Citi cuts PT for Australian Finance Group on rate hikes, bearish housing market

Australian Finance

14/07/2022 02:33

** Analysts at Citi cut price target of mortgage and lending
business Australian Finance Group  AFG.AX  to A$2.50 from A$3.20
following rate hikes and falling housing prices; maintains "buy"
rating
    ** Brokerage expects co's earnings resilience to drive
outperformance as compared to the market
    ** Sees about 45% fall in mortgage commitments by the second
half of FY22 owing to an expected 13% decline in house prices
over the next 12 months
    ** Downgrades profit forecasts by about 7% for FY23 and
about 14% for FY24
    ** "Stock remains absolutely cheap, and tends to trough
before housing does" - Citi
     ** Lending business expected to grow to 55% of overall
profit by FY25 as lending volume growth offset fall in margins,
brokerage says
    ** Four of four analysts rate the stock "buy" or higher;
their median PT is A$2.33 - Refinitiv data
    ** Stock has fallen about 42% this year, as of last close

 (Reporting by Anan Ashraf in Bengaluru)
 ((Anan.Ashraf@thomsonreuters.com;))