AUB Group (AUB.AX): Upgrade to organic growth offset partially by funding cost increase; Model update

Midpoint of FY27 UNPAT guidance was upgraded by ~1% driven by increasing the bottom end of the guidance range: the new range of A$250-265m with a midpoint of ~A$258m was lifted from the previous midpoint of A$255m, suggesting a ~1% upgrade to FY27. Within this change, funding costs and FX were slightly higher at -A$14.2m versus previous guidance of -A$12.3m; this increased cost was more than offset by an improvement in FY27 organic growth expectations at the midpoint from A$24.2m to A$28.6m, with a material increase at the bottom end of the organic growth guidance range and a less material increase at the top end. This is a positive message for total organic growth across rate/volume/expenses and bodes well for valuation. Leverage ratio is expected to be 2.44x at Dec-26, up from 2.3x at Jun-26. We retain our Buy rating and raise our 12-month price target slightly to A$35.50 (from A$35.00) to reflect earnings changes; the stock closed at A$32.04, implying 10.8% upside.