AMP Update

Submitted by Craig Strzelecki on 7 May, 2007 - 18:22

AMP has a Neutral 2 broker call and a steady $10.70 share price target from stockmarket analyst UBS. Q1 fund flows poor: AMP reported net fund flows of $753m for Q107 vs. $358m pcp, although $380m of the $395m increase is accounted for in a single corporate superannuation account win. Low margin on this new business vs. low incremental costs aside, the implications for broader retail net flows are poor, in our view. Value of new business also a question in the analyst's minds: Of particular note: (1) Reasonable Retail super net flows +10.5% on pcp at $232m (2) Corporate super net flows $530m vs. $105m pcp (3) Wealth protection net flows dn 7% to $39m (4) AMP Financial Planning net flows dn 4% at $265m (5) Hillross net flows dn 25% at $126m (but up 7% adj for transfer in pcp). Potential for further disappointment: AMP has had disappointing aspects of funds flow for 3 consecutive quarters in addition to entering then broadening the scope of a regulatory undertaking with ASIC. Their Neutral 2 rating is unchanged; they think AMP is unlikely to outperform on a 6-12 month view. Potential Positives for AMP: (1) Operating leverage (2) Reduced capital intensity (3) market position. Key potential risks: (1) mature run-offs an earnings drag (2) contemporary growth disappointing (3) valuation stretch.

AMP Limited is listed on the Australian Stock Exchange (ASX) under stock code AMP. You can view their investor website here. AMP was listed on the ASX on 15 June, 1998. The company is a provider of life insurance, superannuation, pensions and other financial services in Australia and New Zealand. Peter Edward Mason is the Chairman for AMP and Andrew Max Mohl is the CEO. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade AMP. Check your charts and good luck with your share trading!