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Growth Portfolio: ClearView Wealth Ltd (ASX: CVW)


Published 11-OCT-2016 00:00 A.M.


2 minute read

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Overview: ClearView Wealth Ltd ("ClearView Wealth", "the Company") is an Australian financial services company focused on life insurance and wealth management. The Life Insurance division accounts for approximately 85 percent of earnings, while Wealth Management makes up less than 10 percent. In addition, ClearView has built an aligned financial adviser network primarily comprised of self-employed advisers covering ~$8.2bn of FUMA.

Catalysts: ClearView Wealth has increased operating revenue for the past five financial years at an average annual growth rate of 16 percent. The company has established a sales and distribution pipeline and is now transitioning to the ‘growth’ phase. Continuation of this trend whilst scaling up the business is the major value driver. A recent capital raising was used to repay the Debt Funding facility, whilst a further $50m facility remains in place for future funding. With the majority shareholder looking to divest their holding, there is potential for a takeover.

Hurdles: Maintaining sufficient capital adequacy whilst executing management’s growth strategy is the primary hurdle. While its majority shareholder controls over 50 percent of the company’s stock, the ability for minority shareholders to influence direction is impaired. There is also the risk of stock overhang in case of a sell-down which is currently being discussed. Regulatory hurdles may impact ClearView’s business.

Investment View: ClearView Wealth offers profitable exposure to the domestic insurance market. We are attracted to the company’s revenue growth trajectory, ability to scale up the business, and balance sheet. Hurdles include maintaining liquidity and the company’s capital structure. ClearView Wealth is experiencing growth across all key metrics, which may enable management to reward shareholders with higher dividend distributions in the future. The dividend has been increased for the past two consecutive years and recognising ClearView’s potential for capital growth and income, we initiate coverage with a ‘buy’ recommendation.


General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

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The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

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