Smartgroup Corp's 1H results were bang on management's late-2023 guidance, observes Morgan Stanley. No FY24 guidance was provided but the broker believes strong momentum continues.

Positives from the result, according to the analysts, include a 15% increase in 2H yields over the previous corresponding period on an increased mix of new cars and electric vehicles.

While it makes sense for management to invest in higher returns elsewhere, the broker appreciates investors may have been surprised by a reduced dividend payout ratio.

Equal-weight rating. Target $9.10. Industry view: In-line.

Sector: Commercial & Professional Services.

Target price is $9.10.Current Price is $9.82. Difference: ($0.72) - (brackets indicate current price is over target). If SIQ meets the Morgan Stanley target it will return approximately -8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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