Wallis's $30 Share Valuation Puzzles

Sydney Morning Herald

Saturday May 20, 2000

Anthony Hughes

AMP's attempts to talk up its share price found some success yesterday but broking analysts still struggle to tally chairman Mr Stan Wallis's assertion that AMP shares are worth closer to $30 than $20 each.

AMP shot 55.3c higher to $14.94, but the shares are still well down on levels in March.

Most brokers value AMP at between $16 and $18 a share, but even with a takeover premium included struggle to get anywhere near $30 a share. At this price, AMP would be trading on a 2000 price-earnings multiple of more than 30 times.

Mr Wallis cited the $30 valuation after AMP was criticised at Thursday's annual meeting in Melbourne for reportedly rejecting a $21 a share scrip offer from National Australia Bank.

Salomon Smith Barney this week released a valuation of $18.04 on AMP and labelled the shares ``outperform" and its favoured pick of the life insurance sector.

The broker said it was cautious about the short-term outlook for AMP because of volatile investment markets, but said the prospects were good for AMP Financial Services and AMP Global Asset Management. Market concerns about management remained, given nearly all senior management had yet to complete one year in their roles.

In the UK, AMP still lacked scale and the challenge of turning around the ``mediocre and overpaid-for NPI to a business generating strong and profitable sales growth should not be underestimated".

The Australian Shareholders Association's Victorian president, Mr Stan Mather, said one of the main disappointments of the meeting was Mr Wallis's failure to clarify his position. AMP also expects to appoint one or two directors in the coming months.

Mr Wallis said he would take six months to decide which of his three chairmanships to drop.

``Yesterday would have been a great day to announce his own intentions," Mr Mather said. ``It's important he gets the board established and his own position clarified quickly.

``Something has to give and if it's going to be AMP, he needs to get someone else in quickly."

Mr Mather said his general impression was that Mr Wallis conducted the meeting well and attempted to face up to some of the problems that had plagued the company.

© 2000 Sydney Morning Herald

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