The Steadfast Group Ltd (ASX: SDF) share price climbed as much as 5% in yesterday's trade on the ASX to hit a 52-week high of $3.52 per share – so what caused the surge?
Market update boosts share price higher
The Aussie insurance broker's share price closed the day yesterday 2.32% higher at $3.44 per share, slightly down on its $3.52 per share 52-week high that we saw in the opening hour of trade.
The insurance group responded to interest around its proposed alliance with Insurance Brokers Network Australia Limited (IBNA) and the Board advised the following:
- Steadfast has entered into an agreement with IBNA regarding IBNA supporting IBNA members joining the Steadfast Network and renouncing rights to rebates from professional service fees (PSF) to Steadfast as a result of business placed by those members with strategic partners
- Initial consideration is actual FY19 PSF generated by IBNA members multiplied by 8.32x, which translates to an initial purchase price of $76 million
- The initial consideration is subject to adjustment if not all IBNA members join the Steadfast Network, if Steadfast does not accept application of an IBNA member or if PSF attributable to business placed by IBNA members in FY19 varies from the estimated $9.13 million.
What's driving the Steadfast share price higher in 2019?
The Steadfast share price has soared 28.8% higher so far this year, despite some setbacks along the way for the Aussie insurance broker.
Steadfast released its half-year results in February 2019, headlined by an underlying net profit after tax (NPAT) of $38.2 million, an increase of 17.6% on 1H18 numbers.
Steadfast's 21.3% increase in underlying earnings before earnings, tax and amortisation (EBITA) and 12% increase in underlying earnings per share (EPS) to 4.83 cents seemed impressive, particularly when accompanied by a 14.3% increase in its interim (fully-franked) dividend.
The company's statutory numbers were also strong, posting a statutory NPAT of $40.5 million (up 19.8% for the year), which included changes in the mark-to-market value of the group's Johns Lyng Group investment, among other items.
