Steadfast Capital Allocation Upgraded to Exemplary on Moat Enhancing and Well Executed Strategy

We upgrade our capital allocation rating on Steadfast Group to Exemplary from Standard. We believe the balance sheet is sound, dividend payout ratio appropriate, and the investment strategy and execution have been and will continue to be positive contributors to shareholder returns. Our AUD 3.70 fair value estimate, medium uncertainty rating, and narrow economic moat rating are unchanged. While we like the business, we believe Steadfast is modestly overvalued at current prices. The market has priced in our view that commission income will continue to be aided by insurance premium increases, earnings upside from acquisitions of existing network brokers, organic market share gains on the back of technology and marketing spend, and positive operating leverage.