Admiral: Only Way is Up After H1 Results

Company Update (ADM LN) (Buy)

Highlights

• The benefit of price increases is now materializing in the P&L

• U.K. Motor margins rose in H1 and should continue improving

• The cycle is turning and Admiral’s volume should resume growing

• P/E is 20.6x on H1 2023 and 16.1x on 2019; Dividend Yield is 4.3%

• At 2,364p, we see 59% upside (15.8% p.a.) by end of 2026. Buy

Introduction

Admiral Group PLC reported H1 2023 results last Wednesday (August 16). Shares finished the day up 7.2% and rose risen thereafter, ending the week at 16.5% higher than the most recent trough in early July, though still 25% down since the end of 2021 and 36% down from the peak in August 2021:

Admiral Share Price (Last 5 Years)

Source: Google Finance (20-Aug-23).

Admiral’s performance has progressed positively as we expected. In its core U.K. Motor business, prices have been raised decisively in response to inflation, and the benefit is now materializing in its underwriting results; the price increases were ahead of the market and costed 7.4% of its volume, but Adm…