ASX:GDG

Stock Analysis Report

Generation Development Group

Executive Summary

Generation Development Group Limited manages and markets life insurance and life investment products and services to the retail sector in Australia.

Rewards

PE ratio (16.2x) is below the Australian market (18.6x)

Earnings are forecast to grow 7.14% per year

Earnings grew by 1262.4% over the past year

Risk Analysis

Unstable dividend track record

Highly volatile share price over past 3 months

Large one-off items impacting financial results

Does not have a meaningful market cap (A$86M)



Snowflake Analysis

Solid track record second-rate dividend payer.

Share Price & News

How has Generation Development Group's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: GDG's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

-0.7%

GDG

-1.3%

AU Insurance

-1.8%

AU Market


1 Year Return

4.6%

GDG

14.6%

AU Insurance

20.0%

AU Market

Return vs Industry: GDG underperformed the Australian Insurance industry which returned 10.9% over the past year.

Return vs Market: GDG underperformed the Australian Market which returned 16.7% over the past year.


Shareholder returns

GDGIndustryMarket
7 Day-0.7%-1.3%-1.8%
30 Day-3.5%-1.4%-0.3%
90 Day34.3%-4.1%1.1%
1 Year8.0%4.6%21.0%14.6%25.9%20.0%
3 Year54.1%42.7%29.8%11.5%36.0%17.4%
5 Year132.0%95.7%53.4%18.7%62.5%25.9%

Price Volatility Vs. Market

How volatile is Generation Development Group's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Generation Development Group undervalued compared to its fair value and its price relative to the market?

16.19x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: GDG (A$0.69) is trading above our estimate of fair value (A$0.3)

Significantly Below Fair Value: GDG is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: GDG is good value based on its PE Ratio (16.2x) compared to the Insurance industry average (20.2x).

PE vs Market: GDG is good value based on its PE Ratio (16.2x) compared to the Australian market (18.6x).


Price to Earnings Growth Ratio

PEG Ratio: GDG is poor value based on its PEG Ratio (2.3x)


Price to Book Ratio

PB vs Industry: GDG is overvalued based on its PB Ratio (4.2x) compared to the AU Insurance industry average (2.9x).


Next Steps

Future Growth

How is Generation Development Group forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

7.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: GDG's forecast earnings growth (7.1% per year) is above the savings rate (1.1%).

Earnings vs Market: GDG's earnings (7.1% per year) are forecast to grow slower than the Australian market (9.4% per year).

High Growth Earnings: GDG's earnings are forecast to grow, but not significantly.

Revenue vs Market: GDG's revenue is expected to decline over the next 3 years (-54.4% per year).

High Growth Revenue: GDG's revenue is forecast to decline over the next 3 years (-54.4% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: GDG's Return on Equity is forecast to be low in 3 years time (18.7%).


Next Steps

Past Performance

How has Generation Development Group performed over the past 5 years?

47.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: GDG has a large one-off gain of A$3.6M impacting its June 30 2019 financial results.

Growing Profit Margin: GDG's current net profit margins (5.9%) are higher than last year (0.6%).


Past Earnings Growth Analysis

Earnings Trend: GDG has become profitable over the past 5 years, growing earnings by 47.4% per year.

Accelerating Growth: GDG's earnings growth over the past year (1262.4%) exceeds its 5-year average (47.4% per year).

Earnings vs Industry: GDG earnings growth over the past year (1262.4%) exceeded the Insurance industry 7.2%.


Return on Equity

High ROE: GDG's Return on Equity (25.6%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Generation Development Group's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: GDG has a low level of unsold assets or inventory.

Debt Coverage by Assets: Insufficient data to determine if GDG's debt is covered by short term assets.


Financial Institutions Analysis

Asset Level: GDG's level of assets compared to its equity is very high.

Allowance for Bad Loans: Insufficient data to determine if GDG has a sufficient allowance for bad loans.

Low Risk Liabilities: GDG reports no customer deposits, loans are made up entirely of externally borrowed funds.

Loan Level: Insufficient data to determine if GDG has an acceptable proportion of non-loan assets held.

Low Risk Deposits: GDG has advanced significantly more loans than the customer deposits it holds.

Level of Bad Loans: Insufficient data to determine if GDG has an appropriate level of bad loans.


Next Steps

Dividend

What is Generation Development Group's current dividend yield, its reliability and sustainability?

2.92%

Current Dividend Yield


Dividend Yield vs Market

company2.9%marketbottom25%2.4%markettop25%5.6%industryaverage4.3%forecastin3Years3.0%

Current dividend yield vs market & industry

Notable Dividend: GDG's dividend (2.92%) is higher than the bottom 25% of dividend payers in the Australian market (2.44%).

High Dividend: GDG's dividend (2.92%) is low compared to the top 25% of dividend payers in the Australian market (5.59%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, GDG has been paying a dividend for less than 10 years.

Growing Dividend: GDG's dividend payments have increased, but the company has only paid a dividend for 6 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (47.3%), GDG's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: GDG's dividends in 3 years are forecast to be covered by earnings (53.2% payout ratio).


Next Steps

Management

What is the CEO of Generation Development Group's salary, the management and board of directors tenure and is there insider trading?

1.9yrs

Average management tenure


CEO

Grant Hackett 0

1.2yrs

Tenure

AU$558,501

Compensation

Mr. Grant Hackett, OAM, serves as Chief Executive Officer at Generation Development Group Limited since October 25, 2018. Mr. Hackett joined GDG in September 2017 and has been instrumental in lifting sales ...


CEO Compensation Analysis

Compensation vs Market: Grant's total compensation ($USD381.62K) is above average for companies of similar size in the Australian market ($USD255.57K).

Compensation vs Earnings: Insufficient data to compare Grant's compensation with company performance.


Management Age and Tenure

1.9yrs

Average Tenure

Experienced Management: GDG's management team is not considered experienced ( 1.9 years average tenure), which suggests a new team.


Board Age and Tenure

2.4yrs

Average Tenure

62yo

Average Age

Experienced Board: GDG's board of directors are not considered experienced ( 2.4 years average tenure), which suggests a new board.


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

SellAU$103,35416 Sep 19
MAM Pty Limited
EntityCompany
Shares199,197
Max PriceAU$0.52
BuyAU$116,10816 Sep 19
MAM Pty Limited
EntityCompany
Shares228,623
Max PriceAU$0.55
BuyAU$797,01716 Sep 19
Wilson Asset Management (International) Pty Limited
EntityCompany
Shares1,590,539
Max PriceAU$0.50
BuyAU$275,62424 Apr 19
John Wheeler
EntityIndividual
Role
Member of the Board of Directors
Non-Executive Director
Shares500,000
Max PriceAU$0.55
BuyAU$29,76206 Mar 19
William Bessemer
EntityIndividual
Role
Member of the Board of Directors
Non-Executive Director
Shares50,000
Max PriceAU$0.60
BuyAU$128,75001 Mar 19
William Bessemer
EntityIndividual
Role
Member of the Board of Directors
Non-Executive Director
Shares200,000
Max PriceAU$0.64

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Rob Coombe (56yo)

    Executive Chairman

    • Tenure: 2.4yrs
    • Compensation: AU$84.18k
  • Amanda Gawne

    Head of Legal & Compliance

    • Tenure: 0yrs
  • Robert Thomson

    Head of Equity Capital Markets Division

    • Tenure: 0yrs
  • Grant Hackett

    Chief Executive Officer

    • Tenure: 1.2yrs
    • Compensation: AU$558.50k
  • Felipe Araujo

    Head of National Key Accounts - Generation Life

    • Tenure: 2.2yrs
  • Jamie Green

    Head of Sydney & Director of Corporate Finance

    • Tenure: 0yrs
  • Gordon Joseph

    Group Financial Controller

    • Tenure: 0yrs
  • Terence Wong

    Chief Financial Officer

    • Tenure: 1.8yrs
    • Compensation: AU$340.22k
  • Louise van der Veen

    Joint CEO

    • Tenure: 1.5yrs
    • Compensation: AU$303.72k
  • Ann Foster

    Joint CEO

    • Tenure: 1.5yrs
    • Compensation: AU$294.49k

Board Members

  • Bill Bessemer (77yo)

    Non-Executive Director

    • Tenure: 7.8yrs
  • Rob Coombe (56yo)

    Executive Chairman

    • Tenure: 2.4yrs
    • Compensation: AU$84.18k
  • Jonathan Tooth (62yo)

    Non-Executive Director

    • Tenure: 7.6yrs
  • John Wheeler

    Non-Executive Director

    • Tenure: 2.8yrs
  • Christopher Freeman

    Independent Non-Executive Chairman of Generation Life

    • Tenure: 2.1yrs
  • Louise van der Veen

    Joint CEO

    • Tenure: 1.5yrs
    • Compensation: AU$303.72k
  • Ann Foster

    Joint CEO

    • Tenure: 1.5yrs
    • Compensation: AU$294.49k

Company Information

Generation Development Group Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Generation Development Group Limited
  • Ticker: GDG
  • Exchange: ASX
  • Founded: 1991
  • Industry: Life and Health Insurance
  • Sector: Insurance
  • Market Cap: AU$85.977m
  • Shares outstanding: 125.51m
  • Website: https://gendevelopmentgroup.com.au

Number of Employees


Location

  • Generation Development Group Limited
  • 15 William Street
  • Level 12
  • Melbourne
  • Victoria
  • 3000
  • Australia

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
GDGASX (Australian Securities Exchange)YesOrdinary SharesAUAUDDec 2007
GDGCHIA (Chi-X Australia)YesOrdinary SharesAUAUDDec 2007
GDGASX (Australian Securities Exchange)NPVAUAUDMar 2018

Biography

Generation Development Group Limited manages and markets life insurance and life investment products and services to the retail sector in Australia. It offers investment bond product solutions; and adminis ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/09 10:34
End of Day Share Price2019/12/06 00:00
Earnings2019/06/30
Annual Earnings2019/06/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.