Smartgroup Corporation Ltd

SIQ: XASX (AUS)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	A$9.30	Jtldq	Lfzfthnkx

Smartgroup Earnings: Positioned Well for Organic Growth and Better Margins

Shaun Ler

Aug 28, 2024

No-moat Smartgroup’s first-half 2024 results slightly exceeded expectations, with underlying net profit after tax and acquisition amortization and EBITDA growing by 16% and 20%, respectively, from the previous corresponding period. The compression in EBITDA margins to 38% from 40% in the PCP was anticipated, as it includes investment to service a large contract win from McMillan Shakespeare, which commenced June 30, 2024. Excluding these investments, EBITDA margins would have been flat. We maintain our fair value estimate of AUD 8.30 per share, with shares close to fairly valued at current prices.

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