MNG stock rises on strong FY24 results and upbeat targets

Investing.com -- Shares of M&G Plc (LON:MNG) climbed 3.21% following the announcement of solid FY24 operating results and optimistic future targets.

The company reported an adjusted operating profit and operating capital generation that surpassed expectations, driven by non-underlying items such as foreign exchange gains and a one-off in shareholder annuities. The adjusted operating profit for the fiscal year came in at £837 million, outpacing the consensus of £769 million and RBC estimates of £781 million.

The firm's Solvency II ratio, a measure of capital adequacy, stood at 223%, exceeding the consensus by 7 percentage points. This result was supported by the operating capital generation beat, which was reported at £933 million against a consensus of £916 million.

However, asset management net flows were weaker than expected, with a £0.9 billion outflow compared to the consensus of a £0.1 billion outflow.

Looking ahead, MNG has set ambitious targets for the FY25-27 period, including an average annual adjusted operating profit growth of at least 5%, which suggests consensus earnings upgrades of 4-6%.

The company also aims to generate £2.7 billion in operating capital over the next three years, a figure that aligns with previous achievements but is considered higher quality due to a larger proportion being underlying.

Furthermore, MNG has formalized a progressive dividend policy, announcing a 2% rise in dividends per share (DPS) for FY25, which is in line with consensus expectations of approximately 3% growth per annum through FY27.

RBC analysts commented on the company's financial guidance, stating, "MNG’s new operating capital generation guidance (OCG) implies small downgrades to consensus, once new business capital strain is considered. However, it remains strong enough to underpin MNG’s confidence to commit to a progressive dividend policy, while also continuing to invest in the business (via higher Life new business capital strain)."