GBP211 million operating profit in three years."
In response, shares leapt 16% to 136.68 pence in London on Tuesday. It was the best performing stock in the FTSE 250 index which was little changed.
In the six months to June 30, Just Group said pretax profit fell 37% to GBP74 million from GBP117 million.
Underlying operating profit, in contrast, rose 44% to GBP249 million from GBP173 million. This was driven by new business sales growth, higher recurring in-force profit and operational gearing.
Retirement income sales increased 30% to GBP2.47 billion from GBP1.90 billion.
Just Group said pricing discipline and risk selection in "buoyant" markets led to an increased margin of 9.0% compared to 8.5% a year ago. These combined to drive a 38% increase in new business profit to GBP222 million from GBP161 million.
Looking ahead, the company said momentum remains "strong as we enter the second half of 2024".
"We forecast second half new business volumes to be similar to the excellent performance in the first half, albeit with slightly lower margins due to business mix. We expect the strong structural growth drivers of our markets to continue well into the future."
Just Group declared an interim dividend per share of 0.70 pence, up 21% versus 0.58p the year before.
Panmure Liberum analyst Barrie Cornes said the better-than-expected results from Just Group blow its previous guidance "out of the water".
Headline underlying operating profit of GBP249 million beat his own GBP218 million forecast by 14% and was 19% ahead of market consensus of GBP208 million.
Cornes explained the result was primarily driven by new business sales which were very strong.
Panmure Liberum raised its share price target to 169 pence from 144p and reiterated a 'buy' rating.
The broker increased its underlying operating profit forecast for 2024 to GBP477 million from GBP447 million and for 2025 to GBP541 million from GBP507 million.
"Whilst the shares have rallied slightly, in our view have much, much further to go," Cornes stated.
RBC Capital Markets also was positive.
The broker reiterated an 'outperform' rating and increased its share price target to 175p from 165p.
RBC pointed out that Just Group offers double-digit growth at a 50% discount to an "already cheap" peer group.
JPMorgan joined the positive chorus of approval, describing the results as "solid", beating all major metrics with new business sales and underlying operating profit 15% to 20% ahead of JPM's estimate and consensus.
"We think earnings are set to grow at strong rates over the next few years, and likely above current consensus levels," JPM added.
The investment bank has an 'outperform' rating on Just Group.
By Jeremy Cutler, Alliance News reporter
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