📚 AUB Group Limited (AUB.AX) — investigación Rational Compounder
Investigación hecha a mano: fundamentos, valor vs libros, prueba de utilidades retenidas, tendencias de ganancias, costo de capital y valor razonable — publicada tal como fue escrita, actualizada por última vez el 2026-09-19.
Investigación original en inglés — mostrada tal como fue escrita.
Notas de investigación del autor
| Management Reputation | Medium |
| Debt Exposure | Medium |
| Legal Exposure | Medium |
| Inflation Exposure | Low |
| Business Understanding | Medium |
| Value Prospect | High |
| Progress Prospect | High |
| Wealth Prospect | High |
| Market Sentiment | Medium |
| Public interest? | Yes |
| OK when inverted? | Yes |
The Business & Its Moat
Market Reality: *Industry is not in a bubble but it is in a late-cycle "mature expansion" phase—not a bubble, but not early-stage growth either.
*Insurance policies are not flatlined but the core growth is cyclical not structural. Not flat — but core organic growth is moderate and tied to economic + insurance cycles
*AUB is open to investigate other markets in fact it is part of its core strategy. Strong expansion intent — growth depends heavily on entering and scaling new markets
*The market sees AUB as a high-quality, defensive, cash-generative business. Viewed as a high-quality compounder with execution risk. Financial community sees AUB as a quality growth platform, but not risk-free
*Market sentiment is medium
AUB's future success is heavily dependent on the execution of its UK expansion strategy, which represents both its largest growth opportunity and its most significant risk; while the company has a proven model and strong acquisition capability, success in the UK is not guaranteed given higher competition, acquisition pricing pressure, and the need to maintain broker alignment at scale.
MUST BE BOUGHT WITH A MARGIN OF SAFETY LARGER THAN 1.25
Challenges: *UK Expansion Execution | Risk Rating: 10 | Likelihood: Likely | AUB's strategy is designed to replicate its Australian model internationally through acquisitions and broker alignment; however, the UK is more competitive and mature, so success depends heavily on execution and integration quality.
*Acquisition Pricing and Discipline | Risk Rating: 9 | Likelihood: Unlikely | AUB's acquisition-led growth strategy is constrained by rising competition from private equity and global brokers, which is pushing up deal prices beyond what the strategy can fully control. ADD ROIC PROBABILITY TO CLASSIFY THIS CELL LIMIT VALUE IS 8.5
*Integration of Acquisitions | Risk Rating: 9 | Likelihood: Likely | AUB's decentralised "owner-driver" model is designed to reduce integration friction and preserve autonomy, improving success rates, though increasing deal volume raises complexity.
*Competitive Pressure (Global brokers + PE) | Risk Rating: 9 | Likelihood: Unlikely | Competition is structural and driven by capital, scale, and consolidation; AUB's strategy provides differentiation but cannot fully offset advantages held by large global players and PE-backed firms.
*Broker Retention and Talent Risk | Risk Rating: 9 | Likelihood: Likely | AUB's core strategy directly addresses this by giving brokers equity ownership and autonomy, aligning incentives and improving retention compared to competitors.
*Insurance Cycle Reversal (Soft Market) | Risk Rating: 7 | Likelihood: Unlikely | AUB can partially mitigate cycles through diversification and fee income, but cannot fundamentally overcome macro insurance cycles which are outside its control.
*Margin Compression Risk | Risk Rating: 8 | Likelihood: Likely | AUB's strategy focuses on scale, operational leverage, and advisory services, which helps defend margins, though industry conditions may still cause gradual compression.
*Shrinking Acquisition Pipeline | Risk Rating: 8 | Likelihood: Unlikely | As consolidation progresses, fewer independent brokers remain; while AUB can expand geographically, the core strategy cannot fully offset a structurally shrinking pool of acquisition targets.
*Technology and Digital Disruption | Risk Rating: 6 | Likelihood: Likely | AUB's strategy includes investment in platforms and support services, allowing adaptation to digital trends, though continued investment is required to remain competitive.
*Regulatory and Compliance Pressure | Risk Rating: 5 | Likelihood: Certain | AUB's scale enables it to handle regulatory burden better than smaller competitors, and regulation often strengthens its position by raising barriers to entry.
ROIC risk is high for the long term and unlikely to be improved. The company is destroying value rather than creating value. Not suitable for a long-term investment.
Risk & Inversion
Inversion Angle: Rank 1 — Broker retention (hybrid model): This risk relates to losing key brokers who drive revenue. Failure would occur if brokers leave after acquisitions and revenue declines in acquired businesses. AUB mitigates this through equity ownership, earn-outs, and maintaining autonomy, with effectiveness rated as High.
Rank 2 — Acquisition pricing & integration: This risk arises from overpaying for acquisitions or failing to integrate them effectively. Failure would occur through high purchase multiples, write-downs, or weak post-acquisition performance. AUB mitigates this through disciplined deal structures, earn-outs, and its acquisition track record, with effectiveness rated as Medium-High.
Rank 3 — UK execution risk: This risk reflects the ability to successfully scale the UK business. Failure would occur if UK growth stalls, margins remain low, or acquisitions fail to integrate. AUB mitigates this through phased expansion, applying its Australian playbook, and leveraging the Tysers platform, with effectiveness rated as Medium. Revised AML to high.
Rank 5 — Competitive imitation (Howden adapts): This risk arises if competitors replicate AUB's model. Failure would occur if competitors offer similar incentives and AUB loses differentiation. AUB mitigates this through strong brand positioning and authentic ownership structures, with effectiveness rated as low-medium. Revised AML medium.
Rank 9 — Management bandwidth / execution stretch: This risk reflects leadership capacity constraints. Failure would occur through slower decision-making, missed deals, or declining Australian performance. AUB mitigates this with an experienced team and decentralised operations, with effectiveness rated as Medium. Long-term management leadership and proven track record on acquisitions.
Rank 13 — Revenue quality / premium cycle exposure: This risk reflects dependence on insurance pricing cycles. Failure would occur if growth slows when premiums fall. AUB mitigates this through diversification and focusing on client growth, with effectiveness rated as Low-Medium. AML rerating as Medium.
Summary: AUB's most critical risks are concentrated in broker retention, acquisition discipline, and UK execution, while macro risks primarily act as amplifiers; failure is most likely if AUB loses brokers, overpays for growth, or fails to maintain its differentiation while scaling.
Breakeven Price: $800 per policy which is 27% below current price
No Brainer Question: How is ROIC likely to be impacted if acquisitions are purchased with a big premium? And how will this affect the share price?
How can AUB maintain its business growth in Australia? What's its competitive advantage and how can it be durable over time?
Can AUB succeed with their UK expansion? Is AUB's purchase system achieving the same results achieved in Australia?
Double-digit growth can only be achieved with international growth what is the expansion strategy in UK?
Is the CEO likely to move on after successful expansion just like in his old role? Who is in the succession plan and what could be the possible share price scenarios (increased share price due to purchase)?
What is a better investment AUB or Steadfast? Maybe both?
What variable should be taken into account to measure AUB's probability of success in UK? We could look at past acquisitions' success to calculate probability of future?
What FS should I use for this company? 1.25?
What is the main macro reading for insurance cycle and what variable should be taken into account to determine best entry price for stock based on fundamental analysis?
What is the risk of this investment using Munger style of risk measurement?
Management & Context
CEO Time With Company: 7 Years
How Old Is the Business?: 12 Years
Competitors Analysis 2: Australia Competitors
*Steadfast appears to have an edge on profit per employee and current valuation however it shows lower revenue growth. Business model is mainly in network, profit is reduced below AUB so maintenance and upgrade of network is as expensive as employees. Steadfast sells more policies per year due to network however AUB focuses on client and value.
*AUB growth is driven by acquisitions and steadfast focuses more on organic growth.
*AUB offers a more diversified range of policies opposed to steadfast which could translate to higher potential of growth in short term.
*AUB and steadfast sell same insurer priced products. Steadfast is larger than AUB so in some cases it can offer cheaper products. Success depends on client satisfaction rather than price both got high marks but Steadfast seems to be more reliable due to way it operates. Steadfast doesn't own brokers but enforces standardization of methods, AUB does own them operating a hybrid model, however, it does not enforce standardization of operations. AUB model could have some superiority due to freedom of brokers, however, this leads to a less efficient model. Steadfast's revenue growth is more than 50% than AUB. Steadfast is a long-term compounder.
UK Competitors
*AUB has a substantially higher investment in the UK. Where it seems to have a greater opportunity. Cash from this investment is likely to start flowing into reports soon. There is high risk associated with this opportunity.
*Howden will be a strong better competitor to AUB. However AUB can win in some areas but not consistency and speed. It also could have a more personalized and less rigid experience just like in Australia.
*AUB opportunity in UK lies on high flexibility and scalability in the mid-SME market where their direct competitors don't operate. However, it will be short-lived as competitors move into the gap. AUB shares ownership of brokers which gives it an edge over the others which are more rigid. AUB can double its size if UK works as intended.
*AUB hybrid model plus Mike's experience could give an edge on the acquisition model as current owners can stay as owners instead of being absorbed by big brands. 60 to 70% chance of success. AUB has already been successful in Australia with this model.
*Steadfast = efficiency, Howden = scale, AUB = ownership — and the UK battle is about who controls the middle
Fundamentos
| Earning Yield | 2.7% |
| Price to Sales ratio | 3.16x |
| Total Current Assets | $612,000,000 |
| Inventory | $0.00 |
| Working Capital | $190,000,000 |
| Tangible Asset Value | $2,138,000,000 |
| Market Cap/Tangible Asset Value | 1.77x |
| Income Tax Expense | $54,310,000 |
| % Income Paid on Taxes | 28.9% |
| Book Value Per Share | $17.25 |
| 1.5xBV | $25.88 |
| Interest Coverage | 3.25x |
| Working Capital to Debt | 0.22x |
| EV To Free Cash Flow | 31.54x |
| Net Income Ratio | 8.0% |
| Free Cash Flow Yield | 3.1% |
| Intangibles To Total Assets | 57.3% |
| Price to Equity Ratio | 1.74x |
| Return on Tangible Assets | 4.5% |
| ROE | 5.6% |
| Operating Income Ratio | 20.1% |
| PFCF Ratio | 32.49x |
| ROIC | 3.4% |
| Debt to Assets | 24.0% |
| Quick Ratio | 0.41x |
| Current Ratio | 59.23x |
| Debt to Equity | 0.64x |
| Covariance (SP500) | 11,289.33 |
| Correlation (SP500) | 0.90x |
Valor vs Libros
| Share Price | $28.89 |
| 52 Week High | $40.28 |
| 52 Week Low | $22.08 |
| Free Cash Flow (TTM) | $116,151,000 |
| IV/BV | 1.22x |
Utilidades Retenidas
| Share Price | $28.89 |
| 52 Week High | $40.28 |
| 52 Week Low | $22.08 |
| Market Cap (TTM) | $3,774,204,536 |
| EPS (TTM) | $0.78 |
| Dividend (TTM) | $0.98 |
| Ratio P/(E-D) | -136.80x |
| Dividend Yield (TTM) | 3.4% |
| Retained Earnings (TTM) | $-0.20 |
| 10Y Retained Earnings (From Last FY) | $2.92 |
Tendencias de Ganancias
| 10y Average Earnings | $0.86 |
| 4y Average Earnings | $1.12 |
| Max Earnings | $1.54 |
| Min Earnings | $0.50 |
| 10y EPS Variance | 9.9% |
| 10y EPS SD | $0.31 |
| 4y EPS SD | $0.32 |
| 10y AVG+SD | 1.17x |
| 4y AVG+SD | 1.45x |
| Average 10 Year Growth | 9.6% |
| 10Y Growth (3Y AVG) | 91.9% |
| PE Ratio Average | 28.39x |
| PE Ratio Average 3 Years | 24.28x |
| ETP% Vs AA Bond | 4.1% |
| AVG PE 3Y*PTB Ratio | 46.91 |
Costo de Capital
| Market Cap (TTM) | $3,774,204,536 |
| Enterprise Value (TTM) | $3,663,495,536 |
| Long Term Debt (TTM) | $1,174,849,000 |
| Interest Expense (TTM) | $85,594,000 |
| ROIC (TTM) | 7.0% |
| Income Before Tax (TTM) | $188,136,000 |
| WACC | 9.0% |
| Total Investments (TTM) | $356,353,000 |
Valor Razonable
| Factor of Safety Buffet | 0.70x |
| Forecast EPS 1y | $0.79 |
| Forecast EPS 5y | $1.08 |
| EPS 5y Growth | 46.9% |
| Average P/E | 28.39x |
| Discount Rate | 9.0% |
| Owner Earnings Growth Rate | 8.0% |
| Share Price 10Y | $33.45 |
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